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For the last several years, real estate has been in a pricing bubble. Prices have been substantially higher than historical relationships to incomes and rents would justify. While prices have started to decline, they are still abnormally high compared to these core fundamentals. This website is focused on analyzing the housing bubble, its aftermath, and real estate in general as it pertains to the Greater Boston Area.
 
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Boston-Specific Info

  • Boston Futures: For Greater Boston real estate prices from 1987 through the present and looking several years into the future, see the latest S&P/Case-Shiller Boston snapshot with futures (both before and after inflation). The futures markets are probably the most unbiased predictor of where housing prices are headed.
  • Price/Income: For a gauge of how overpriced the market is, see the latest report on the Greater Boston price to income ratio.
  • Inflation Adjusted: See the latest report on Massachusetts single family home prices for prices as typically reported by the local media but adjusted for inflation.
  • Price/Rent: Comparing prices to rents can help illuminate an overpriced market since many hypothetical justifications for higher home prices should raise rents as well. See the latest report on the Boston MSA price to rent ratio.
  • The population of the Greater Boston Area was declining as the housing market posted its most exceptional gains during the bubble. One of the fallacious arguments which was used to contest the existence of a housing bubble was that a growing population was pushing up the natural price of property. While that argument is flawed in general, it is especially wrong when the population is declining. [Boston Globe] [Boston Bubble]
  • The Wall Street Journal has identified Boston as one of the metropolitan areas in the US where it is cheaper to rent than to buy. Their data goes from 2001, when it was already cheaper to rent, to 2004 when the difference was even more pronounced. The Economist also published an article showing that renting is cheaper, and although it does not focus on Boston, it is very thorough about including various expenses and tax benefits that the Wall Street Journal left out. [Wall Street Journal] [The Economist]
  • Consumer Reports has rated real estate in the Boston market as "Overpriced" and pegged it at 24% over the affordable price as of Q4 2004. [Consumer Reports]
  • The number of homes sold in Massachusetts has been plummeting. For the third quarter of 2006 (the most recently reported quarter as of this writing), home sales have fallen 23% compared with the same quarter one year earlier. This despite the fact that home sales were already on the decline in 2005. [Worcester Telegram] [WCVB] [Milford Daily News]
  • Foreclosures are rising sharply in Greater Boston and Massachusetts. There were more foreclosures in the first nine months of 2006 than in all of 2005, and as of this writing (in November 2006), Massachusetts is on track to break the all time record in 2006. [Boston Globe] [Lowell Sun]
  • Boston and Massachusetts are the typical exceptions that people use to qualify their statements when they say that real estate prices don't fall. Boston and Massachusetts prices have fallen in the past, even in nominal terms (when adjusted for inflation, the fall is even more pronounced). Bear in mind that even if prices decline merely by the same percent that they have in the past, the leverage (a.k.a., margin or mortgage) used to purchase the homes must be taken into consideration - the substantially higher number of zero down and negative amortization loans will leave a lot of people with heavy losses and negative equity. [BusinessWeek] [Wall Street Journal (sub)]
  • To compensate for property that fails to sell, real estate agents in Boston are falling back on the deceptive practice of canceling the listing in MLS and then creating a new listing so that the property appears as new to the market. There were 10,606 MLS cancellations in the first six months of 2005, up from 9,722 cancellations in the first six months of 2004 and 3,736 in 2001. "The number of canceled listings in Massachusetts has nearly tripled since 2001... In a recent spot check of houses for sale on MLS in Middlesex County, Barry Nystedt, president of the Massachusetts Association of Buyer Agents, said one in four listings canceled between May 25 and June 25 was recreated by the same firm with a new MLS number." [Boston Globe]
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National (US) Info

  • Visit the Wikipedia article on the United States housing bubble for another excellent overview of the bubble on a national scale.
  • It is actually now cheaper to rent than to buy in many areas even after you factor in accumulated equity and tax savings. [The Economist]
  • Yale professor Robert J. Shiller released the first edition of his prophetic book warning of a stock market bubble weeks before the stock market began its epic crash in 2000. He recently released an updated second edition in late February, 2005 with similar warnings of froth in the real estate market. This book is very highly recommended and is quite readable despite the complexity of the subject. [Irrational Exuberance] [Amazon.com]
  • The current nationwide housing boom has been fueled in large part by historically low interest rates and an increase in the use of risky mortgages. Buyers may find that their monthly payments will skyrocket once the introductory period of their mortgage ends and the adjustable rate kicks in. In 2005, only $83 billion, or 1 percent, of mortgage debt will switch to an adjustable rate. In 2007, this number will leap to $1 trillion, or about 12 percent. [Herald Tribune]
>>> Discuss the national and worldwide housing bubbles now!
 

Boston Bubble News & Interesting Links

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2011-12-30
Info/Broken? - One Reason Why Boston Housing Is So Expensive
Discuss - One Reason Why Boston Housing Is So Expensive
One Reason Why Boston Housing Is So Expensive
2011-12-29
Info/Broken? - Mass. foreclosures surge 70% in Nov.
Discuss - Mass. foreclosures surge 70% in Nov.
Mass. foreclosures surge 70% in Nov.
2011-12-28
Info/Broken? - Warren and MAR predict Mass. on homestretch of massive tumble
Discuss - Warren and MAR predict Mass. on homestretch of massive tumble
Warren and MAR predict Mass. on homestretch of massive tumble
2011-12-27
Info/Broken? - 8 Outrageously Flawed Economic Predictions (majority are housing related)
Discuss - 8 Outrageously Flawed Economic Predictions (majority are housing related)
8 Outrageously Flawed Economic Predictions (majority are housing related)
2011-12-23
Info/Broken? - Boston Bubble Wrap: The Real Story for MA - Nov 2011
Discuss - Boston Bubble Wrap: The Real Story for MA - Nov 2011
Boston Bubble Wrap: The Real Story for MA - Nov 2011
2011-12-23
Info/Broken? - Boston housing market projected to lose $9.5 billion in 2011
Discuss - Boston housing market projected to lose $9.5 billion in 2011
Boston housing market projected to lose $9.5 billion in 2011
2011-12-23
Info/Broken? - Amazon move has Boston-Cambridge in a tizzy
Discuss - Amazon move has Boston-Cambridge in a tizzy
Amazon move has Boston-Cambridge in a tizzy
2011-12-22
Info/Broken? - Mass. commuters spend more time on the road than most in U.S., potentially due to housing costs
Discuss - Mass. commuters spend more time on the road than most in U.S., potentially due to housing costs
Mass. commuters spend more time on the road than most in U.S., potentially due to housing costs
2011-12-21
Info/Broken? - MA SFH Nov 2011 vs Nov 2010 - MAR: nominal median down 4%, volume up 13%; Warren Group: nominal median down 8%, volume up 13%
Discuss - MA SFH Nov 2011 vs Nov 2010 - MAR: nominal median down 4%, volume up 13%; Warren Group: nominal median down 8%, volume up 13%
MA SFH Nov 2011 vs Nov 2010 - MAR: nominal median down 4%, volume up 13%; Warren Group: nominal median down 8%, volume up 13%
2011-12-20
Info/Broken? - Boston ranked 15 of 200+ for most expensive metro areas for home ownership
Discuss - Boston ranked 15 of 200+ for most expensive metro areas for home ownership
Boston ranked 15 of 200+ for most expensive metro areas for home ownership
2011-12-20
Info/Broken? - U.S. Population Migrates for Income Boost
Discuss - U.S. Population Migrates for Income Boost
U.S. Population Migrates for Income Boost
2011-12-19
Info/Broken? - Income Inequality In Metro Boston Among Worst In U.S.
Discuss - Income Inequality In Metro Boston Among Worst In U.S.
Income Inequality In Metro Boston Among Worst In U.S.
2011-12-16
Info/Broken? - Mass. adds 5,000 jobs as unemployment dips to 7%
Discuss - Mass. adds 5,000 jobs as unemployment dips to 7%
Mass. adds 5,000 jobs as unemployment dips to 7%
2011-12-16
Info/Broken? - SEC accuses former Fannie Mae, Freddie Mac bosses of fraud
Discuss - SEC accuses former Fannie Mae, Freddie Mac bosses of fraud
SEC accuses former Fannie Mae, Freddie Mac bosses of fraud
2011-12-14
Info/Broken? - MLS PIN: MA SFH nominal median fell 5% YOY in November
Discuss - MLS PIN: MA SFH nominal median fell 5% YOY in November
MLS PIN: MA SFH nominal median fell 5% YOY in November
2011-12-14
Info/Broken? - Mass. Residents More Pessimistic about the Future - 33% expect housing prices to rise next year
Discuss - Mass. Residents More Pessimistic about the Future - 33% expect housing prices to rise next year
Mass. Residents More Pessimistic about the Future - 33% expect housing prices to rise next year
2011-12-14
Info/Broken? - NAR home sales figures from 2007-10 to be lowered
Discuss - NAR home sales figures from 2007-10 to be lowered
NAR home sales figures from 2007-10 to be lowered
2011-12-13
Info/Broken? - State revenues expected to slow
Discuss - State revenues expected to slow
State revenues expected to slow
2011-12-12
Info/Broken? - Massachusetts Official Reports 26K Instances of Mortgage Fraud
Discuss - Massachusetts Official Reports 26K Instances of Mortgage Fraud
Massachusetts Official Reports 26K Instances of Mortgage Fraud
2011-12-09
Info/Broken? - S&P/Case-Shiller Boston Futures: Real bottom in April 2011, but declines by 2012 Q1 will come very close
Discuss - S&P/Case-Shiller Boston Futures: Real bottom in April 2011, but declines by 2012 Q1 will come very close
S&P/Case-Shiller Boston Futures: Real bottom in April 2011, but declines by 2012 Q1 will come very close
2011-12-08
Info/Broken? - Massachusetts employers have more confidence, but not adding jobs
Discuss - Massachusetts employers have more confidence, but not adding jobs
Massachusetts employers have more confidence, but not adding jobs
2011-12-06
Info/Broken? - Employers turn - barely - more optimistic on economy
Discuss - Employers turn - barely - more optimistic on economy
Employers turn - barely - more optimistic on economy
2011-12-05
Info/Broken? - Mass. residents even more pessimistic about economic future now than when recession was in full swing
Discuss - Mass. residents even more pessimistic about economic future now than when recession was in full swing
Mass. residents even more pessimistic about economic future now than when recession was in full swing
2011-12-02
Info/Broken? - Mass. home buyers party like it's 1999 - Yes, that's where real prices are now
Discuss - Mass. home buyers party like it's 1999 - Yes, that's where real prices are now
Mass. home buyers party like it's 1999 - Yes, that's where real prices are now
2011-12-02
Info/Broken? - GMAC to stop some mortgage loans in Massachusetts stating "recent developments have led mortgage lending in Massachusetts to no longer be viable"
Discuss - GMAC to stop some mortgage loans in Massachusetts stating "recent developments have led mortgage lending in Massachusetts to no longer be viable"
GMAC to stop some mortgage loans in Massachusetts stating "recent developments have led mortgage lending in Massachusetts to no longer be viable"
2011-12-02
Info/Broken? - AG sues banks for violating foreclosure law
Discuss - AG sues banks for violating foreclosure law
AG sues banks for violating foreclosure law
2011-12-01
Info/Broken? - Fed: Greater Boston nominal median home price fell 10.5% YOY in October
Discuss - Fed: Greater Boston nominal median home price fell 10.5% YOY in October
Fed: Greater Boston nominal median home price fell 10.5% YOY in October
2011-12-01
Info/Broken? - Mass. Budget Chief: No New Taxes, But Challenging Year Ahead
Discuss - Mass. Budget Chief: No New Taxes, But Challenging Year Ahead
Mass. Budget Chief: No New Taxes, But Challenging Year Ahead
2011-12-01
Info/Broken? - Unemployment is steady in most Mass. cities and towns
Discuss - Unemployment is steady in most Mass. cities and towns
Unemployment is steady in most Mass. cities and towns
2011-12-01
Info/Broken? - Report ranks Boston the nation's top life science hub
Discuss - Report ranks Boston the nation's top life science hub
Report ranks Boston the nation's top life science hub
2011-12-01
Info/Broken? - 11 for 11 CME Case-Shiller futures fall within expectations
Discuss - 11 for 11 CME Case-Shiller futures fall within expectations
11 for 11 CME Case-Shiller futures fall within expectations

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