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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 Patrick Killelea's housing crash blog. It is a fantastic resource providing ample quantitative background into the housing bubble.
  • 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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2012-01-31
Info/Broken? - Report: Mass. foreclosures fell 30% in 2011
Discuss - Report: Mass. foreclosures fell 30% in 2011
Report: Mass. foreclosures fell 30% in 2011
2012-01-31
Info/Broken? - Dozens push for mortgage writedowns outside Bank of America
Discuss - Dozens push for mortgage writedowns outside Bank of America
Dozens push for mortgage writedowns outside Bank of America
2012-01-30
Info/Broken? - Building activity rebounds in Bay State
Discuss - Building activity rebounds in Bay State
Building activity rebounds in Bay State
2012-01-27
Info/Broken? - Boston Bubble Wrap: The Real Story for MA - Dec 2011
Discuss - Boston Bubble Wrap: The Real Story for MA - Dec 2011
Boston Bubble Wrap: The Real Story for MA - Dec 2011
2012-01-26
Info/Broken? - Romney talks housing, ends up defending banks
Discuss - Romney talks housing, ends up defending banks
Romney talks housing, ends up defending banks
2012-01-26
Info/Broken? - Obama Proposes Mortgage Bailouts, Handouts, Copouts Exactly One Paragraph After Stating "Top to Bottom: No Bailouts, No Handouts, and No Copouts"; How the Taxpayer Ripoff Works
Discuss - Obama Proposes Mortgage Bailouts, Handouts, Copouts Exactly One Paragraph After Stating "Top to Bottom: No Bailouts, No Handouts, and No Copouts"; How the Taxpayer Ripoff Works
Obama Proposes Mortgage Bailouts, Handouts, Copouts Exactly One Paragraph After Stating "Top to Bottom: No Bailouts, No Handouts, and No Copouts"; How the Taxpayer Ripoff Works
2012-01-26
Info/Broken? - In tight local market, no relief for renters, apartment hunters
Discuss - In tight local market, no relief for renters, apartment hunters
In tight local market, no relief for renters, apartment hunters
2012-01-26
Info/Broken? - Borrower better accept the consequences
Discuss - Borrower better accept the consequences
Borrower better accept the consequences
2012-01-25
Info/Broken? - Massachusetts home sales in 2011 at lowest level since 1990
Discuss - Massachusetts home sales in 2011 at lowest level since 1990
Massachusetts home sales in 2011 at lowest level since 1990
2012-01-24
Info/Broken? - MAR and Warren Group both report ~4% YOY nominal decline in SFH median in December, drop in volume
Discuss - MAR and Warren Group both report ~4% YOY nominal decline in SFH median in December, drop in volume
MAR and Warren Group both report ~4% YOY nominal decline in SFH median in December, drop in volume
2012-01-23
Info/Broken? - Massachusetts Taxpayers Foundation says unfunded retiree health care liability is growing for towns and cities
Discuss - Massachusetts Taxpayers Foundation says unfunded retiree health care liability is growing for towns and cities
Massachusetts Taxpayers Foundation says unfunded retiree health care liability is growing for towns and cities
2012-01-19
Info/Broken? - O'Brien calls for criminal action against the Big Banks; says they acted like "criminal enterprise" (PDF)
Discuss - O'Brien calls for criminal action against the Big Banks; says they acted like "criminal enterprise" (PDF)
O'Brien calls for criminal action against the Big Banks; says they acted like "criminal enterprise" (PDF)
2012-01-19
Info/Broken? - Mass. jobless rate dips to 6.8% in Dec., but 6,200 jobs cut
Discuss - Mass. jobless rate dips to 6.8% in Dec., but 6,200 jobs cut
Mass. jobless rate dips to 6.8% in Dec., but 6,200 jobs cut
2012-01-19
Info/Broken? - Mortgage settlement between banks, states "close"
Discuss - Mortgage settlement between banks, states "close"
Mortgage settlement between banks, states "close"
2012-01-18
Info/Broken? - Mortgage woes top list of complaints to AG Coakley
Discuss - Mortgage woes top list of complaints to AG Coakley
Mortgage woes top list of complaints to AG Coakley
2012-01-18
Info/Broken? - Massachusetts housing market is slowly stabilizing
Discuss - Massachusetts housing market is slowly stabilizing
Massachusetts housing market is slowly stabilizing
2012-01-16
Info/Broken? - Mass. lawmakers hear pushback on foreclosure protection bill
Discuss - Mass. lawmakers hear pushback on foreclosure protection bill
Mass. lawmakers hear pushback on foreclosure protection bill
2012-01-13
Info/Broken? - Prof. Glaeser: Fed's housing ideas won't fix market
Discuss - Prof. Glaeser: Fed's housing ideas won't fix market
Prof. Glaeser: Fed's housing ideas won't fix market
2012-01-13
Info/Broken? - GOP cribs: Where the candidates live
Discuss - GOP cribs: Where the candidates live
GOP cribs: Where the candidates live
2012-01-11
Info/Broken? - Survey: Mass. employers a bit more confident, but less so than a year ago
Discuss - Survey: Mass. employers a bit more confident, but less so than a year ago
Survey: Mass. employers a bit more confident, but less so than a year ago
2012-01-10
Info/Broken? - MA SFH Pending Home Sales up 11.7% YOY in December
Discuss - MA SFH Pending Home Sales up 11.7% YOY in December
MA SFH Pending Home Sales up 11.7% YOY in December
2012-01-09
Info/Broken? - Boston Fed chief urges Obama administration to make housing even less affordable
Discuss - Boston Fed chief urges Obama administration to make housing even less affordable
Boston Fed chief urges Obama administration to make housing even less affordable
2012-01-02
Info/Broken? - 2012 forecast: Economists see continued slow growth for MA
Discuss - 2012 forecast: Economists see continued slow growth for MA
2012 forecast: Economists see continued slow growth for MA
2012-01-02
Info/Broken? - Report says wage gap in Mass. is widening
Discuss - Report says wage gap in Mass. is widening
Report says wage gap in Mass. is widening

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