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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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2012-02-28
Info/Broken? - MA SFH Jan 2012 vs Jan 2011 - MAR: nominal median down 5%; Warren Group: nominal median down 4%; Volume up 3-4%
Discuss - MA SFH Jan 2012 vs Jan 2011 - MAR: nominal median down 5%; Warren Group: nominal median down 4%; Volume up 3-4%
MA SFH Jan 2012 vs Jan 2011 - MAR: nominal median down 5%; Warren Group: nominal median down 4%; Volume up 3-4%
2012-02-27
Info/Broken? - Housing in Boston Costs Too Much, and That's Bad for Business
Discuss - Housing in Boston Costs Too Much, and That's Bad for Business
Housing in Boston Costs Too Much, and That's Bad for Business
2012-02-27
Info/Broken? - Empty nesters staying put and expanding the home front
Discuss - Empty nesters staying put and expanding the home front
Empty nesters staying put and expanding the home front
2012-02-27
Info/Broken? - With inventory lower, properties sell faster
Discuss - With inventory lower, properties sell faster
With inventory lower, properties sell faster
2012-02-24
Info/Broken? - Lower home prices provide no relief in Bay State
Discuss - Lower home prices provide no relief in Bay State
Lower home prices provide no relief in Bay State
2012-02-23
Info/Broken? - Mass. couple pleads not guilty to housing fraud
Discuss - Mass. couple pleads not guilty to housing fraud
Mass. couple pleads not guilty to housing fraud
2012-02-21
Info/Broken? - Saving the foreclosed - and profiting
Discuss - Saving the foreclosed - and profiting
Saving the foreclosed - and profiting
2012-02-21
Info/Broken? - Massachusetts Home Seizures Threatened in Loan Case
Discuss - Massachusetts Home Seizures Threatened in Loan Case
Massachusetts Home Seizures Threatened in Loan Case
2012-02-20
Info/Broken? - Who loses in foreclosure settlement?
Discuss - Who loses in foreclosure settlement?
Who loses in foreclosure settlement?
2012-02-15
Info/Broken? - Home of the housing bust - Central Mass. towns reel; no recovery in sight
Discuss - Home of the housing bust - Central Mass. towns reel; no recovery in sight
Home of the housing bust - Central Mass. towns reel; no recovery in sight
2012-02-14
Info/Broken? - Coldwell Banker Pays Cambridge Homeowners $872,000 Over Deceptive Condominium Sale
Discuss - Coldwell Banker Pays Cambridge Homeowners $872,000 Over Deceptive Condominium Sale
Coldwell Banker Pays Cambridge Homeowners $872,000 Over Deceptive Condominium Sale
2012-02-13
Info/Broken? - With settlement finished, Coakley turns to Freddie Mac and Fannie Mae
Discuss - With settlement finished, Coakley turns to Freddie Mac and Fannie Mae
With settlement finished, Coakley turns to Freddie Mac and Fannie Mae
2012-02-12
Info/Broken? - More Mass. residents lack rainy-day funds - 26% couldn't survive 3 months without job; average credit card debt tops $12G
Discuss - More Mass. residents lack rainy-day funds - 26% couldn't survive 3 months without job; average credit card debt tops $12G
More Mass. residents lack rainy-day funds - 26% couldn't survive 3 months without job; average credit card debt tops $12G
2012-02-12
Info/Broken? - Hub housing activists not satisfied with $25B deal
Discuss - Hub housing activists not satisfied with $25B deal
Hub housing activists not satisfied with $25B deal
2012-02-09
Info/Broken? - Massachusetts Part Of $25 Billion Mortgage Settlement
Discuss - Massachusetts Part Of $25 Billion Mortgage Settlement
Massachusetts Part Of $25 Billion Mortgage Settlement
2012-02-09
Info/Broken? - Boston Fed: Lack of Mobility Not Holding Back Employment
Discuss - Boston Fed: Lack of Mobility Not Holding Back Employment
Boston Fed: Lack of Mobility Not Holding Back Employment
2012-02-08
Info/Broken? - US senator seeks probe of Mass. housing authority
Discuss - US senator seeks probe of Mass. housing authority
US senator seeks probe of Mass. housing authority
2012-02-07
Info/Broken? - Job growth projection for 2020 favorable for Massachusetts
Discuss - Job growth projection for 2020 favorable for Massachusetts
Job growth projection for 2020 favorable for Massachusetts
2012-02-07
Info/Broken? - Mass. congressmen urge bailout for homeowners
Discuss - Mass. congressmen urge bailout for homeowners
Mass. congressmen urge bailout for homeowners
2012-02-06
Info/Broken? - Report: Massachusetts, Nevada Would Have to Give Up Foreclosure Fraud Suits to Join Deal
Discuss - Report: Massachusetts, Nevada Would Have to Give Up Foreclosure Fraud Suits to Join Deal
Report: Massachusetts, Nevada Would Have to Give Up Foreclosure Fraud Suits to Join Deal
2012-02-02
Info/Broken? - Brookline real estate mogul ordered to pay fine for illegal campaign contributions
Discuss - Brookline real estate mogul ordered to pay fine for illegal campaign contributions
Brookline real estate mogul ordered to pay fine for illegal campaign contributions
2012-02-01
Info/Broken? - Ironically, as economy improves, foreclosures may increase
Discuss - Ironically, as economy improves, foreclosures may increase
Ironically, as economy improves, foreclosures may increase
2012-02-01
Info/Broken? - Study: Licensing rule cut number of real estate agents, increased what clients paid by 17%
Discuss - Study: Licensing rule cut number of real estate agents, increased what clients paid by 17%
Study: Licensing rule cut number of real estate agents, increased what clients paid by 17%

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