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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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2013-01-31
Info/Broken? - Report: MA Cost of Business 22% Above Natl. Average
Discuss - Report: MA Cost of Business 22% Above Natl. Average
Report: MA Cost of Business 22% Above Natl. Average
2013-01-30
Info/Broken? - Bay State is 48th in home affordability, earns grade of "F" in housing and homeownership; Many Mass. residents have little saved up
Discuss - Bay State is 48th in home affordability, earns grade of "F" in housing and homeownership; Many Mass. residents have little saved up
Bay State is 48th in home affordability, earns grade of "F" in housing and homeownership; Many Mass. residents have little saved up
2013-01-30
Info/Broken? - Middlesex North Registry of Deeds: Big jump in foreclosures
Discuss - Middlesex North Registry of Deeds: Big jump in foreclosures
Middlesex North Registry of Deeds: Big jump in foreclosures
2013-01-30
Info/Broken? - Spending cuts create an air of uncertainty for "critical" parts of Mass. economy
Discuss - Spending cuts create an air of uncertainty for "critical" parts of Mass. economy
Spending cuts create an air of uncertainty for "critical" parts of Mass. economy
2013-01-29
Info/Broken? - Massachusetts foreclosures drop 13% in 2012
Discuss - Massachusetts foreclosures drop 13% in 2012
Massachusetts foreclosures drop 13% in 2012
2013-01-28
Info/Broken? - MA SFH Dec 2012 vs Dec 2011 - Warren Group: nominal median up 12%, volume up 18%; MAR: nominal median up 10%, volume up 13%
Discuss - MA SFH Dec 2012 vs Dec 2011 - Warren Group: nominal median up 12%, volume up 18%; MAR: nominal median up 10%, volume up 13%
MA SFH Dec 2012 vs Dec 2011 - Warren Group: nominal median up 12%, volume up 18%; MAR: nominal median up 10%, volume up 13%
2013-01-27
Info/Broken? - Chris Whalen: "The Fed and the Treasury are the biggest source of systemic risks today... creating another bubble potentially in housing and perhaps also in equities"
Discuss - Chris Whalen: "The Fed and the Treasury are the biggest source of systemic risks today... creating another bubble potentially in housing and perhaps also in equities"
Chris Whalen: "The Fed and the Treasury are the biggest source of systemic risks today... creating another bubble potentially in housing and perhaps also in equities"
2013-01-25
Info/Broken? - Shiller: current housing market "very abnormal," high uncertainty
Discuss - Shiller: current housing market "very abnormal," high uncertainty
Shiller: current housing market "very abnormal," high uncertainty
2013-01-24
Info/Broken? - Warren Group: Massachusetts housing market "turned the corner" last year
Discuss - Warren Group: Massachusetts housing market "turned the corner" last year
Warren Group: Massachusetts housing market "turned the corner" last year
2013-01-23
Info/Broken? - Patrick submits $34.8B budget plan, proposes income tax increase to 6.25%
Discuss - Patrick submits $34.8B budget plan, proposes income tax increase to 6.25%
Patrick submits $34.8B budget plan, proposes income tax increase to 6.25%
2013-01-22
Info/Broken? - Massachusetts bankruptcies drop 18% in 2012
Discuss - Massachusetts bankruptcies drop 18% in 2012
Massachusetts bankruptcies drop 18% in 2012
2013-01-18
Info/Broken? - Experts say higher income levy could kill 19,500 Mass. jobs
Discuss - Experts say higher income levy could kill 19,500 Mass. jobs
Experts say higher income levy could kill 19,500 Mass. jobs
2013-01-17
Info/Broken? - Mass. adds jobs but unemployment rate rises
Discuss - Mass. adds jobs but unemployment rate rises
Mass. adds jobs but unemployment rate rises
2013-01-16
Info/Broken? - Church may be sacrificed - Residents fight St. Augustine condo project
Discuss - Church may be sacrificed - Residents fight St. Augustine condo project
Church may be sacrificed - Residents fight St. Augustine condo project
2013-01-15
Info/Broken? - Mass. taxes may rise to pay for transportation system
Discuss - Mass. taxes may rise to pay for transportation system
Mass. taxes may rise to pay for transportation system
2013-01-12
Info/Broken? - Brockton, Massachusetts, Considers Eminent Domain To Address Foreclosures
Discuss - Brockton, Massachusetts, Considers Eminent Domain To Address Foreclosures
Brockton, Massachusetts, Considers Eminent Domain To Address Foreclosures
2013-01-11
Info/Broken? - MassHousing enabled record debt in 2012, shattering previous record by 52%; Record debt touted as "good news"
Discuss - MassHousing enabled record debt in 2012, shattering previous record by 52%; Record debt touted as "good news"
MassHousing enabled record debt in 2012, shattering previous record by 52%; Record debt touted as "good news"
2013-01-09
Info/Broken? - MA pending home sales up 16% YOY in December
Discuss - MA pending home sales up 16% YOY in December
MA pending home sales up 16% YOY in December
2013-01-08
Info/Broken? - Massachusetts business confidence improves slightly
Discuss - Massachusetts business confidence improves slightly
Massachusetts business confidence improves slightly
2013-01-07
Info/Broken? - Boston's taxable value up 4.2% for FY13
Discuss - Boston's taxable value up 4.2% for FY13
Boston's taxable value up 4.2% for FY13
2013-01-07
Info/Broken? - Bank of America Fined for Refusing Lesbian Couple Loan
Discuss - Bank of America Fined for Refusing Lesbian Couple Loan
Bank of America Fined for Refusing Lesbian Couple Loan
2013-01-06
Info/Broken? - Zillow: Boston homeowners increased equity by $16B in 2012
Discuss - Zillow: Boston homeowners increased equity by $16B in 2012
Zillow: Boston homeowners increased equity by $16B in 2012
2013-01-04
Info/Broken? - US jobless rate holds at 7.8%; billions at stake for MA economy
Discuss - US jobless rate holds at 7.8%; billions at stake for MA economy
US jobless rate holds at 7.8%; billions at stake for MA economy
2013-01-04
Info/Broken? - Big uptick in high-priced housing sales
Discuss - Big uptick in high-priced housing sales
Big uptick in high-priced housing sales
2013-01-02
Info/Broken? - Massachusetts foreclosure activity drops in November
Discuss - Massachusetts foreclosure activity drops in November
Massachusetts foreclosure activity drops in November

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