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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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2011-04-29
Info/Broken? - Boston Bubble Wrap: March 2011
Discuss - Boston Bubble Wrap: March 2011
Boston Bubble Wrap: March 2011
2011-04-29
Info/Broken? - Essex County inventory: foreclosures 5.13%, shadow 4.93%
Discuss - Essex County inventory: foreclosures 5.13%, shadow 4.93%
Essex County inventory: foreclosures 5.13%, shadow 4.93%
2011-04-29
Info/Broken? - Massachusetts homeowners beware - State raises red flags over 'foreclosure-prevention' companies
Discuss - Massachusetts homeowners beware - State raises red flags over 'foreclosure-prevention' companies
Massachusetts homeowners beware - State raises red flags over 'foreclosure-prevention' companies
2011-04-29
Info/Broken? - Tech sector lifts Mass. economy to start '11
Discuss - Tech sector lifts Mass. economy to start '11
Tech sector lifts Mass. economy to start '11
2011-04-28
Info/Broken? - MAR: MA SFH nominal median down 2.3% YOY in Mar, volume plunges 22.4%
Discuss - MAR: MA SFH nominal median down 2.3% YOY in Mar, volume plunges 22.4%
MAR: MA SFH nominal median down 2.3% YOY in Mar, volume plunges 22.4%
2011-04-28
Info/Broken? - Warren Group: MA SFH nominal median down 2.8% YOY in Mar, volume plunges 14.4%
Discuss - Warren Group: MA SFH nominal median down 2.8% YOY in Mar, volume plunges 14.4%
Warren Group: MA SFH nominal median down 2.8% YOY in Mar, volume plunges 14.4%
2011-04-27
Info/Broken? - Pricey homes don't mean better schools
Discuss - Pricey homes don't mean better schools
Pricey homes don't mean better schools
2011-04-27
Info/Broken? - S&P/Case-Shiller Boston down 1.5% YOY (nominal) in February
Discuss - S&P/Case-Shiller Boston down 1.5% YOY (nominal) in February
S&P/Case-Shiller Boston down 1.5% YOY (nominal) in February
2011-04-26
Info/Broken? - Obama May Consider Tax Credit for Renters
Discuss - Obama May Consider Tax Credit for Renters
Obama May Consider Tax Credit for Renters
2011-04-26
Info/Broken? - Cheapest Homes in 40 Years? Not Even Close...
Discuss - Cheapest Homes in 40 Years? Not Even Close...
Cheapest Homes in 40 Years? Not Even Close...
2011-04-25
Info/Broken? - Ill housing markets trump ideology for many in GOP
Discuss - Ill housing markets trump ideology for many in GOP
Ill housing markets trump ideology for many in GOP
2011-04-25
Info/Broken? - MLSPIN: MA SFH sales fall 16.2% YOY in March, nominal median down 0.7%
Discuss - MLSPIN: MA SFH sales fall 16.2% YOY in March, nominal median down 0.7%
MLSPIN: MA SFH sales fall 16.2% YOY in March, nominal median down 0.7%
2011-04-25
Info/Broken? - Foreclosures creeping up, April mortgages and deeds trending negative (Middlesex County)
Discuss - Foreclosures creeping up, April mortgages and deeds trending negative (Middlesex County)
Foreclosures creeping up, April mortgages and deeds trending negative (Middlesex County)
2011-04-22
Info/Broken? - Suffolk County inventory: foreclosures 4.77%, shadow 9.66%
Discuss - Suffolk County inventory: foreclosures 4.77%, shadow 9.66%
Suffolk County inventory: foreclosures 4.77%, shadow 9.66%
2011-04-22
Info/Broken? - Bay Staters still shellshocked by recession
Discuss - Bay Staters still shellshocked by recession
Bay Staters still shellshocked by recession
2011-04-21
Info/Broken? - Mass. Home Sellers Sweat Slow Spring Market
Discuss - Mass. Home Sellers Sweat Slow Spring Market
Mass. Home Sellers Sweat Slow Spring Market
2011-04-20
Info/Broken? - Mass. foreclosure activity falls by 60%
Discuss - Mass. foreclosure activity falls by 60%
Mass. foreclosure activity falls by 60%
2011-04-20
Info/Broken? - Radar Logic futures coming to CBOE Futures Exchange
Discuss - Radar Logic futures coming to CBOE Futures Exchange
Radar Logic futures coming to CBOE Futures Exchange
2011-04-19
Info/Broken? - MAR REALTOR(R) sentiment index down 19.78% YOY in Mar
Discuss - MAR REALTOR(R) sentiment index down 19.78% YOY in Mar
MAR REALTOR(R) sentiment index down 19.78% YOY in Mar
2011-04-18
Info/Broken? - Consumer Reports recommends max mortgage-to-income ratio of 2.0 - How many Boston buyers are prudent?
Discuss - Consumer Reports recommends max mortgage-to-income ratio of 2.0 - How many Boston buyers are prudent?
Consumer Reports recommends max mortgage-to-income ratio of 2.0 - How many Boston buyers are prudent?
2011-04-15
Info/Broken? - Middlesex County inventory: foreclosures 3.10%, shadow 8.01%
Discuss - Middlesex County inventory: foreclosures 3.10%, shadow 8.01%
Middlesex County inventory: foreclosures 3.10%, shadow 8.01%
2011-04-15
Info/Broken? - IRS paid $513M in undeserved homebuyer tax credits
Discuss - IRS paid $513M in undeserved homebuyer tax credits
IRS paid $513M in undeserved homebuyer tax credits
2011-04-14
Info/Broken? - Are foreclosures picking up?
Discuss - Are foreclosures picking up?
Are foreclosures picking up?
2011-04-13
Info/Broken? - Government orders 14 lenders to reimburse homeowners
Discuss - Government orders 14 lenders to reimburse homeowners
Government orders 14 lenders to reimburse homeowners
2011-04-13
Info/Broken? - Lender has shed 2,000 jobs in state
Discuss - Lender has shed 2,000 jobs in state
Lender has shed 2,000 jobs in state
2011-04-12
Info/Broken? - Hub mayor touts city's housing production efforts
Discuss - Hub mayor touts city's housing production efforts
Hub mayor touts city's housing production efforts
2011-04-11
Info/Broken? - 20% down on homes may soon be norm - Aim is to prevent another crisis
Discuss - 20% down on homes may soon be norm - Aim is to prevent another crisis
20% down on homes may soon be norm - Aim is to prevent another crisis
2011-04-08
Info/Broken? - The Defense Industry in Massachusetts: Current Profile and Economic Significance
Discuss - The Defense Industry in Massachusetts: Current Profile and Economic Significance
The Defense Industry in Massachusetts: Current Profile and Economic Significance
2011-04-08
Info/Broken? - Norfolk County inventory: foreclosures 3.14%, shadow 2.88%
Discuss - Norfolk County inventory: foreclosures 3.14%, shadow 2.88%
Norfolk County inventory: foreclosures 3.14%, shadow 2.88%
2011-04-08
Info/Broken? - Weaker recovery is projected for Mass. - State economy may be as vulnerable as rest of US, revised data suggest
Discuss - Weaker recovery is projected for Mass. - State economy may be as vulnerable as rest of US, revised data suggest
Weaker recovery is projected for Mass. - State economy may be as vulnerable as rest of US, revised data suggest
2011-04-08
Info/Broken? - Stretching to buy - a fact of life in Greater Boston - may soon become a lot harder
Discuss - Stretching to buy - a fact of life in Greater Boston - may soon become a lot harder
Stretching to buy - a fact of life in Greater Boston - may soon become a lot harder
2011-04-07
Info/Broken? - Banks get edge in foreclosure talks
Discuss - Banks get edge in foreclosure talks
Banks get edge in foreclosure talks
2011-04-07
Info/Broken? - Surging oil prices squeezing a still-recovering economy
Discuss - Surging oil prices squeezing a still-recovering economy
Surging oil prices squeezing a still-recovering economy
2011-04-06
Info/Broken? - Pulling state money from Bank of America
Discuss - Pulling state money from Bank of America
Pulling state money from Bank of America
2011-04-06
Info/Broken? - MAR: Massachusetts March 2011 Pending Homes Sales Down 16.33% YOY
Discuss - MAR: Massachusetts March 2011 Pending Homes Sales Down 16.33% YOY
MAR: Massachusetts March 2011 Pending Homes Sales Down 16.33% YOY
2011-04-06
Info/Broken? - Rising oil prices beginning to hurt US economy
Discuss - Rising oil prices beginning to hurt US economy
Rising oil prices beginning to hurt US economy
2011-04-05
Info/Broken? - Middlesex North Registry of Deeds, Mar 2011 vs Mar 2010: Deeds down 2%, foreclosure deeds down 42%
Discuss - Middlesex North Registry of Deeds, Mar 2011 vs Mar 2010: Deeds down 2%, foreclosure deeds down 42%
Middlesex North Registry of Deeds, Mar 2011 vs Mar 2010: Deeds down 2%, foreclosure deeds down 42%
2011-04-05
Info/Broken? - Polls reveals baby boomers' retirement fears
Discuss - Polls reveals baby boomers' retirement fears
Polls reveals baby boomers' retirement fears
2011-04-04
Info/Broken? - Fed's Low Interest Rates Crack Retirees' Nest Eggs
Discuss - Fed's Low Interest Rates Crack Retirees' Nest Eggs
Fed's Low Interest Rates Crack Retirees' Nest Eggs
2011-04-04
Info/Broken? - New Rule: Banks Exempt from New Mortgage Rules
Discuss - New Rule: Banks Exempt from New Mortgage Rules
New Rule: Banks Exempt from New Mortgage Rules
2011-04-04
Info/Broken? - Middleton Says U.S. Housing Data "Overly Optimistic" (video)
Discuss - Middleton Says U.S. Housing Data "Overly Optimistic" (video)
Middleton Says U.S. Housing Data "Overly Optimistic" (video)
2011-04-01
Info/Broken? - Boston Bubble Wrap: February 2011
Discuss - Boston Bubble Wrap: February 2011
Boston Bubble Wrap: February 2011
2011-04-01
Info/Broken? - Essex County inventory: foreclosures 6.11%, shadow 3.64%
Discuss - Essex County inventory: foreclosures 6.11%, shadow 3.64%
Essex County inventory: foreclosures 6.11%, shadow 3.64%
2011-04-01
Info/Broken? - Southborough family imprisoned in a home of horrors
Discuss - Southborough family imprisoned in a home of horrors
Southborough family imprisoned in a home of horrors

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