Last week the Boston Globe’s real estate blog called Boston Real Estate Now published a post called, “The Next Housing Bubble?” This small piece is jam-packed full of nonsense, misleading information and irresponsible journalism.
The first problem with this post is the title, “The Next Housing Bubble?” Bubbles are a conclusion made in hindsight, and make no sense in predictions as we crawl our way out of a slump. This whole post was based on JP Morgan’s prediction of a 12% jump in home prices over the next four years as reported in Housing Wire. A 12% increase in home prices over four years hardly makes for a bubble. So why call it that?
Next, the article continues to claim the Boston area as a “one of the most bubble prone metro markets in the country.” Although I agree with the assertion of lack of inventory and new construction, lack of housing is not what creates real estate bubbles. Shortages and scarcity lead to organic price increases, not bubbles. Bubbles are full of air – not continuous real demand!
Of course the demand for housing has its ebbs and flows. Prices went down in Boston but most of our neighborhoods did not suffer the economic blow of Cities where housing and new construction is abundant, like Miami and Phoenix. Those cities had new construction condo buildings with less than 30% occupancy and price falling 50-60%.
Another quote that is the mark of irresponsible journalism, “Of course, a 12 percent jump nationally translates into a 20 percent jump in Greater Boston.” If this is true, please provide historical evidence of Boston’s real estate outpacing national real estate markets. It didn’t outpace the last “bubble” (if you believe we had one).
My next bone to pick is with the value of data the Globe uses. The Globe’s purpose, I thought, is to inform the local readers. There is no way national real estate headlines inform the local buyer or seller or provides a basis for decision making. Furthermore, the Globe’s stretching this national prediction to apply to Boston’s market adds to confusion and nonsense.
National real estate numbers, regardless of integrity of source, are totally and completely meaningless to you, dear friend. Real estate only matters on the local levels – your street, your neighborhood, maybe your town. If you want to learn about your local Boston area market, Boston Real Estate Now is proving to be an unreliable source.
Lastly, the author discounts the only piece of valuable information. “The bank (JP Morgan) predicts 2.5 million problem loans will get bailed out this year through foreclosure rescue programs – sounds like wishful Wall Street thinking to me.”
The big bank is in a pretty good position to report accurately if they believe it is likely they are to have a deal coming together with the government. This is the only interesting information I find in the report. The Globe calling it wishful thinking shows a lack of thoughtfulness going into the post.
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