Friday, August 31, 2007

How big is this bubble? Very big - Boston

The good people of Boston have been through housing bubbles before. In the mid-1980s, house prices increased by around 50 percent in four years. However, house prices declined in real terms in 1990 and overall prices didn't recover for all most a decade.

The current bubble is in a completely different league. Prices have gone up for 9 straight years. During that period, prices have more than doubled. Simply put, for 9 years housing prices in Boston have been out of control.

My grateful thanks to Mike, who suggested that I run this chart. Mike runs a great blog down in South Florida. I recommend that you check it out and learn something about the crazy things that are happening down there.

Further explanation of the Chart - The chart plots both housing bubbles across the same time span. The horizontal axis indicates years since the beginning of the bubble. The vertical axis is the OFHEO house price index. Prices at the beginning of each bubble equal 100 and therefore compare the relative magnitudes of each bubble.

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