What really caused New England's last housing crash, why Texas and Florida are struggling now, and why today's softer market here is a different story.
Lately the question I hear most isn't "should we buy?" or "should we sell?" It's quieter than that, and a lot more anxious: Are we headed for another crash?
I understand why people are asking. Mortgage rates are back above 7%. Freddie Mac's average 30-year rate was 7.18% in early November, up from 6.22% a year earlier. Nationally, there were 7.4% more homes for sale in October than a year before, and one in five listings had a price cut. Then come the headlines about prices falling 20% or more in Austin and Southwest Florida.
For a lot of people here, that combination brings back one memory: the early '90s.
I REMEMBER 1991
I was in high school in Western Massachusetts when the market here broke. Most of us didn't know exactly what was happening or what had caused it. We just knew something big had shifted. The carefree, high-rolling '80s were over, and you could feel it everywhere. In the cities along the Connecticut River, the blue-collar jobs that had carried families for generations were disappearing. Everyone knew someone who was hurting. So when someone tells me they're afraid of that happening again, I don't brush it off. I remember what that change felt like.
Looking back now, after years in this business, I can see what most of us couldn't see back then. And the cause matters, because the early-'90s crash didn't happen simply because prices got too high.
WHAT ACTUALLY CAUSED THE EARLY-'90s CRASH
Three things hit New England at the same time:
- The regional economy collapsed. Defense spending had peaked, the computer industry behind the "Massachusetts Miracle" was shrinking, and the October 1987 stock market crash hurt financial services. Between the end of 1988 and March 1991, Massachusetts lost 273,000 jobs, 8.7% of all employment, and unemployment hit 9.7%, according to the Federal Reserve Bank of Boston.
- The region overbuilt. The boom set off a wave of new offices, retail space, and housing. When demand dried up, the FDIC found, a glut of finished projects hit the market all at once.
- The banks were overexposed. Commercial real estate loans went from 6.5% of New England bank assets in 1982 to 14% by 1989 and 1990. When those loans went bad, banks failed across the region, including the Bank of New England.
The statewide median single-family price fell 13.8%, from a peak of $162,000 to $139,500 by February 1991, according to The Warren Group. It took until 1997 to get back to the old high.
And that 13.8% understates the damage, because it ignores inflation. In today's dollars, the peak was roughly $440,000 to $460,000, depending on whether it landed in 1988 or 1989, and the February 1991 low was about $349,000. That's a real loss of roughly 20% to 25%. In the Boston area, the Boston Fed put the inflation-adjusted decline at close to one-third. For someone who bought near the top, that was years of equity gone.
It's worth separating this from the Great Recession, because people often blur the two together. The 2008 to 2012 bust was everyone's crash: a national financial crisis that hit nearly every market in the country at once. Massachusetts actually came through it with lower unemployment than the nation, 8.1% versus 9.3% in 2009, even though home prices here fell hard and many towns took more than a decade to recover.
The early '90s was different. It was New England's crash. The rest of the country had a fairly mild recession, while this region had a collapse of its own, driven by its own economy, its own overbuilding, and its own banks. That distinction matters right now, because it's the clearest way to understand what's happening in the Sun Belt.
Notice what isn't on that list: a big run-up in prices by itself. The last five years felt enormous, with the statewide median up about 30% from May 2021 to May 2026. But Massachusetts has seen bigger runs. The median jumped 63.5% from 1999 to 2004. What turned past booms into busts here was what came next: lost jobs and too much supply.
TEXAS AND FLORIDA ARE LIVING A VERSION OF IT NOW
I lived in Texas for 25 years before coming home, so I've watched that market closely. If 1991 was New England's correction, 2026 is the Sun Belt's. What's happening there looks a lot like New England in 1989, just with a different spark: a regional boom, a regional building spree, and a regional bust, while much of the rest of the country holds steady.
During the 2020 to 2022 boom, people flooded into the Sun Belt. Florida home prices rose about 51% in that stretch, compared with about 41% nationally. Builders responded by building at enormous scale, and Texas and Florida issue more residential permits than any other states.
Then demand turned. Florida's net gain from people moving in from other states fell from about 311,000 in 2022 to about 22,500 last year. Rates rose. And thousands of new homes kept arriving, with builders cutting prices and offering rate buydowns to move them. Anyone selling an existing home nearby had to compete with that.
- Austin: Local market data puts the median price roughly 20% to 25% below its May 2022 peak.
- Florida: 15 of the 20 U.S. metros with the steepest price declines between January 2025 and January 2026 were in Florida, according to Zillow data. Punta Gorda was about 24.5% off its 2022 peak this summer. Soaring insurance costs have made things worse.
The common thread is the same one New England had in 1989: too much supply, right as demand pulled back.
SOUTHERN NEW ENGLAND IN 2026
Now run today's New England through the same test.
Jobs: Massachusetts unemployment was 4.3% in September, and the state added about 16,300 jobs over the past year, according to the state's labor department. That's not 1991.
Supply: We didn't overbuild. We barely built. From January through August 2026, Massachusetts permitted 1.35 new housing units per 1,000 residents, less than half the national rate of 2.83, according to a UNLV analysis of Census data. Connecticut ranked dead last in the country. There's no wave of empty new subdivisions in East Longmeadow, Wilbraham, or Ludlow, and no builder down the street offering a rate buydown to undercut your sale.
Prices: Yes, the market is softening, and I won't pretend otherwise. In Hampden County, Redfin reported a July median sale price of about $356,000, down roughly 1% from a year earlier and the first annual decline in more than three years. Listings were up 13%. But homes were still selling in a median of 21 days. Across the region, values are mostly holding: Massachusetts up 2.3% year over year as of September (Zillow), Rhode Island's July median up to $525,000 from $505,000, Connecticut up 5% through August.
That's a market moving from frantic back toward normal. The two biggest ingredients of 1991, a jobs collapse and a glut of new construction, simply aren't here.
WHY YOU'RE HEARING "CRASH" EVERYWHERE
If your feed feels like a countdown to disaster right now, you're not imagining it. Fear travels fast. A post that says "prices are about to collapse" gets more clicks, more shares, and more phone calls than one that says "the market is normalizing and it depends on your town." Some of that is the national news cycle, and some of it comes from inside my own industry.
I understand why it happens. Urgency gets attention. But scaring someone into a decision about the biggest asset they own isn't something I'm willing to do. You deserve the actual numbers for your market, even when they're less exciting than a headline. That's what this post is, and it's what you'll get from me every time.
FLAT IS NOT THE SAME AS FALLING
If you've owned your home for the last five or six years, you're very likely sitting on a lot of equity. A year of flat prices, or even a small dip, doesn't erase a 30% gain. It just slows it down.
Equity on paper only becomes a loss when you sell for less than you paid, or for less than your home is worth because it was positioned badly. That second one is where I see real money disappear in a market like this. When buyers have more options, they get choosier. The homes sitting right now are almost never sitting because the region is collapsing. They're sitting because they were priced for 2022 instead of for this week. Price cuts follow, lowball offers follow the price cuts, and a seller in a stable market walks away with less than they should have. The market didn't take that equity. The launch did.
THE HONEST TAKEAWAY
This isn't 1991. That's not a promise prices can't soften; they might, and I'll tell you if they do. It's a reminder that real crashes need real causes. In 1991, those causes were here. In 2026, they're in Texas and Florida, not here.
If you're thinking about selling, this market rewards accurate pricing and smart positioning from day one. If you're thinking about buying, you have more room to negotiate than you've had in years, in a region that has historically held its value.
Either way, the goal is the same: protect your equity. Your equity is your wealth, and the way you protect it isn't by reacting to headlines, or to old memories. It's by understanding what's actually happening on your street.
If you want to know where your home really stands today, let's talk.
Marcelino S. Viereck | Coldwell Banker Realty | 617.701.7183 | marcelinoviereck.com
