101 dumbest moments in business: Real estate
The year in shenanigans, skulduggery, and just plain stupidity in the world of housing.
1. Bubble Trouble, Grand Prize Winner, Dumbest Moment of 2005"If you grew up in Danvers, and you remember it as the spooky place on the hill, it might not be the right place to live." -- William McLaughlin, an executive with AvalonBay Communities, which is converting boarded-up Massachusetts mental institution Danvers State Hospital into a 497-unit complex of high-end apartments and condos. That sound you hear? Not the ghosts of mental patients, but loud hissing from the wildly inflated housing bubble, which tops our list this year with seven priceless moments of real estate insanity. First up: the nuthouse-to-yuppie-house trend currently sweeping North America, with such conversions also planned in Detroit, New York, Vancouver, and Columbia, S.C., where the centerpiece of the development is an original brick building with the word "asylum" chiseled into the facade.
10. Three weeks later, Vail's Board of Realtors announces that it's moving back in with its mom.Unable to buy office space in a community where the average home price recently headed north of $4 million, the Aspen Board of Realtors heads north too -- to Basalt, Colo., a town of 3,000 residents 20 miles away.
30. Better get your offer in quick -- rumor has it, Kate Moss is very interested.
49. The air we breathe is free? Says who?In November, New York developers William and Arthur Zeckendorf agree to pay $37 million for the air rights above a church and an 88-year-old private club. The Zeckendorfs' purchase, part of a plan to build a 35-story apartment building that would tower over its neighbors on East 60th Street, comes out to a whopping $430 per square foot -- two to four times the going rate for the skies above Manhattan.
67. Can't keep up with the Joneses? Heck, it's bad enough just trying to keep up with the appreciation on their dilapidated Victorians.In March the median price of a single-family detached home in the San Francisco Bay Area rises more than $1,000 per day. By month's end, it swells to $106,000 above the previous year's median -- 43 percent more than the area's estimated average household income of about $74,000.
90. See? Our plan to turn it into a bastion of American-style capitalism is working just fine."Before, in Iraq, the houses were cheap. Now the houses are expensive, but the lives are cheap." -- A real estate agent in Baghdad, to Knight Ridder reporter Matthew Schofield, about the red-hot market in the Iraqi capital, where prices have soared as much as 1,000 percent in the past three years. The increases are fueled by foreign investment, pent-up demand after Saddam Hussein's strict property regulations, and even reinvested gains from looting.
100. Bubble? What bubble? Oh ... that bubble.In May an Experian-Gallup national survey finds that 65 percent of Americans haven't heard anything about a possible "housing bubble." Another 12 percent have heard "only a little." Indeed, 70 percent expect home prices to keep rising, while only 5 percent think they'll slip. However, when the facets of a housing bubble are described to them, about 40 percent go on to say that the scenario is likely to occur in their area in the next three years. Next: 101 Dumbest Moments in Business: Full list >>
From the February 1, 2006 issue