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A True Housing Bubble

Posted by: Chris Palmeri on November 30, 2005


You have to love it when companies have a sense of humor about their business and that certainly seems to be the case with two big Florida developers, the Related Companies and Dacra. They were both sponsors of a $35,000 art project called the Fabulous Floating Inflatable Villa. The 30 foot high, balloon-like replica of a 16th century Italian villa is the work of Venezuelan-born architect Luis Pons, who told the Miami Herald that he got the idea because “we are surrounded by so many inflatable things—an inflatable culture, an inflatable real estate market—and I relate that to an inflatable house.” The villa was formally unveiled Tuesday outside Dacra’s Aqua development, a complex of condos and townhomes on a private island near Miami Beach that’s garnered tons of laudatory press for its striking design. Related, a division of the well-known New York firm, has some 10,000 residential units under development in Florida, including City Place, a $600 million mixed-use project in West Palm Beach. The Wolfsonian design museum at Florida International University also sponsored. The inflatable house will be moored in front of Aqua until December 25. It’s there as part of Art Basel, a giant contemporary art festival that kicked off this week. Hopefully everyone attending will get the joke.

Reader Comments


December 16, 2005 12:05 AM

How can a person possibly afford housing in some cities when the cost is so high? Yes taking out a wonderful mortgage for 2 lifetimes to come, and then some!!! Of course one can forget it if one cannot find a job, position or reference that dosent pay much...or "if" one happens to fall into the catagory of an overqualified Triple Ph.d in a catagory not Politicaly Correct (but has the harness of knowledge perhaps moving to someplace like India where one can live and buy a home...and boost their economy, falling sadly on the floor saying,
"Well I could have just taken it all off my resume...hid it under the basement" (of the home I bought)...and with pride to get a job...(and decent home at a FAIR cost)working, working 10 hours a day to possibly make and not skip a payment at a nice and lovely 10 dollars an say...well to say ...Whats happening folks! The BA businessmen are buying all the homes and cranking the price up!! So that no one can possibly afford them...100K to 1mil. Of course its UP-UP and away! The truth not becoming in real estate that most of these homes are made of sticks...and not worth the cardboard...yet we suffer for their leaky roofs! Saying Yes we have pride in ownership, or rather pride in proof of burden of that! Taxes will sink the best ship, and my gosh if they only got sensible....The Feds and clamped down on the Gross...Gross Hyper Inflations of these slave built- south of the border engineered cardboard huts that ridge the mountains and valleys of urbania costing us 2000 a month to buy on interest only loans! Oh my gosh...did I tell the Truth!!! When the bubble bursts...will it make a popping noise or simply retire the realtors to Burmuda in Style. Hoping the Federal Tax department takes note of these Hyper Inflators and make a Forced Bubble Burst!!!! The loss to some will be the gain of a home to the people who really need homes (not mobile tombs). That way at least we can come to some sensible housing here without considering options of shipping ourselves out. The economy is absolutely bad now, and rich people do not want us to say anything that is uncouth! Especially hoping that a Bubble Does Burst!!!! For the good of the families of the Future!
A decent $80,000 home is enough to pay on for for the rest of ones life...and yes for most of some people!!!


December 16, 2005 1:18 AM

Without question the most undervalued housing market in the nation and soon to explode is Pittsburgh , PA!!!!!!!!!!!! Why Pittsburgh??? This city has under gone a transformation that is mind boggling . With a skyline and a vista from Mt. Washington and The West End Overlook that is absoloutely breathtaking, this city is attracting worldwide attention. The foundation has been in place for decades some of the best universities and Colleges in the world and some of the worlds greatest corporate citizens headquartered here. Another undervalued asset is Pittsburgh International a world class airport which is about to grow significantly with its land space and uncongested airspace. Pittsburgh is no longer "America's Best Kept Secret" it is a city that is about to come into its own. Investors , Corporate CEO's if you are not seriously looking at Pittsburgh you are missing the boat.


December 19, 2005 4:04 PM

it's true that seashore (vacation) real estate market is treated or considered different than tradional suburban or city real estate?


December 30, 2005 12:23 AM

Why doesn't anyone talk about Kentucky Real-estate? What is the future real-estate market going to be like here? In the Lexington area and surrounding county's, it has been extremely hot. Will that continue. Thinking about investing in 2006 but not sure.


January 10, 2006 8:10 AM

Does anyone have any information on independent and dependent variables for interest only loans? Web addresses etc? I am doing a research paper on the economic impact of interest only loans and need to determine some baseline data using these two variables.

Thank you.


January 10, 2006 4:00 PM

Not sure what variables you are looking for Joe, but check out Freddie Mac for rate type of info or for further information.

Tom Hartshorn

March 23, 2006 5:23 PM

Is it fraud that reveals stupidity, or is it stupidity that breeds fraud. Either way the housing market in this country is not only a bubble, it's a joke. First of all the house is built of particle board, they don't even use plywood. You pay $11,000 closing cost. Crap, I remember when you could buy a great house for $11,000. Then you pay $1,500 to $2,000 per month to live there. God help you if you get sick or hurt and can't work! Or even worse, lose your job and get even one month behind when your payment is $2,000. What's wrong with this picture!! HellllllllllllllOoOOOOO!!! These inflated values I mention are giant profits going into someones pocket!! Is it yours?? It isn't mine!
Until the PEOPLE in this country get off their dead #$%^& and demand what they they will accept and what they won't, then we will ALL suffer these types of daily catastrophies. Crap, you can't even get people to vote, which is where the problems starts!!!
If every American will go and vote on the next election, and ALL of us vote down the line for the libertarian or another party other than the normal Demos and Republicans, you will get their ATTENTION!! As long as you always do what you have always done, you will always get what you have always gotten!!!
Houses costing an average $200,000 = Fraud!
Closing cost = $3,000 to $12,000 =Fraud
Realtor fee on home costing $200,000 = 5 to 8% Fraud
Credit scored Homeowner Insurance Rates = Fraud ,=When have you seen a hurricane dodge a house because the occupant's credit score was 800? If I have bad to weak credit, I am paying a higher rate than someone with a high score = FRAUD!!
And finally, after all of the above, just make sure you don't have anything fixed at your new home as you will have to sell your first born to pay the bill.


December 18, 2006 11:06 AM

A typical house in SF costs about $800,000. In Arizona the same cardboard box will cost about $300,000. I will personally not pay more than $150,000 for that same box today, where ever it might be - California, Arizona, the moon for that matter I dont care. The rule to buying a house is that one should be able to fully own the house singly with ones salary in about 1.5 years, or jointly with spouse in about 1 year with the 1 years salary. This is becuase the value of an average home should be priced based on prevailing salaries..period. Otherwise it is fraud. If one cannot out right own his/her own house with ones given salary within a 2 year max. then things will certainly get out of control and spiral downwards towards foreclosure, triggered by personal loss (of job etc) or externally by the economy (inflation etc). Based on the above rule, home prices in the US are totally fraudulant and I would personally rather live in a tent in the Sierra Nevada or tent in the open Sonoran desert than by a cardboard box in the USA that they lovably like to call your HOME!


June 17, 2007 2:46 PM

I agree with the sentiment regarding Kentucky Real Estate. I feel that its posed to become one of the new hot spots. It didn't suffer the big downswings in real estate values that so many other markets have endured. Besides, there is a lot of national and even international events to attract interest like the Kentucky Horse Park which hosts the Rolex 3 Day Equestrian Event. The Rolex Kentucky 3 Day Event is ALWAYS year in, year out one of the most impressive horse shows in the country. I'm really looking forward to the 2010 FEI World Equestrian Games that is coming for the FIRST TIME to the United States. I can't wait to see how riders from across the world show their skills.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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