If you follow me on Twitter you may have seen this story last week. The short version is that someone purchased a parking space for $300,000. If you live in an area where you park for free or super cheap every day, you might see this as ridiculous.
The $300k parking space immediately became a prime candidate for my coveted Weaky Awards. As if it weren’t bad enough that even the choices for a $300,000 car are very limited, the situation that led to the current price was a classic example of an emotional purchase. Parking spaces in this area of Boston regularly go for less than half of the $300,000 this guy paid. A bidding war between residents led to the highly prized parking space. Even if you have money to burn it’s conceivable that this person grossly overpaid for the spot. Were you to treat this as an investment, it would be a long time before they make their money back if other spaces sell for half the cost. Bad move. If you wanted a spot to park your Ferrari because your wife’s Mercedes takes up the spot that came with your home, I hope you don’t mind it getting wet. This is an outdoor and uncovered parking spot.
However $300k for a parking spot seems less outrageous when you put it into context. For one thing we’re talking downtown Boston. There is a district called “Back Bay” where the wealthy live and play. The couple that sold their space are also selling their home, which is listed at $2.5 million. I looked up the address and found a few listings between $2 million and $3.5 million, but not one specifically for $2.5 million. But to give you an idea of what kind of area we’re talking about, here’s a listing in the same building for $2.7 million.
In order to understand $300k parking spots you have to think like someone that can afford a home costing more than 10x the national average. This person obviously lives in Boston, their multi-million dollar home in Back Bay is probably their primary home too, though possibly not their only home. They probably work very hard, and time is their most precious resource. Though he can afford an Aston Martin, he probably drives something more comfortable, and less expensive. This is because you don’t need 400 horsepower to navigate city streets, you need a soft suspension and something easy to park. Assuming he’s married, his wife gets the garage spot that came with the home because, well, she’s the wife. If this guy drives home from work every day in another part of Boston he might spend 30 minutes or longer finding a parking spot in this cramped neighborhood. But when a fellow resident is selling a spot right near the front door to his own building he sees an opportunity. He’d save himself valuable time and effort. In this scenario $300k for a parking space starts to sound slightly more reasonable. It’s not out of the question for me to say given that situation, I’d consider that too. I hate the act of “finding parking.”
There are other possibilities too. Maybe this guy is a lawyer and he operates out of his home. He’s got a good spot below the building, but his clients had nowhere to park. Leasing high quality office space in Boston is no matter of “bargain hunting”. $300k might pay for itself in a few years compared to what other lawyers are paying for office space and parking for their clients. An he doesn’t even need to be a lawyer, it could be anything.
Of course it always could have been a big purchasing mistake fueled by a bidding war between two angry neighbors with more money than common sense, but I just didn’t have it in me to award this guy a Weaky.
Story: Boston Globe via Autoblog
Photo: zkorb
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
