Square inch of Indiana land is sold for £1,000 on eBay

Anyone who doubts that property prices are out of whack in the US should take a close look - a magnifying glass would help - at rural Owen County in Indiana, where a developer from Michigan has just spent $1,752 (£1,012) on a pleasant tract of land a pebble's throw from a wooded lake.

But to understand that this is hardly a steal, know that the parcel in question is on the modest side. To be precise, it measures .0000000159 of an acre, better known as a square inch. Do the sums and you realise the buyer, Andy Gutman, paid high. It works out at about $7bn an acre.

Precisely, what Mr Gutman, who is the chief financial officer for a development firm called NAI Farbman, just outside Detroit, intends doing with his postage stamp-sized plot is not clear to anyone. He could build a house on it, assuming it was for a pet ant. Or memorialise it with a lollipop stick.

Like so many other bizarre purchases of our cyber-times, Mr Gutman bought the land on eBay, the online auction site. It had been posted for sale by officials of Owen County. It wasn't just for gimmick value; the minimum asking price of $1,500 was calculated to cover back-taxes and fees owed on the plot.

The story of the miniature estate goes back to the 1960s, when a local homeowners' association decreed that access to Cataract Lake, about 60 miles southwest of Indianapolis, would be limited to those who owned land on its shores. A local man with 1.12 acres of lakeside property deeded the square inch to his relatives so that they could continue swimming in its cool waters and fishing for the tasty bluegill.

Because of overdue mortgage payments, a local bank foreclosed on the larger property recently and successfully sold it on the regular real estate market. However, the bank was left with the diminutive square-inch on its hands, on which the $1,500 of mortgage payments and county taxes were still outstanding.

An attempt to sell the muddy speck in a tax sale last month drew no bidders, disappointing local officials. "They had no vision, no sense of the true value of this gem," mutters Richard Lorenz, Owen County's attorney. Though it wasn't much, the county could have done with the cash.

But when a local paper reported the strange limbo of possibly the smallest piece of property in the world, media interest took off. CNN took up the story as did papers in Europe. That's when people started to come forward offering to close the deal.

Some of the prospective buyers seemed more appealing than others. A dot.com company suggested taking possession of the land in exchange for donating medical supplies to the local hospital for a year. Then there was the DJ from Israel who wanted the plot in order to set up the official state of Palestine.

It was then that Mr Lorenz hit on the idea of putting it on eBay and in the end it was Mr Gutman who made the highest bid. Among those who lost out was John Jadamec of Japan. Disappointed with the auction's outcome, he said he had been planning to carry the square inch of soil around in his pocket.

All's well that end's well, however, especially for the bank and the Owen County treasurer. But for Mr Gutman one small problem remains. Nobody, it seems, knows just where exactly on the larger plot the square-inch is situated. He could pay the $500 for a land survey, but for now he prefers to keep his costs where they are. "We have to rely on the physical description in the deeds and make a best-case guess," conceded Peter Dorsey, the director of the county's mapping department.