Year in review

Democrats roared in. Filene’s slipped out.

Stocks went up. Real estate and energy prices went down, but not down enough to make many home buyers or motorists happy.

And with all the back and forth of another year in Boston business news, there was more than a whiff of scandal, too — chief executives sacked or sanctioned over sexual harassment accusations and plagiarism, and a rash of stock-options book-cooking probes.

Here’s the Globe’s take on our top 10 stories of 2006.

1. THE REAL ESTATE BUBBLE DEFLATES -- but doesn't burst. It was the Boston market's worst year since the early-1990s housing bust. Reversing a spectacular run-up that made the Hub one of the nation's most expensive housing markets, the median price last year for existing homes plunged 19.3 percent between the first and second quarters, according to Global Insight, a Lexington economics and consulting firm. That second-quarter decline was the biggest since 1991.

With the glut of suburban homes for sale nearing records, by October it took homeowners on average four months to sell a house. Boston condominium prices slipped 7 percent in the autumn quarter from a year earlier. Foreclosure filings soared as homeowners with adjustable-rate mortgages were hit with higher rates.

But prices haven't fallen enough to ease economists' warnings that exorbitant housing costs remain a huge drag on Massachusetts' economic growth. "The worst drops are over," said Larissa Duzhansky , Global Insight's economist. "Are we going to see every quarter lose? No we're not, because Boston is still a desirable market." Lingering on the market: the state's most expensive house, a $25 million, 10-acre estate in Orleans.

2. HISTORY AND HEADACHES IN HEALTHCARE. Governor Mitt Romney in April signed a first-in-the-nation effort to extend health coverage to the half-million residents who lacked insurance, shifting a $300 million state fund to buying insurance instead of reimbursing emergency rooms. But fights remain over imposing the new $295-per-employee annual fee on businesses that don't provide health insurance for their workers and the July 1, 2007 deadline for solvent individuals to buy coverage.

Nationally, the rollout of the new Medicare prescription drug plan known as Part D was just as messy as critics predicted. Choice-overwhelmed seniors swamped government help lines and complained about a $3,000 coverage gap nicknamed "the doughnut hole." Still more than 22 million Americans finally got some Medicare drug coverage, and opinion polls show subscribers are pleased with the drug coverage.

3. DEMOCRATS TRIUMPH FROM BEACON HILL TO CAPITOL HILL. What it actually means for business and the economy will be 2007's story. But Democrats earned the right to some chest-thumping after Deval L. Patrick was elected to be the first Democratic Massachusetts governor in 16 years, and his party also gained majorities in the US House and Senate.

Patrick's election is good news for wind power and stem-cell research, to name two issues. And Democratic congressmen Barney Frank and Edward Markey will become major players in the national banking and Internet agendas.

4. BOSTON SCIENTIFIC CORP.'S MERGER AND STENT WOES. After a bidding war with Johnson & Johnson, the Natick company won control of Guidant Corp. with a $27 billion bid, putting the state's biggest life-sciences company in the global spotlight. But investors fear BSX badly overpaid -- and are anxious about festering health-danger questions about its marquee product, stents used to keep arteries open after heart surgery -- and whacked 30 percent off BSX shares over the year.

5. FAREWELL TO FILENE'S. A Boston icon since 1890, it vanished when the parent company of Macy's, Federated Department Stores Inc., completed its $17 billion takeover of regional chains across the country. In Massachusetts, seven stores closed and 1,500 jobs were cut at Filene's corporate headquarters and department stores around the state. New York investors who bought the Downtown Crossing Filene's plan a mixed-use development there.

6. NEWSPAPERS IN TURMOIL . . . The demise of Filene's -- and its pages of lingerie and cookware ads -- played more than a small role in a big 2006 story, the continuing struggle of newspapers to keep advertisers and readers in the face of Internet competition. Investors forced a sale and breakup of the Knight Ridder Inc. newspaper chain, and the publisher of the Los Angeles Times and Chicago Tribune put itself up for sale. Former General Electric chief executive Jack Welch , local ad man Jack Connors , and Boston concessionaire Joe O'Donnell pressed The New York Times Co. -- without success -- to sell them The Boston Globe. Boston Herald publisher Patrick J. Purcell sold off his suburban newspapers to meet an investor cash call.

7. . . . WHILE MEDIA "CONVERGENCE" ROILS. Media companies' turf wars intensified in 2006. Phone giant Verizon Communications Inc. began taking on cable television nationwide, and is poised to offer FiOS TV to some 200,000 Massachusetts homes by year's end. Comcast Corp. fought back with a new wireless phone offering. And the promise of Internet-based TV's gathering challenge to conventional broadcast was underlined by Google.com's whopping $1.65 billion takeover bid for YouTube.com, a low-budget online video start-up that's never made money.

8. STOCK MARKET HIGH AND HIJINKS. The Dow Jones industrial average crossed 12,000 for the first time in October, driving a strong year for financial services profits and job growth, from Boston's Financial District to back offices on Interstate 495. The parent company of troubled Boston mutual fund firm Putnam Investments took advantage of the favorable climate to put Putnam up for sale.

But throughout the year, news kept popping about companies -- including several Massachusetts high-tech and telecom firms -- facing federal investigations over charges they back-dated or manipulated the timing of stock options grants to inflate profits for their top executives or directors. Nationally, by last week 195 companies had revealed they had internal or federal probes underway and more than 50 top executies or directors had resigned.

Meanwhile, Fidelity Investments agreed last week to pay $42 million to its mutual funds after an internal report found the Boston financial-services giant failed to adequately supervise traders who accept gifts and other benefits from brokers.

9. THE PRICE OF GAS. After cresting at $3.06 in early August, average gasoline prices in Massachusetts dipped to $2.16 by Election Day before starting to edge up again. The global drop in oil and natural gas prices rippled throughout the economy, in particular helping struggling airlines -- which pay more for jet fuel than anything other than salaries -- fight back to profitability. But it didn't help Massachusetts utility customers, who faced autumn increases in electricity and natural gas rates that utilities blamed on a hangover from long-term contracts signed in 2005 after Hurricane Katrina sent prices soaring.

10. CEOS BEHAVING BADLY. Brian Keane , head of Charlestown tech-services business Keane Inc., resigned in May amid sexual harassment allegations by a female subordinate. So too that month did Caritas Christi Health Care chief Robert M. Haddad after more than a dozen women accused him of out-of-line hugs, kisses, leering, and late-night phone calls.

And William H. Swanson, Raytheon Co. chairman and chief executive, agreed to a salary freeze and a one-fifth cut in new stock option grants, a $1 million total bite, after a California blogger revealed that Swanson had massively plagiarized from a 1944 book in his "Swanson's Unwritten Rules of Management," a 2004 booklet Raytheon printed 300,000 copies of.

"You should understand; I'm not a writer," Swanson said in an interview. "It's not my profession, and I don't know how to do it."

Jenn Abelson, Kimberly Blanton, Robert Gavin, Diedtra Henderson, Stephen Heuser, Carolyn Y. Johnson, Ross Kerber, Jeffrey Krasner, Thomas C. Palmer Jr., Sacha Pfeiffer, Christopher Rowland, and Robert Weisman of the Globe staff also contributed to this report. Peter J. Howe can be reached at howe@globe.com.