Is the McMansion Dead?

by Darwin on August 30, 2010

Over the past few weeks, there have been several headlines declaring the death of the McMansion.  Depending on how you define the “McMansion”, there may be some merit to the argument, but other aspects of the American desire to have things that are “big” are alive and well.  I mean, didn’t we declare the death of SUVs when oil prices hit $140/barrel only to see sales come roaring back when oil then dropped 70% the following year?

What is a McMansion?

To some, a McMansion is just a large home.  Anything exceeding 2500 square feet or so probably qualifies to them.  To others, there are some more discerning criteria.  When a developer comes in a clears a 5 acre lot and plops as many 3000 square foot homes as possible into the development leaving little room for anything other than a driveway, that’s another story.  In these cases, the lots are often .2 acre or less, there’s no yard and no trees as far as the eye can see.  Then, to others, even estate-type developments with 2+ acre lots qualify.  I guess it depends on your perspective.  You probably consider other peoples’ homes to be a McMansion, but not yours.

Is the McMansion Dead?

It probably depends on your personal perspective on what a McMansion is.  Let’s focus on the key criteria then, to answer this question.  Size.  According to CNN, the median new home size fell to 2,135 square feet in 2009 after peaking at over 2,300 earlier in the decade.  So, to me, (and I’m glad they used median instead of mean ), it does sound as though people are settling for smaller new homes.  But is this really because that’s what they want?  Many articles go on to say that people’s attitudes have somehow changed, as if they’re now repulsed by large homes.  I don’t think this is the case at all - it’s the economy stupid!

The economy is so uncertain right now, that

  • a) people aren’t able to use their existing home as a piggybank to pull out unlimited equity,
  • b) people don’t have a lot of liquid cash since they’re paying down debt and other obligations and
  • c) they are afraid to take on a larger monthly cost in the form of mortgage and taxes than they may have been 3 years ago.

Therefore, let’s say (totally unrealistic but bear with me) that the economy miraculously recovers over the next year, business is booming, and incomes are up.  People are feeling better about their current and future financial outlook.  Under these circumstances, I would fully expect to see the median home size start to increase again.
Americans like big things.  We had to have big SUVs with the seat very high off the ground.  Big, flashy engagement rings, designer clothes and bags, anything to show your neighbor and friends and family how well-off you are.  This is the American way.  Personally, I view this phenomena as solely an economy issue and not a change in attitudes toward larger homes.  Whenever the economy does actually recover, come back and let me know if I was right.

What do you think?

Are Americans really content in smaller homes?  Or scared of the economy?

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{ 7 comments… read them below or add one }

1 Money Obedience August 30, 2010 at 11:06 am

That’s some McMansion in the photo! – In my experience a larger house just means that you have more space to put more stuff into it. How many shirts does the average male have these days compared to 1972? How many TVs are in the house? Larger houses have probably contributed to an increase in overall consumption. For the time being, lavish consumption like ever growing house sizes are probably a thing of the past. I don’t think that Americans are content with smaller houses, but they can’t afford ever larger houses and more and more stuff anymore. I don’t see that trend reversing itself any time soon, either.

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2 Evan August 30, 2010 at 4:25 pm

No way are they dead. Zero chance. Americans tend to forget too quickly. SUVs came back with a vegence as soon as oil corrected itself. There is way too much cheap money out there for these homes to just go away

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3 Penny Frugalista August 30, 2010 at 4:30 pm

McMansions aren’t dead — they’ve still been built and are out there in our towns. And probably not doing well on the new builds/resale markets. But I’m sure there won’t be any new ones being constructed for a while, at least until our economy hits another high point and people have money to burn again. I never was one to subscribe to the thinking that ‘bigger/more expensive is better.’

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4 C.C. Collins August 30, 2010 at 6:42 pm

Didn’t David Rosenberg chief economist & strategist at Gluskin Sheff (formerly with Merrill Lynch) relate a few days ago that there were zero home sales in July and August of $750,000 or greater purchase price?

I didn’t catch whether this was the entire U.S., a region or a specific state.
Hard to believe but, if indeed this applies to the entire U.S. one might say the
McMansions are dead.

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Darwin's Finance Reply:

@C.C. Collins, correct, and that was an incredible stat. But my thinking is that it’s the current economy, not the death of a trend. And also, these days McMansions need not cost over 750k. Can get a nice 4000 sq fr
Home on no land for 350-400k even on the coasts.

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Evan Reply:

@Darwin’s Finance,

“Home on no land for 350-400k even on the coasts.” NO CHANCE WHERE I LIVE. North Shore Nassau County 400K I am looking at a 2200sq

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5 Kay Lynn @ Bucksome Boomer August 30, 2010 at 10:41 pm

Although I would like to believe that people have really changed, I don’t think that’s the case. I agree that once we have a good recovery in place you’ll see people making the same bad decisions regarding debt, bigger is better and other signs of financial irresponsibility.

Oh well, it’s nice to step back for a while.

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6 Jackie August 31, 2010 at 8:40 am

I don’t believe they are dead, but I do believe that at least some Americans are content in smaller homes. Maybe though, the economy is acting as a wake up call to some people, and that change in attitude may be permanent for some.

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7 Budgeting in the Fun Stuff August 31, 2010 at 4:01 pm

They aren’t dead or dying in Houston – the neighborhood across the street is bustling and no house in there is less than 3500 square feet and almost all of them look like your picture (although a little older…these houses were built in the 1980s at least). Nope, as long as people have money, they will find a way to use it. Especially when it comes to housing…

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