The New York Times is on it, so it must be true: the McMansion is back.
Construction of new homes dropped off a cliff during the housing bust. But where there has been building of single-family homes in recent years, the homes have been getting bigger.
A few years ago we all had hopes that the crash, the green movement and energy prices might make a difference in what we build; Daniel Indivigio at the Atlantic wrote:
Since being green is so en vogue these days, I would suspect that larger, energy sucking houses will also be out of style indefinitely.
I had doubts:
I wish I could say that people will flock to well designed, smaller, greener, healthier houses, but I've had a couple of very expensive lessons that convinced me that it just ain't so. When it comes to the marketplace, size matters, efficiency doesn't.
And the American Government encourages this.
But also, when it comes to the marketplace, government policy matters more than efficiency.
Look at the ad that was in the Sunday New York Times, from PenFed, short for Pentagon Federal Credit Union.
It is all wrapped in eagles and flags, chartered by the US government to serve veterans and members of the military, and does so by offering them jumbo mortgages at low rates to build dream McMansions. Then the government offers the completely bizarre mortgage interest deductibility, actually subsidizing the purchase and encouraging debt. And we wonder why people buy these things.
Money is cheap. Natural gas is cheap. The trades are cheap. What could possibly go wrong?