Whither the McMansion? Opinions from the Wall Street Journal and the Atlantic


Last week, the debate was When it Comes to Green Building, Does Size Matter?; this week, it is Whither the McMansion.. June Fletcher in The Wall Street Journal thinks they will come back when the economy does:

But don't write the obituary for McMansions just yet. Although mass-produced behemoths more than 3,000-square-feet in size have only been common (and commonly criticized), since the late '90s, home sizes have never been influenced by need alone. The builder association's report also points out that houses ballooned most—about 1,000 square feet—during the period between 1970 and 2008, when household size dropped from 3.11 to 2.57. Homes are getting smaller now because people feel poorer, but all that will change once the recession ends and consumer confidence is restored.

Daniel Indiviglio of the Atlantic disagrees.

house size increase graph

He thinks that there are structural and demographic changes afoot that will change demand.

As baby boomers retire and their nests empty, they will take flight to smaller townhouses and condos. That should provide significant excess inventory for any new home buyers looking to purchase larger homes for raising a family.

He also thinks that the green movement will have an effect.

Since being green is so en vogue these days, I would suspect that larger, energy sucking houses will also be out of style indefinitely. Unless the McMansions of the future are also designed with enough solar panels and wind turbines to power themselves, 20- to 30-somethings will not be interested.

giv'em points for honesty!

I think they are both wrong. But then I spent the nineties in Toronto as a real estate developer on Toronto, and consulted with a few others before I built. I found that there was one simple rule, that applied in the city or the suburbs:

People buy the biggest home they can afford, period.

One developer I know developed a formula where he entered the interest rates, the average income of the target market and the average cost of construction of both the base unit (an absolutely tiny but workable unit) and the cost of the incremental additional square footage. It spit out a unit size which he built, and it had absolutely nothing to do with "consumer preferences" or "market trends." He built fast and he built to the minimum acceptable building code standards and he was the most successful developer in town.

So when mortgage rates were low (or mortgages were "creative") and banks were lending, the houses and condos got bigger. When times are tough and the lenders are not lending, they get smaller.

It also was cheap to build bigger; once the expensive stuff like land, services, levies, kitchens and baths are paid for, more vinyl clad wall and vinyl window was cheap. But This may not be the case this time, particularly if the Waxman-Markey standards are approved. A house that is 30% more efficient will cost more, with better windows, more insulation, higher grade appliances and HVAC. A house that is 50% more efficient is going to be more expensive still. Since the maximum price that the average customer can pay is fixed, the house is going to get smaller.

I wish I could say that people will flock to well designed, smaller, greener, healthier houses, but I got 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.

See also on house size and the suburbs:
Big Steps in Building: Change our Building Codes from Relative to Absolute
The Next Slum?

Tags: Housing Industry | Urban Planning


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