What will happen to all the McMansions in the 1T?

[David Horn]

(05-28-2019, 10:36 AM)Skabungus Wrote: Why is this news?  Why is any of this a question?  We've seen this all before.  This is the natural progression of real estate though the cycle.  See The Appraisal of Real Estate 14th Edition.  The cycle is Recovery-Expansion-Hyper Supply-Recession. This happens on a local basis but is also quite visible at the macro level.  It is pretty simple the McMansion phase is over.  It was over even before 2008 with markets for 3,500- 4,500sf homes tanking starting in 2005.  Those paying attention (I get paid to pay attention) saw it coming with books like "The Not So Big House: A Blueprint for the Way We Really Live" (Susanka) Paperback – April 1, 2001 and tons of articles on rethinking America's housing market popping up throughout the early 00's.  

McMansions decay pretty fast.  Most housing stock built in the mid 90's through mid 00's was built with average grade materials to save money and don't hold up well.  New housing (that sells to folks other than Boomers) is notably smaller and simpler, with a better quality construction.  Note also the advent of the "Tiny House".  Though the tiny house idea was birthed to provide a long term solution to housing homeless people, it's become popular and cities throughout the midwest are accommodating (albeit reluctantly) tiny houses in zoning codes.  Tiny houses.  Houses from 600-900sf in size.  Susanka stated waaaay back in 2000 that 1,200sf was probably the ideal size for homes moving into the future, based on earning power and family size.  She wasn't wrong.  

The McMansions will be absorbed into the market and go the way of all housing trends.  A few will hang around a long time, but most will disappear in favor of new construction as they age.  No worries.  Glad to see them go.

What is infinitely more interesting from my perspective is how the new perspective on housing is shaping up.  Live-work developments in old office parks and warehouses, intentional communities (hey it's not just for hippies anymore!) and increased interest in urban living have reduced the threats of urban sprawl significantly.  All these options reduce the load on community services and utilities quite significantly.  Add to that the recent boom in municipal efforts toward solar and wind power and you begin to see an America that is returning to a frugal, utilitarian mindset, at least when it comes to the way people view affording a place to live and work.  Nobody these days is asking for a lap pool in their basement.

I'm a big Sarah Susanka fan, and have several of her books.  I'm definitely a smaller-is-better type, though too small for the area may make a house unsalable too.  We live in interesting times in that regard.  I live in a rural are that has a large recreational lake.  We have houses here (neighborhood dependent, of course) that are anywhere from 1,000 to 20,000 square feet.  Some of the larger ones are intended as family resorts, and occupied sporadically by extended families, but a few are owned by Boomers who still carry the bigger-is-better torch.  Some are well made (and pricey) and others are the typical spec-house-on-a-grand-scale.  The spec-house neighborhoods are already getting a bit seedy.  The others seem to holding their value.  We'll see if the next generation can maintain them, since most will be passed-on rather than sold.

FWIW, I don't see tiny houses lasting as "a thing" for much longer.  Most were inexpensive enough that they can be used for things other than full-time housing, when the owner-occupants finally realize that living in an urban apartment only works well in a city.  Likewise, the McMansion is already a boat-anchor for Boomers (mostly) trying to down-size into something manageable: true in suburbia and true here as well.