It may be long overdue, but the McMansion appears to have finally reached its end. This can be joyous news for many environmentalists who have long seen these monstrosities as a waste of resources, energy, and symbols of materialistic society. For builders, though, it means that they need to downsize their homes and sometimes also their staff.
During the past several decades, average home sizes were continuing to expand and in the beginning of the new millennium, the average home size was around 2,300 square feet. In 2009, that number had dropped to 2,135 square feet. This isn’t a significant number in total square footage, but the trend makes perfect sense from a global and national standpoint.
Multiple factors contributing
There are many factors that are apparently contributing to this decrease in home size. One of the more significant factors is that square footage costs money in property taxes as well as purchasing price and with millions of people out of work, there’s just not the same amount of purchasing power at the moment.
The mortgage crisis has also contributed to this downsizing. Many lenders are being more scrutinizing when evaluating potential buyers and are not offering the massive loans that they were just a few short years ago. It seemed throughout the nineties that these McMansions were growing larger and larger and with them, so was their price.
Homeowners across the nation are deciding that having a smaller home is simply a better investment. After all, how many couple with two children really need six bedrooms, five bathrooms, and a three or four car garage?
Home heating costs are part of the equation
It can’t be stated enough that the cost to heat a home during the winter months, or to cool it in the hot summer months, has gone up significantly during the past several years. When a family is struggling to make ends meet for their McMansion and then add to that the rise in these costs, it can break almost any budget. When the costs to heat and cool homes continued to rise, the call for less square footage really kicked in.
People stopped and looked around at their existence and realized how much space was wasted within their homes. And the downsizing began.
Living within one’s means is a new concept?
After the seventies, credit cards and credit companies began to blossom like never before. Americans were encouraged to spend on credit. If they wanted something right now, it wasn’t such a bad idea to buy it, put it on the charge card, and worry about the cost later. As the eighties rolled into the nineties, McMansions began to take off like nobody’s business.
The idea of buying the house of your dreams was planted in many would-be homeowners. Why not buy what you will want ten years from now at that time? It didn’t seem to matter whether the mortgage was consuming almost every dime that you made; you had credit in the bank in the form of credit cards. People ran up ten, twenty, thirty thousand dollars and more just trying to survive and make ends meet so that they could keep up with their enormous homes.
Those days seem to be drying out now for millions of Americans. Credit card companies are closing accounts, raising interest rates, and looking to tighten up on their own lending practices, which means that virtual endless stream of funds is running out fast. Sizing down with homes is the logical step and while the industry may suffer some lag when the McMansion finally goes extinct, the next phase will begin.
David Reinholtz is a professional Mortgage expert in Real Estate Industry . David is also a sales and marketing expert and trains professionals in every career field. David has personally trained tens of thousands of loan officers, mortgage brokers, real estate agents and individuals through The Close More University Seminar Series, LoanOfficerSchool.com Classes , Correspondence and On Line Learning, and countless private engagements and training events throughout the country.
David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems’ (NMLS) required pre-licensing education and continuing education.