Real estate has become hot again, enjoying an incredible comeback from the depths of the recession, and nearly every class of home has seen incredible appreciation — except for McMansions.
As it turns out, these opulent and tacky relics of a better economic era have few takers these days. People old and young today want smaller homes in more walkable areas. McMansions are typically leviathan-sized vanity projects that cost a fortune to maintain. They’re also mostly located in hellish suburbia, far away from the hip neighborhoods that surround our city centers.
Home buyers’ unwillingness to buy McMansions is showing up in real estate markets all over the country, and it’s creating distortions in prices for smaller homes in better locales.
Boomers buying millennial homes
McMansions are notoriously expensive to maintain, and end up coming up with large electricity bills, sky high tax payments, expensive insurance premiums and other miscellaneous unforeseen costs.
As baby boomers enter retirement, they look to downsize and get rid of their McMansions. In exchange they search for smaller homes with less property and manageable carrying costs.
In other words, our parents are increasingly gobbling up the starter homes that millennials desperately need to get their lives going. Therefore, in today’s real estate market, the problem is that literally everyone wants to buy the same type of house.
From Chicago to Orlando, and Phoenix to Pittsburgh, no one wants (or can afford) the expensive eyesores that we’ve come to know as McMansions. So as big homes languish on the market for months, quaint affordable homes are sold right away.
What used to be known as a “starter home” is the now the most sought-after asset in American real estate. This has created a nationwide shortage of affordable housing, as homes in lower price ranges are being chased by a larger number of people than ever.
Takeaway: Who needs a McMansion anyway?
The average size of an American home has grown by leaps and bounds in recent decades. It appears we’ve reached a point where most consumers who can afford these eyesores realize that having a large house is nothing but a gigantic waste of money.
If anything, the move away from McMansions is part of a larger societal shift away from conspicuous consumption. Most people can’t afford these humongous houses, and the well-heeled affluent class that can are spending less money on material things than ever.
We’re moving towards a culture that values experiences over having copious amounts of stuff. As part of that evolution, McMansions are becoming a quaint reminder of another era, when keeping up with the Joneses actually mattered.
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