Real Estate

Death of the McMansion Has Been Greatly Exaggerated


A McMansion in Westport, Conn.

Photograph by Dave Matlow/AP Photo

A McMansion in Westport, Conn.

Who says Americans have fallen out of love with McMansions? It’s true that the housing bust shaved a few square feet off the average size of new homes in the U.S. But new single-family homes built last year were still 49 percent bigger than those built in 1973, according to Census Bureau data.  And it’s worth remembering that family sizes have shrunk over that period.

The peak size for new homes was an average of 2,521 square feet in 2007. By 2010 it was down to 2,392. That statistic fed into a slew of stories about the “new frugality.” A survey of builders conducted in December 2010 by the National Association of Home Builders predicted that the shrinkage would continue, with the average getting down to 2,152 by 2015.

But then a funny thing happened. In 2011, according to the Census Bureau, the average ticked up a bit, to 2,480 square feet.

That’s partly because mortgages were so hard to get that only the well-to-do, who buy bigger houses, were able to buy new homes in 2011, according to Stephen Melman, the director of economic services for the National Association of Home Builders. But it could also be that the “new frugality” story was somewhat oversold.

The NAHB is conducting another survey now. This time it’s interviewing potential buyers, instead of builders—who were deeply depressed when interviewed at the end of 2010, with housing starts down three-quarters from their peak.

Beneath the average, whatever it is, is a swirl of conflicting demographic trends. On one hand, boomers are aging and downsizing, and more people are living alone. On the other hand, there’s a rise in the number of households with more than one adult generation present. Those families need bigger houses. (You can sometimes cram a couple of kids into the same bedroom; try doing that with Grandpa and little Jimmy.)

The one-big-happy-family uptrend is amplified by immigration of Hispanics and Asians, where multigenerational households are more common. “They’re doing well economically, too,” says Melman. “There’s real buying power there.”

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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