Just a few months ago we were being told—erroneously, in our view–that the McMansion was making a big comeback. Then, last week, there were a wave of stories lamenting the declining value of McMansions. Bloomberg published: “McMansions define ugly in a new way: They’re a bad investment –Shoddy construction, ostentatious design—and low resale values.” The Chicago Tribune chimed in “The McMansion’s day has come and gone.” Whither are these monster homes headed?
First, as we’ve noted, its problematic to draw conclusions about the state of the McMansion business by looking at the share of newly built homes 4,000 feet or larger (one of the standard definitions of a McMansion). The problem is that in weak housing markets (such as what we’ve been experiencing for the better part of a decade in the wake of the collapse of the housing bubble) the demand for small homes falls far more than the demand for large, expensive ones. So the share of big homes increases (as does the measured median size of new homes). And indeed, that’s exactly what happened post–2007: the number of new smaller homes fell by 60 percent, while the number of new McMansions fell by only 43 percent, so the big homes were a bigger share (of a much smaller housing market). Several otherwise quite numerate reports gullibly treated this increased market share as evidence of a rebound in the McMansion market; it isn’t.