The days of McMansions are over, according to Trulia’s recent analysis. The tract-built mega homes have fallen out of favor among multiple generations, and the investment value of McMansions has plummeted in 85% of the largest U.S. markets. The report shows a 26 percent drop nationwide in the amount buyers are willing to pay for McMansions in just the last four years. The reason? McMansions lack the appeal — and the affordability — that townhouses and more modestly sized homes have to buyers of all ages today.
At the start of the millennium, mass-produced homes with 3,000-5,000 square feet built on identical lots in the suburbs became known as “McMansions,” implying that however wealthy the builders and future dwellers may be, the homes themselves lacked sophistication and design. Despite this, McMansions were one of the biggest housing trends in America and thought to be great investments. Now ten years later, Baby Boomers are looking to downsize and Millennials want unique fixer-uppers — and these trends are likely to continue. As the Chicago Tribune reports, the owners of these McMansions who are now looking to sell are having to cut the price of their homes by nearly half, or risk losing even more money in the years to come.
Ralph McLaughlin, chief economist at Trulia, contributes the depreciation of McMansions to builders flooding the market with thousands of homes averaging 2,500 square feet in the last two years, therefore ignoring the increasing demand for small, entry level homes. He also chalks it up to smaller homes recovering faster from the housing bust than McMansions, and the fact that buyers are willing to pay more for new houses compared to older homes.
Price premiums for McMansions in the DC area have only dropped 12% since 2012 — one of the least significant drops compared to other areas of the country — but the region is already known for having the most expensive homes per square foot. In Florida, McMansions have taken the biggest hit; eight out of the top 10 metropolitan areas where McMansions have lost resale value are in the Sunshine State. Only 15 markets out of the 101 analyzed by Trulia have shown improvement for McMansions nationwide, and the increase in premiums is minimal.
Bottom Line: McMansions are falling out of favor and townhouses are selling better than ever. Contact the Keri Shull team today to find your dream home!