The End of the McMansion – I Think So


The median size of new homes in the U.S. increased from just over 1,500 square feet in 1973 (the first year the Census Bureau began tracking new home size) to 2,309 square feet at its peak in 2007.  The median size has declined almost 10% since then.  Will the trend to smaller-sized homes persist?

While it is unlikely that new homes will continue to decline, I think we have seen the end of the McMansion.

NAHB’s Chief Economist David Crowe, although he didn’t proclaim the end of the McMansion, believes that the trend to smaller homes may last longer than in past recoveries.

Baby-Boomers, although they might wish to downsize, might be unable to do so due to their inability to sell their existing McMansions because of an oversupply these larger homes and downward price pressure coupled with their recently decimated wealth. However, immigrant households with their lower incomes while they may be unable to afford new larger homes, might be able to purchase the Baby-Boomers existing homes allowing the Baby-Boomers to downsize into smaller new homes.

Gen X’ers could be driven to purchase smaller, more affordable homes due to affordability barriers combined with the more stringent lending standards and fewer mortgage options resulting from the subprime mortgage fiasco.

The sheer number of Gen Y households projected to increase by between 2.0 million and 3.4 million should keep the demand for smaller starter homes strong for the next 10 years.

The trend to single-person households and women as heads of households should also support the trend to smaller-sized homes.

While the rising cost of energy could also drive some buyers to purchase smaller homes, this may not be enough to drive the trend to smaller homes.

The information presented in this series of blogs appears to support a continuation of the trend to smaller homes and the end of the McMansion. However, all real estate is local and the impact of the changes I have discussed will vary by market.  Each market will experience these changes to varying degrees and at varying times, but it is reasonably certain that they will experience them.

The National Association of Home Builders Institute of Residential Marketing (IRM) courses will teach you how to do market research so that you understand your local housing market and your potential customers. The BCASWI Sales and Marketing Council is offering IRM I – Understanding Housing Markets and Consumers on February 16th and 17th in Boise, Idaho.  In IRM I, you’ll gain knowledge of the demographic, economic, and psychographic factors that affect housing supply and demand and learn to employ a model that projects opportunities for specific local markets.  For more information and to register, contact me or the BCASWI.

Chuck Miller GMB   CGP   CGB   MIRM   CMP   MCSP   CSP

President / Builder – Chuck Miller Construction Inc.

(208) 229-2553

Posted in: building, home building, land development, marketing, real estate

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  1. poverty_dieter December 30, 2009

    The McMansion will never die! At least not in the suburbs of Dallas/Fort Worth!