A 5 year run of collapsing home prices and rampant foreclosures have killed the McMansions, maybe not forever, but for the time being. Research by the National Association of Realtors confirms that the median-sized home built today is smaller.
There are a number of reasons for the McMasion phenomenon, the most apparent being that so much cheap money was available. Why shouldn't an ambitions homebuyer shoot for a bigger home, since the down payment was minuscule in comparison to price, and the bank would just as soon lend on the bigger home as it would on a smaller one. Secondly, home prices were appreciating so quickly that it was worth the gamble to buy bigger as the appreciation was also amplified.
It wasn't just the consumer that was to blame, developers were also to blame. Builders could justify paying high prices for land by building larger homes.
Today hombyers are looking for what they need in a home, as apposed to purchasing their fantasy abode, as fewer buyers can qualify for the big mortgages any longer. Going forward hombuyers aspirational desires will adhere more closely with economic realities. Homeowners feel that the days of appreciation are not coming back so they will not be purchasing homes for the sake of investment.
The economic factors that lead to the rise of the McMasions will not be returning for a long time. The shift to smaller homes could be the trend for the foreseeable future.