The trend began in California but quickly spread to other states where the housing boom was taking off -- Nevada, Florida, and our own Grand Canyon State: rows upon rows of new tract homes -- large homes, often with expensive amenities but cut from similar (not exactly the same) molds. 

In fact, the Phoenix area was featured in the New York Times in November, 2006.  “Road signs welcoming visitors to Pinal County proffer a menu of new subdivisions. Looking for houses by D. R. Horton, the nation’s largest builder? Keep driving, you have not far to go. Make a U-turn for KB Home’s latest four-bedroom Mc-Mansions. For Centex homes in the Johnson Ranch development, hang a right after the next bend.”

Source: New York Times

But as Americans -- from the titans of Wall Street to the “hockey moms and Joe Six-packs” on Main Street -- think about downsizing, are McMansions a thing of the past?

A recent article by the Associated Press suggested that homeowners have reversed their strategies -- from focusing on the benefits of large homes with expensive amenities to focusing on smaller homes with fewer upgrades.

KB Homes, for example, “initially pared down 3,400 square-foot homes that sold for around $450,000 to smaller, 2,400 square-foot homes selling for around $300,000.

Now, the builder is shrinking floor plans again. It recently launched a new line of homes in foreclosure-ravaged Southern California that start at 1,230 square feet and are priced a little over $200,000.”

According to the AP, the trend toward more modest homes represents a turn-about from 20 years of increasingly larger homes.  Over the last two decades, the median size of a single-family home went from less than 1,600 square feet to more than 2,200 sq. ft. -- even as average family size decreased.

Economic conditions are influencing the move toward more modest homes both from the builder’s perspective and the buyer’s perspective. 

“Declining home prices have also made it less profitable to build large homes, said Nishu Sood, a Deutsche Bank analyst. ‘The only way to respond to the lower price environment ... is to make the home smaller,’ Sood said. ‘As you kind of reduce the floor plan size, we're getting back to more the way things were historically, kind of undoing the excesses, not just from a price perspective but home size and (fewer amenities).’”

For the homebuyer’s part, tighter credit markets -- where it’s much harder to get a mortgage than it was a year ago -- as well as generally deteriorating economic conditions make more modest, less expensive homes much more appealing.

What do you think?  If you are in, or have recently been in the market for a home, were you considering smaller homes with fewer amenities that you had in the past?  Click on the “Comments” link and join the discussion!