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2010-11-18 01:03:22

The McMansion is Going the Way of the Dinosaur

It may be long overdue, but the McMansion appears to  have finally reached its end. This can be joyous news for many  environmentalists who have long seen these monstrosities as a  waste of resources, energy, and symbols of materialistic  society. For builders, though, it means that they need to  downsize their homes and sometimes also their staff.

During the  past several decades, average home sizes were continuing to  expand and in the beginning of the new millennium, the average  home size was around 2,300 square feet. In 2009, that number  had dropped to 2,135 square feet. This isn’t a significant  number in total square footage, but the trend makes perfect  sense from a global and national standpoint.


Multiple  factors contributing

There are many factors that are  apparently contributing to this decrease in home size. One of  the more significant factors is that square footage costs  money in property taxes as well as purchasing price and with  millions of people out of work, there’s just not the same  amount of purchasing power at the moment.

The mortgage crisis  has also contributed to this downsizing. Many lenders are  being more scrutinizing when evaluating potential buyers and  are not offering the massive loans that they were just a few  short years ago. It seemed throughout the nineties that these  McMansions were growing larger and larger and with them, so  was their price.

Homeowners across the nation are deciding that  having a smaller home is simply a better investment. After  all, how many couple with two children really need six  bedrooms, five bathrooms, and a three or four car garage?


Home heating costs are part of the equation

It can’t be  stated enough that the cost to heat a home during the winter  months, or to cool it in the hot summer months, has gone up  significantly during the past several years. When a family is  struggling to make ends meet for their McMansion and then add  to that the rise in these costs, it can break almost any  budget. When the costs to heat and cool homes continued to  rise, the call for less square footage really kicked in.

People  stopped and looked around at their existence and realized how  much space was wasted within their homes. And the downsizing  began.


Living within one’s means is a new concept?

After  the seventies, credit cards and credit companies began to  blossom like never before. Americans were encouraged to spend  on credit. If they wanted something right now, it wasn’t such  a bad idea to buy it, put it on the charge card, and worry  about the cost later. As the eighties rolled into the  nineties, McMansions began to take off like nobody’s business.

The idea of buying the house of your dreams was planted in  many would-be homeowners. Why not buy what you will want ten  years from now at that time? It didn’t seem to matter whether  the mortgage was consuming almost every dime that you made;  you had credit in the bank in the form of credit cards. People  ran up ten, twenty, thirty thousand dollars and more just  trying to survive and make ends meet so that they could keep  up with their enormous homes.

Those days seem to be drying out  now for millions of Americans. Credit card companies are  closing accounts, raising interest rates, and looking to  tighten up on their own lending practices, which means that  virtual endless stream of funds is running out fast. Sizing  down with homes is the logical step and while the industry may  suffer some lag when the McMansion finally goes extinct, the  next phase will begin.

 


 



David Reinholtz is a professional Mortgage  expert in Real Estate Industry. David is also  a sales and marketing expert and trains  professionals in every career field.  David has  personally trained tens of  thousands of loan  officers, mortgage brokers, real estate agents  and individuals through The Close More University  Seminar Series, LoanOfficerSchool.com Classes, Correspondence and On Line Learning, and  countless private engagements and training events  throughout the country.

David is the Founder and CEO of  LoanOfficerSchool.com, an approved education  provider for The Conference of State Bank  Supervisors and The National Mortgage Licensing  Systems' (NMLS) required pre-licensing education  and continuing education.

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