Remember McMansions? They Were a Bad Investment

It's not just McMansions; luxury homes built earlier are also going for less
By Elizabeth Armstrong Moore,  Newser Staff
Posted Sep 11, 2016 2:14 PM CDT
Remember McMansions? They Were a Bad Investment
The Astle family, children Kayla, Mason and Ali, and parents Valerie and Evan, pose outside their current 2,074 square foot home Tuesday, May 22, 2007, in Layton, Utah. They are moving to a new 5,700 square foot home this summer. McMansions are sprouting in the suburbs of Washington and Atlanta, in...   (AP Photo/Douglas C. Pizac)

McMansions, defined loosely as mass-produced homes built between 2001 and 2007 weighing in at 3,000 to 5,000 square feet, have long been teased as shoddily built, poorly designed, and outrageously unsophisticated—the fast food version of luxury homes. (See the anonymous blog McMansion Hell for examples.) They were pricier to build than the average starter ranch-style house, and they also sell for more, but as Bloomberg reports using Trulia stats, their investment value has "dropped like a stone." In 85% of the largest US markets, that extra amount people are willing to pay for McMansions is shrinking. Case in point: A typical McMansion in Fort Lauderdale was valued at $477,000 in 2012, a 274% premium over all other area homes. Now they're worth $611,000, which is just 190% more.

The move away from the McMansion trend of 10 years ago appears to be widespread across age groups as well, with Baby Boomers looking to downsize, Gen Xers licking their wounds from post-bubble foreclosures, and millennials not marrying and starting families at the same rate previous generations did. Plus, builders have been more cautious in the intervening years, with more new construction being smaller (though still sizeable, with 2,500-square-footers being the median). And it's not just McMansions, as the Chicago Tribune reports. Luxury homes built long before McMansions came along are also slow to sell, and prices for any homes and condos listed above $1 million have dropped 9% during the first three months of 2016. (One writer at Slate got it right with his 2011 predictions.)

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