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With home building up, will McMansions return?
Nationwide, home-building permits are at a four-year high. But coming off the Great Recession, is there a market for luxury homes?
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Jeff Horwich: This hour, the luxury home-builder Toll Brothers said profits in the latest quarter jumped 46 percent over last year. The CEO says he sees recovery across most of the country. But coming off the Great Recession, will the market for McMansions ever be the same?
From New Hampshire Public Radio, here's Dan Gorenstein.
Dan Gorenstein: Don't ask New Hampshire home builder Joe Spain about 2011.
Joe Spain: Last year we had one inquiry for a new home.
This year, business is getting better.
Spain: We're up 700 percent.
The builder says there's a real difference between what his clients want pre- and post-recession. Before it was family homes -- three-, four-car garages...
Spain: And I think today people are more or less getting back to basics. They are just looking to downsize. Single-floor living. And then have moderate finishes to fit their budgets.
It may be back to basics for Spain's customers, but Fred Cooper with Toll Brothers, one of the nation's top builders, says that's not what their clients want.
Fred Cooper: While initial buyers came in thinking maybe they wanted the lower-priced home, they ended up predominately buying the larger one. That's what they want.
So we may see more McMansions, but Los Angeles architect Buzz Yudell says the funny thing is we won't see as much of them. One of the hottest new trends: basements. No, not the ones with flimsy wood paneling.
Buzz Yudell: You know, special event rooms and wine tasting rooms and media rooms and spas, and it goes on and on.
Yudell says he knows of one newly constructed 9,000 square foot home, 3,000 of those feet below ground. It sold for $9 million in two weeks -- wasn't even listed.
I'm Dan Gorenstein for Marketplace.
Well, McMansions are still flourishing in Northern Virginia. And while they may not qualify as the same square footage as the NVA monster homes, the teardowns and rebuilds in Bethesda, MD are often major big but also eyesores. In a vintage neighbor, where - for sure- the homes need serious updating - especially energy-wise, builders buy a home, trash it and build an absurdly large structure on the existing lot.
This damages the harmony of the neighborhood but almost always gets approved by the Montgomery County planning commission when variances are needed - despite organized resistence from many established neighborhood residents
Really, the McMansion label is specific and accurate. Cookie cutter looking properties that are huge and expensive, but hardly aethestic. Many times a home is only 40% used. Don't forget - it takes a lot to heat/cool and furnish those massive spaces.
So much better for all concerned if they would take on the philosophy of architect Sarah Susanka - "Not so big house" to maximize the space, the storage and upgrade the finishes rather than just go for wasteful volume. (Did I mention the common 5 or 4-car garages?)
I just made a related comment on the "foreclosure story." These two issues are linked. Many of the longer term ARMs are resetting THIS year. These are primarily the loans that went to higher-income households. So look out suburbs. More foreclosures flooding the market and crowding out demand for new home construction. I really hope that home builders do not repeat history by building more McStrosities on the urban fringe - far away from services, schools and jobs. If the banks are foolish enough to give out more loans for folks to buy these homes, then we will have another wave of foreclosures 5 years from now.
We really dislike that darn word "McMansion" - it just means so many things to different people.
As an add on to your story, we have seen a dramatic pick-up in new infill construction activity in the markets we cover.
Are the new homes mostly larger than the one that's being replaced - yes. But, most often the "teardown" was older with obsolete features that are not in demand for today's buyer.
Again, new is always near the top of a buyers wish list (if affordable) - but hopefully not all that is new is a "McMansion".
Thanks,
Brian
