Today's Dire Prediction About McMansion Prices
The Wall St. Journal leads today's Weekend Journal (subscription required) with a big article on the McMansion Glut. Like most phenomena with catchy names, this one bears scrutiny. The article's point is that as Baby Boomers mature and heating prices rise, the real-estate market is trending toward smaller homes. As a result, the inventory of gaudy, overlarge domiciles is growing against lower demand and poor McMansionnaires are having to cut prices. One family cited in the article had to toss a life-size Spiderman statue and a dog bowl into the deal to get their Loudon, Va., house sold.
There are a couple of holes in the Journal's logic. The shift to smaller homes as been going on for well over a year, predating the serious rise in fuel prices. And if Boomers are downsizing, their children are just gearing up for their childbearing, income-producing years, as this week's Harvard study on real-estate prices points out. (The good news for the suburbs seems to be that those Boomer-babies are buying older homes in the inner-ring burbs.)
No doubt McMansions are stacking up on the market. (Memo to WSJ: all kinds of houses are.) But according to brokers, a cooling realty market often pushes buyers away from overblown architecture (the Journal shows a Phoenix pile with landscaping fit for a waterpark) toward more conventional colonials, tudors and even modernist boxes. And when you do the math, even the homeowners who gave up Spidey aren't doing so bad: they cut their price from $1 million to $820,000, after buying the house for $515,000 six years ago. That's an average of more than nine percent a year on their money. Where were they get that return on investment?
The Real Estate Journal has a seeming companion story on Microhouses, the anti-McMansions.
There are a couple of holes in the Journal's logic. The shift to smaller homes as been going on for well over a year, predating the serious rise in fuel prices. And if Boomers are downsizing, their children are just gearing up for their childbearing, income-producing years, as this week's Harvard study on real-estate prices points out. (The good news for the suburbs seems to be that those Boomer-babies are buying older homes in the inner-ring burbs.)
No doubt McMansions are stacking up on the market. (Memo to WSJ: all kinds of houses are.) But according to brokers, a cooling realty market often pushes buyers away from overblown architecture (the Journal shows a Phoenix pile with landscaping fit for a waterpark) toward more conventional colonials, tudors and even modernist boxes. And when you do the math, even the homeowners who gave up Spidey aren't doing so bad: they cut their price from $1 million to $820,000, after buying the house for $515,000 six years ago. That's an average of more than nine percent a year on their money. Where were they get that return on investment?
The Real Estate Journal has a seeming companion story on Microhouses, the anti-McMansions.
posted by burb at 12:55 PM
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