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McMansions McOver? Experts Say Less Demand
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There’s no question the housing market has been on the outs for the past several years. Certainly, Columbus is not as bad off as say Florida or Nevada. But there’s one segment of the market that could be suffering a little more – larger homes often referred to as McMansions. WOSU reports on one development where sale prices are reduced more than $100,000 below the value could these large houses be a dying trend?
“I’m standing at the corner of Ballantrae Place and Strathern Court in the prestigious Ballantrae neighborhood in Dublin. Trees line the streets where the homes are large and the lawns are lush. The community, like so many others, has been hit hard by the recession. Many homes are valued less than the mortgage is worth. The home I’m facing now is empty. The owners are attempting a short sale. Across the street from it, another home is on the market. Its owners are willing to take a loss to get it sold. And they’re not the only ones affected…”
Just around the corner from these two homes is 6611 Baronscourt Loop. It’s another beautiful, large home, what some might dub a McMansion. It, too, is on the market – and under water. The home’s value has declined slightly – about one percent. And the owners plan to take a loss – if they can sell it. Angela Crowley answered the door, but she did not want to be recorded. She said she was angry – angry that the home has not appreciated in four years, and that a $100,000 loss could be merely a starting point.
You’d be hard pressed to drive down a street in the development and not see a “for sale” sign. Some homes have been foreclosed. Others are in pre-foreclosure.
A Hilliard school bus pulls up to 6647 Ballantrae Place. Amy Sauk goes to greet her son. There’s no “for sale” sign in Sauk’s yard, but they live next door to the house that’s empty and facing a short sale.
Sauk said her husband bought their house in 2003. They’ve finished the basement, re-done the kitchen, added outdoor patio space. But she says home improvements will not make up for the damage done by the foreclosed properties. Sauk is fairly certain they’ll take a loss when they decide to sell.
“You’re not making any money in here because A, there’s a huge supply, just basic economics. And you know, a lot of the houses have been foreclosed on which bring your value down,” Sauk said.
How large of a loss will they likely take?
“Probably $80,000 or $90,000. So, I mean, it is what it is. You have to, sometimes you get lucky and buy in the right spot and you make $70,000 or $80,000 quick. But in this situation we didn’t,” she said.
Some news reports and analysts say this is end of the McMansion era, where people will stop buying very large homes typically those larger than 4,000 – 5,000 square feet. Experts often blame the bad economy for sluggish sales and walkaways.
But Columbus Board of Realtors president Sue Lusk-Gleich notices another trend – people are downsizing.
“Coming out of the larger houses obviously the utilities are higher, the carbon footprint is bigger. All these things, people aren’t thinking they need this much. And there’s saving in downsizing,” Lusk-Gleich said.
According to the Columbus Board of Realtors, homes ranging in price from $400,000 to $1 million are selling at about four percent less per square foot than they were five years ago. And prices continue to drop.
Many homes in Ballantrae are priced $100,000 or more below their current assessed values. Lusk-Gleich said she cannot predict what will happen, if prices will continue to decline. However, she said there has been a 44 percent reduction in the number of expensive homes sold over the past five years.
“The price is going to have to come to where they can get the buyer. And because there aren’t as many buyers a lot of people are pulling their horns in. There’s not as many buyers. So it depends on the buyer and how much they want to pay for a piece of property,” she said.
John Francis is an agent for HER Real Living. He said he’s noticed smaller to moderate sized homes, closer to downtown selling well.
“I wouldn’t say there’s an end of McMansions at all. I mean there’s Tartan Ridge which is just starting up, where the Parade of Homes this summer, has done pretty well. Belvedere in Dublin has done very well. I’d say it’s, they’re not building as many McMansions but they’re still out there,” he said.
Buyers are also more cautious. Bill LaFayette is economic analyst at the Columbus Chamber of Columbus. LaFayette said since the housing bust, people see more risk in buying a home, and that has hurt the market.
“People’s perception of housing as an investment is more realistic now than it used to be,” LaFayette said.
In the 1950s, the average home was just under 1,000 square feet. By the millennium, it was more than double that size. Households are getting smaller, and LaFayette said they will continue to get smaller as Baby Boomers age.
“I think that the overall demand for houses of a very large size is going to be less in coming years, even than it is now,” he said.
Even more bad news for McMansion owners looking to sell.