Why are new homes built mostly McMansions when people want smaller?

[LuvOrlando]

Why are new homes built mostly McMansions when people want smaller? Especially in communities without big jobs. I'm looking and want small and new for two people with extra rooms for maybe guests every now and then, all I see are old places that need a ton of work I can't do or giant places I don't want to keep up with anymore. How many multimillionaire new families do these builders thing are bubbling up? The resale McMansions I see aren't moving all that fast, such a disconnect between what people want to buy and what builders want to sell.

Is city planning not a thing anymore, tax breaks for smarter builders? I mean even common sense points to this being idiotic and out of step with demand. If the job sites sit dormant isn't it time to reassess?

 

[Paul From MA]

Why are new homes built mostly McMansions when people want smaller? Especially in communities without big jobs. I'm looking and want small and new for two people with extra rooms for maybe guests every now and then, all I see are old places that need a ton of work I can't do or giant places I don't want to keep up with anymore. How many multimillionaire new families do these builders thing are bubbling up? The resale McMansions I see aren't moving all that fast, such a disconnect between what people want to buy and what builders want to sell.

Is city planning not a thing anymore, tax breaks for smarter builders? I mean even common sense points to this being idiotic and out of step with demand. If the job sites sit dormant isn't it time to reassess?

Spoke with a builder a couple of years ago. He referred to it as passing the wealth on to the next generation.When the older parents pass on they leave wealth to there children,then with the sudden influx of money,they opt to invest into a larger home that they always wanted but could not afford when they were first looking for homes when they got married.Seems to be the case in my area

 

[MillauFr]

It comes down to economics and high land prices. A builder in Seattle could buy a 4,000 sq. foot lot (0.1 acres) for $1.5 million and spend $400k to build 1,200 sq. foot house. They most they could sell that for is $1.4 million. They would lose money. Or they could spend $600k to build a 3,500 sq. McMansion and sell it for $2.5 million. Not hard to figure out what kind of houses they will build.

 

[Disneylover99]

Mostly townhouse complexes built around me. Each townhouse will sell for about a million each. Home builders get more bang for their buck doing this.

 

[Christine]

It goes by profit compared to footprint. Get as much house on the land as you can and upsell features.

 

[LuvOrlando]

But I just read new home sales are not great, this does not support the idea there is demand
https://www.reuters.com/markets/us/us-new-home-sales-unexpectedly-fall-february-2024-03-25/

Seems many older people are staying in bigger homes simply because they can't find smaller in their safe familiar environments. Trouble with this is older people do not spend in the same town sustaining ways as younger families, they don't hire teens as babysitters or support schools as volunteers or spend as much on kids in sports and band etc. It's not great for local economies to have older people in homes where the tax revenues need the sort of spending feed that families provide.
https://www.cnn.com/2024/01/16/econ...ger-homes-than-millennial-families/index.html

There used to be moderate new options, this fed the boom in the 90s and early 2000s before the McMansion and swapping craze. I can't see how abandoned home build sites are better than a buzzing moderate home build site with hand over fist movement of homes. The cheaper things cost the more people can afford it the faster it moves, its just so basic.

 

[Praying Colonel]

Assuming the premise of the question is correct (in a lot of the country, it's not), it's probably because the "McMansions" sell well and make the builders profit. Otherwise they'd sit empty and builders would build something different.

 

[Christine]

But I just read new home sales are not great, this does not support the idea there is demand
https://www.reuters.com/markets/us/us-new-home-sales-unexpectedly-fall-february-2024-03-25/

Seems many older people are staying in bigger homes simply because they can't find smaller in their safe familiar environments. Trouble with this is older people do not spend in the same town sustaining ways as younger families, they don't hire teens as babysitters or support schools as volunteers or spend as much on kids in sports and band etc. It's not great for local economies to have older people in homes where the tax revenues need the sort of spending feed that families provide.
https://www.cnn.com/2024/01/16/econ...ger-homes-than-millennial-families/index.html

You missed a few points in your own article (1st one posted). Yes home sales fell. But they fell from an all time high. They are still at an all-time high but a little less of an all time high.

The overall housing market has likely turned the corner, with home resales surging to a one-year high in February. Nonetheless, supply remains inadequate, keeping house prices elevated and homeownership out of the reach of many.

 

[LuvOrlando]

You missed a few points in your own article (1st one posted). Yes home sales fell. But they fell from an all time high. They are still at an all-time high but a little less of an all time high.

The overall housing market has likely turned the corner, with home resales surging to a one-year high in February. Nonetheless, supply remains inadequate, keeping house prices elevated and homeownership out of the reach of many.

I didn't miss that but it doesn't alter the empty home build job sites that were buzzing in 2021 but silent now.

So it is true but looking at Zillow lots of sellers are slashing prices in the highest ranges because people aren't biting for those but the moderate range neighborhoods have no availability. It's all there in Zillow. A moderate home in my family home neighborhood sold in 4 days last year.

Seems if a builders goal is to sell they should make what people want.

 

[Southernmiss]

Around us, they are building 4 bedroom homes with very little parking. When we bought our 4 bedroom home, it was for our 4 children. As they became drivers, parking was ridiculous and when they return home at once, they all need a place to park.

We've considered upgrading, but the lack of parking and yard space is a hard no.

 

[LuvOrlando]

Around us, they are building 4 bedroom homes with very little parking. When we bought our 4 bedroom home, it was for our 4 children. As they became drivers, parking was ridiculous and when they return home at once, they all need a place to park.

We've considered upgrading, but the lack of parking and yard space is a hard no.

They did this around where we bought as well. Our lot was squareish but the second wave of home lots were very narrow and thin so there was a lot of noise pollution and diminished privacy between neighbors, and if you have athletes in the home this is not amazing.

I really do wonder if there are city planners any more or if the township boards are considering the economy in a long term way.

 

[Mackenzie Click-Mickelson]

One of the newest things going on in my metro is the largest city in it adopted stricter energy efficiency homes due to code updates. Now for us in my county I believe we already had at least some of those. My home is an energy star rated home for example.

However, these new codes applied to that largest city have dramatically impacted a builder's ability to build a home never mind a cost effective home. That particular city had only approved like 1 or two new construction when they should have 40+ by now. The builders were saying each plot now had to have a home that would work on it so a north facing home would need to have different things applied than a south facing home to keep in line with the codes. A home with no trees would be impacted differently than a plot of land that has trees, etc.

 

[Mackenzie Click-Mickelson]

Seems many older people are staying in bigger homes simply because they can't find smaller in their safe familiar environments. Trouble with this is older people do not spend in the same town sustaining ways as younger families, they don't hire teens as babysitters or support schools as volunteers or spend as much on kids in sports and band etc. It's not great for local economies to have older people in homes where the tax revenues need the sort of spending feed that families provide.
https://www.cnn.com/2024/01/16/econ...ger-homes-than-millennial-families/index.html

Older individuals staying in their homes has been steadily going on. Part of it is related to living longer and having medical aids in doing so.

The prior natural transition of moving on up in homes to eventually downsize to then eventually transition to more specialized care (such as assisted living, retirement communities, etc) stalled out. Homes are being retrofitted to suit the needs as people age in homes instead of someone moving on to some other place.

Also older people who live in their homes are finding the same problem (except they are also heavily contributing to it unfortunately) as millennials in so much that a lower interest rate (prior to what we've seen in the last year or so) doesn't help with the house pricing to move out of your current home makes no financial sense. It's not just about older individuals wanting a smaller home but for them moving to any other different types of housing becomes more expensive than staying put. But staying put is leaving fewer and fewer and fewer homes for millennials to get into the housing market which drives up the price with the scarcity of homes.

 

[neverlandsky]

Currently in the housing market and beyond frustrated that we are putting our home search on hold.

Our area is resale homes 20 years+ old that need $60K-$100K to bring them up to date (original appliances, roof, HVAC, cabinets, toilets, sinks, windows, etc. ) or new builds that are McMansions or Townhomes on micro lots and hardly any parking. No single story ranch homes that are 1200-1600 sq ft. That doesn’t even take into account that interest rates are high along with prices. Where 30% down equals just about a million dollars for a home.

For builders it’s cheaper to build up than wide. Builders also know homebuyers look for payments per month vs. payments total.
Plus corporations are buying McMansions and Townhomes and turning them into rentals.

Nothing about the housing market is currently normal.

 

[barkley]

Is city planning not a thing anymore, tax breaks for smarter builders? I mean even common sense points to this being idiotic and out of step with demand. If the job sites sit dormant isn't it time to reassess?

city (and county) planning is still a thing-at least where we live and has had tremendous impact on the types of housing being built. the biggest impact i see on fewer/bigger homes being built vs. a greater number of smaller (on the same piece of land) is the infrastructure needed to support numerous homes. one town near us has inadequate water and sewage systems that severly limit building so they might approve 10 mcmansions with a total of 40 bathrooms but deny 30 smaller homes with a total of 90. traffic and road upkeep has been a huge factor in another area near us that's kept building at a halt except for the odd custom home-unless the city it is within were to entirely redesign and restructure the roads that feed into where the proposed developments would be located it would create horrendous access issues that fire and safety officials point to endangering the public.

Trouble with this is older people do not spend in the same town sustaining ways as younger families, they don't hire teens as babysitters or support schools as volunteers or spend as much on kids in sports and band etc. It's not great for local economies to have older people in homes where the tax revenues need the sort of spending feed that families provide.

o.k.-this i do not understand at all. how exactly do band or sports parents provider greater financial support to a local economy? with the exception of private music instruction or instrument upkeep (and those buisnesses are not plentiful in most regions such that they are the bread and butter of local economy) what are the band parents spending on? kids in sports? every taxpaying homeowner (and renter by virtue of it being passed on through rent via the landlord) is paying for the community sports leagues in our area via a line item on our property taxes. the higher cost private teams are not pouring their fees into the local economy (nor attracting any significant traffic that supports local buisness).

based on my experience living in a state with no personal income tax, the only tax revenue difference between a household of seniors and a household with minor children is consumer spending and for the purpose of groceries which is likely higher in a household with kids-most states do not tax. while inflation has slowed optional spending for most people-it's still far more common for seniors vs. families in our region to be regularly dining out and it only takes a drive past one of the many golf courses to observe them spending and supporting the local economy. as far as the taxes collected on utilities-many seniors consume as much by being home and using them in greater abundance if not more than 2 remote working parents/kids in school households. teen babysitters??? no idea-teens were not sitting when my kids were little in the late 90's/early 2000's b/c if they were old enough and responsible enough to be trusted with the care of little ones they could get double or triple the pay rate working at the local fast food with a guaranteed minimum number of hours per week. the local stores and fast foods are flush with teens who i imagine at $20 per hour starting make more than they would babysitting.

 

[barkley]

or new builds that are McMansions or Townhomes on micro lots and hardly any parking

that's the big issue in the largest city near us. there are a wealth of older homes that sit on lots upwards of a half acre with owners who have expressed interest in subdividing for new construction or at least building rental adu's but the neighborhoods are quite old and have VERY narrow streets/existing driveways built for the days when 1 car was much more the norm so parking is the big issue. with existing residents already using much if not all street parking (they have to display permits) where will additional dwellers park? it gets even worse during the winter when residents have to keep one side of the street empty on certain days for snow plows. there was recently a piece on the local news about a 2 story-6 plex being approved on one of these lots, nothing was said about parking so it will be interesting to see how they handle it (perhaps no yard-all parking behind the original craftsman home that will remain).

 

[Christine]

In my area, there are very few new builds. You have to start going pretty far out. Sales are still brisk with buyers paying more than the asking price.

 

[focusondisney]

Homes are still selling in days in my area. As for builders not building smaller homes, what I’ve heard here is the smaller homes just aren’t cost effective. The majority of new home developments are 3000 + sq foot homes, selling for 4-5K +. The few homes being built in the city that are 1500 -1800 sq ft, still cost over $300,000. Very few people want to pay that much to live in a small house with no yard & limited services, like grocery & retail stores. There are several patio home developments in the area. Those cost well over $500K. A suburban lot for building on go for 65-120 K or more, depending on the suburb. Unless labor & supply costs come down, builders can’t make a profit on a product that the land is worth more than the building. Older people who can afford to pay $500K for a small home are buying patio homes, not single family ranches.

 

[LuvOrlando]

o.k.-this i do not understand at all. how exactly do band or sports parents provider greater financial support to a local economy? with the exception of private music instruction or instrument upkeep (and those buisnesses are not plentiful in most regions such that they are the bread and butter of local economy) what are the band parents spending on? kids in sports? every taxpaying homeowner (and renter by virtue of it being passed on through rent via the landlord) is paying for the community sports leagues in our area via a line item on our property taxes. the higher cost private teams are not pouring their fees into the local economy (nor attracting any significant traffic that supports local buisness).

based on my experience living in a state with no personal income tax, the only tax revenue difference between a household of seniors and a household with minor children is consumer spending and for the purpose of groceries which is likely higher in a household with kids-most states do not tax. while inflation has slowed optional spending for most people-it's still far more common for seniors vs. families in our region to be regularly dining out and it only takes a drive past one of the many golf courses to observe them spending and supporting the local economy. as far as the taxes collected on utilities-many seniors consume as much by being home and using them in greater abundance if not more than 2 remote working parents/kids in school households. teen babysitters??? no idea-teens were not sitting when my kids were little in the late 90's/early 2000's b/c if they were old enough and responsible enough to be trusted with the care of little ones they could get double or triple the pay rate working at the local fast food with a guaranteed minimum number of hours per week. the local stores and fast foods are flush with teens who i imagine at $20 per hour starting make more than they would babysitting.

Yes, consumer spending. Most of the seniors in the Pennsylvania area we raised our kids spend very differently and behave very differently. I certainly do not spend now like I did when my kids were home.

My in-laws and neighbors for example, ate frugally at home no big feasts anymore, they went to restaurants often but ate deliberately spending waaaayyy less than I did as a busy mom landing at a restaurant with 4 other families after a sports match easily seating 20, . They slid into a far more chill phase where had most of the stuff they wanted (not easy to buy for seniors at the holidays in my opinion) and needed and took care of their stuff with the intent of keeping it to last, the sofa they now have lasted 15 years, their cars were $$$ but very low milage so they kept them forever whereas I swapped every so often, families are generally harder on vehicles. Sports & band, if you do not know the extraordinary expenses associated with extra curricular I can see how it would be discounted. Every single sport and hobby has its own gear, including shoes, which need to be replaced every single year and so many costs that go off on tangents that my head would spin when a kid would say, "mom I wanna try ----." Then there is the clothing differences, my kids were growing and being trendy which cost a fortune all the time, meanwhile all the seniors I know had very full closets of very nice classic accumulated things so they rarely needed or bought they just mixed and matched, my MIL has a closet full of pricey purses she would just select from on a day out. Both vacation but it is different, a family is buying 4-8 airline tickets and theme park tickets paying for just as many meals but the seniors I know tended to have 2 tickets and stay at higher end places with less quantity more quality. As far as spending on services, that is very different too. Babysitting & pet sitting is still alive and well in PA, paying with cash for a neighbors kid to pick up mail, paying for random lessons for the new sport or piano lessons, is going to bubble through the area quickly sure seniors can do it but they do it with less frequency, the seniors I know had people they knew to assist with this stuff more often. The impulse spending of a family is significantly more while the seniors I know tend to save more, they do spend more on some particular things like an assortment of $$$ medications which get siphoned off to the pharmacy while the family impulse spending is floated around in the local economy where the petsitter goes off to buy lessons in batting from the local high school superstar who pays someone to hand paint something cool on their skateboard. In my experience age creates very different kinds of spenders.

 

[greeneyedchick]

It comes down to economics and high land prices. A builder in Seattle could buy a 4,000 sq. foot lot (0.1 acres) for $1.5 million and spend $400k to build 1,200 sq. foot house. They most they could sell that for is $1.4 million. They would lose money. Or they could spend $600k to build a 3,500 sq. McMansion and sell it for $2.5 million. Not hard to figure out what kind of houses they will build.

Was going to say the same