What is the difference between a McMansion and a luxury home? Here is one viewpoint:
So, what exactly is a luxury home, Michael, you ask? Some people classify it by the style of the house, or perhaps by its finishes, or by the product brands in the home. So, how do we define a luxury home from a price standpoint? I know different brokerages and different real estate firms define luxury real estate differently. Many define a “luxury home” as a property that is priced at $1,000,000 or higher. For the purposes of this article, we’re going to define a luxury home as a home that is listed for sale at at least three times the average sales price for that market. (There are four primary price points in most markets: starter-/entry-level, average, high-end and luxury pricing. I define high-end homes as homes that are two times the average sales price for that given area.)
Luxury is relative to that specific market. Most markets have luxury homes based on our definition; it’s all relative, however, because when people think of luxury, they often think of McMansions or estate homes, and that’s not always the case. To take action, you need to develop graphs and other visuals that can articulate the data for luxury and high-end real estate for/in your marketplace: Are you in a buyer’s market or a seller’s market? High-end and luxury homes start at what price point for your market?
I am interested in the ways the dimensions of a luxury home are different than those of McMansions. This is based on my four traits of McMansions.
- The absolute square feet of the home is not mentioned above. Presumably, both McMansions and luxury homes are large.
- The relative square footage is also not mentioned above. Perhaps luxury homes are generally larger than McMansions?
- The architecture and design is mentioned as luxury homes may have particular features and/or finishes. While McMansions are often criticized for mass produced features and/or poor architectural choices, luxury homes stand apart from this.
- The luxury home is more expensive, whether over $1,000,000 in price or some multiplier above the market or in a tier above others. McMansions are more expensive than small homes or starter homes but they are not as pricey as luxury homes. The luxury home is then a true luxury good available only to a few while McMansions are meant to appeal to a broader audience.
If the description above is correct, luxury homes are mostly different because of their price at the top end of the market. McMansions are not that; they may aspire to be luxury homes but they are for a different price point and have different features that have less to do with square feet and more to do with design elements or features.
(The next step might then be to provide advice for real estate agents and others who want to appeal to McMansion buyers and owners. How to stay away from luxury home territory and above more typical homes?)