Limiting teardown McMansions with ordinances requiring demolitions reuse and recycle materials?

Palo Alto, California will soon require the reuse or recycling of the majority of materials for demolished buildings:

[W]orkers will now be required to systematically disassemble structures, with the goal of reusing or recycling the bulk of the material on the site. Based on experiences in Portland, Oregon, which has a similar law in place, staff believes that up to 95% of the construction debris can be salvaged — either reused or recycled — through “deconstruction.”…

Construction and demolition materials represent more than 40% of Palo Alto debris that gets disposed in landfills, according to an estimate from the city’s Public Works Department. As such, it represents a prime opportunity for diversion and recovery, staff told the City Council at the June 10 meeting, shortly before the council voted unanimously to adopt the new ordinance…

The new model calls for buildings to be systematically disassembled, typically in the reverse order in which they were constructed. Based on two recent pilot projects, deconstruction work using this method would take about 10 to 15 days to complete and require a crew of four to eight people, with the cost ranging from $22 to $34 per square foot….

The new deconstruction ordinance is expected to help the city divert 7,930 tons of waste annually (by contrast, the disposable-foodware ordinance that the council adopted at the same meeting would divert 290 tons). The deconstruction ordinance is also expected to reduce the city’s greenhouse-gas emissions by 22,300 metric tons annually (for the foodware ordinance, the number is 470 tons).

This would be an interesting way for communities to limit teardown McMansions without having to explicitly mention big houses. When there are public discussions about ordinances regarding residential teardowns, it often comes down to a discussion of property rights versus neighborhood or community character. These can get ugly. But, an ordinance like this does not have to explicitly mention residential properties or single-family homes in order to affect them. Going through the reuse/recycle mode would require more time and labor and this might either constrict what is built on the site or stop the teardown process before it begins. Of course, those pursuing teardowns might simply pay more to deal with the new requirements. People who have the money to buy a lot and house (sometimes a perfectly functioning or not very old house) and just tear it down and build a new one might just be able to easily pay these new costs.

With this ordinance in mind, I imagine there are other ways local governments could restrict residential teardowns without necessarily targeting them. Why set up a battle about property rights, aesthetics, and community if it can be avoided by regulations that nudge people certain directions?

Scenarios in which McMansions are passed along to younger adults

Older Americans own plenty of large homes and commentators suggest younger adults have multiple reasons for not going after such homes:

Younger people have loads of reasons not to be charmed by the vaulted ceilings and chef-ready kitchens of homes perched on mountaintops or hugging beaches that promised solitude once but now cry of isolation…

A report from Business Insider highlights numerous reasons that younger people might not want to saddle themselves with such beautiful albatrosses. Down payments, student debt and preferences for rentals in cities coupled with vacation home getaways have all contributed to what the report characterizes as “millennials wiping out starter homes.”…

And that is those among them who can actually manage to save up a down payment. Too many others are so burdened by student debt that buying a house is a foggy image off in the distant future. And lots of young homebuyers underestimate what it will cost them to keep a house, making it less likely they’ll bite off more than they can chew the next time they go home-shopping.

Factoring in their concerns over the environment—the energy footprint of a big house and a long commute—and their disinclination to own cars, as well as the need to hold down multiple jobs or have one or more side hustles—and it looks as if those mega-residences are liable to stay on the market for quite a while longer.

While one angle to this is that Baby Boomers will have a hard time selling their homes, the other side is whether the younger generations want and can get to such homes. I have seen little suggestion that young adults truly desire McMansions.

But, I would not write off this possibility just yet. I could imagine several possible scenarios where McMansions happen to end up in the hands of future generations:

  1. Younger adults do well enough economically – or enough of them do since not all Baby Boomers own big homes either – to keep McMansions going.
  2. Baby Boomers cannot sell their large homes, the prices drop, and the homes are more in the reach of younger adults.
  3. Enough McMansions are converted to other uses – think multi-family housing – to keep the prices up enough to keep everyone happy. (Or, in a more dystopian model, McMansions are simply bulldozed or replaced to limit the supply.

I have a sneaking suspicion McMansions will be passed along in decent numbers to the next generation…despite the wishes of some.

Many Americans can’t afford a McMansion (even if they might aspire to one)

A recent study suggested Americans aspire to own the larger homes in their neighborhood. By using the term “McMansion,” the study might be read as some as suggesting that this belief is widespread among many Americans. Americans like big houses and they like to look to external reference groups to help guide their own behavior. Isn’t everyone after a McMansion?

Just three little problems:

  1. Many Americans do not live in neighborhoods with McMansions.
  2. Many Americans cannot afford a McMansion.
  3. Not all larger houses are McMansions.

McMansions are particular kinds of houses that require a certain social class and set of resources to acquire. Even in cheaper housing markets, McMansions are not within reach of many residents. Academic articles and media articles journals can use the term broadly but how many Americans truly live in McMansions – 10%? 20%?

At the same time, it is worth looking at the aspirations of Americans. Homeownership, particularly in a suburban setting, is an ingrained goal in American society. And Americans do seem to like bigger homes. But, do they really want a McMansion, a home that can be made fun of by others and with a descriptor rarely used in real estate listings? There is clearly a market for such homes but the buffoonish McMansion may not exactly be the goal of homebuyers.

 

Looking at “The McMansion Effect:” home satisfaction and size of the homeowners’ home

A new study under review looks at how satisfied owners are with owning some of the largest homes in their area:

This finding, Bellet reasons, has to do with how people compare their houses with others in their neighborhood—particularly the biggest ones. In his paper, which is currently under peer review, he looks closely at the construction of homes that are larger than at least 90 percent of the other houses in the neighborhood. By his calculation, if homes in the 90th percentile were 10 percent bigger, the neighbors would be less pleased with their own homes unless those homes grew 10 percent as well. Moreover, the homeowners most sensitive to such shifts are the ones whose houses are in the second-biggest tier, not the ones whose houses are median-sized.

To be clear, having more space does generally lead to people saying they’re more pleased with their home. The problem is that the satisfaction often doesn’t last if even bigger homes pop up nearby. “If I bought a house to feel like I’m ‘the king of my neighborhood,’ but a new king arises, it makes me feel very bad about my house,” Bellet wrote to me in an email.

The largest houses seem to be the ones that all the other homeowners base their expectations on. In neighborhoods where the biggest houses are more modest, Bellet told me, expanding the size of one’s house can be 10 times as satisfying as undertaking such an expansion in a neighborhood where the biggest homes are palatial.

Bellet sketches out an unfulfilling cycle of one-upmanship, in which the owners of the biggest homes are most satisfied if their home remains among the biggest, and those who rank right below them grow less satisfied as their dwelling looks ever more measly by comparison. He estimates that from 1980 to 2009, the size of the largest 10 percent of houses increased 1.4 times as fast as did the size of the median house. This means that the reference point many people have for what constitutes a big home has shifted further out of reach, just as many other lifestyle reference points have shifted in an age of pronounced wealth inequality.

Read the working paper here.
Three quick thoughts:
  1. The term McMansion in the paper seems to refer simply to the largest homes. At least a few of the homes are not likely McMansions since the term is much more complex than just referring to homes with a large amount of square feet. Is the big home architecturally sound? Is it a teardown replacing a smaller home? Is it less of an issue of the single home and more an issue of sprawl and excessive consumption? Calling all big homes McMansions does not add much to helping understand what exactly is going on with large homes. Not all large homes are made alike or may be as satisfying. It may, however, add sizzle to the title: “The McMansion Effect” sounds good.
  2. I would like to see more research that addresses the issue of homeowners comparing their homes to others around them. This paper suggests satisfaction is linked to nearby comparisons. How far does this geography extend – walking distance? Half a mile? 2 miles? Within the same municipality? Compared to what is seen on TV?
  3. This sounds similar to a recent argument about the “Dream Hoarders,” the group just below the wealthiest people who have status anxiety about keeping up. Here, those just below the biggest homes in the neighborhood can feel worse. Is it the largest houses that are the problem or the people in the next to largest houses who then long to have the biggest house. If only we could control the pesky human tendency to compare ourselves to people who have just a little more than us…

The rise of beach McMansions in New Jersey, Florida

Large homes are not just for suburban locations. Two recent pieces highlighted their role in changing beach communities. First, from New Jersey:

Decades ago, when I was a teenager, I rented a surf shack in the then-humble town of Beach Haven on the New Jersey shore. Four of us crammed into a squat cinder-block hut tucked behind a bungalow. We worked as lifeguards for $2.50 an hour. Still, our rent was only $187.50 each for the summer. We had a place to sleep, shower, and create memories. We didn’t need more…

But there is another less visible cost that rarely gets mentioned when Americans talk about coastal development and risks. Since the modern coast emerged after the Second World War, a series of land bubbles have wildly inflated land values, to the point that many ordinary families can no longer afford to live at the coast, or even afford a weekly summer rental. On Long Beach Island, a popular resort in Ocean County, where I worked as a lifeguard, $15 billion worth of property now crowds a narrow, 18-mile-long shoreline. The average price of a new home is about $1.1 million, with many costing millions more. Rentals run as high as $5,000 a week. Yet, paradoxically, the island was conceived by Morris Shapiro and other developers as an enclave for middle-class and blue-collar families – teachers, plumbers, electricians, and so forth…

I suppose it is unsurprising there are few, if any, surf shacks left. Most beach towns have been supersized. But unanticipated costs have come with that growth. High school and college students have few places to live and the labor pool for lifeguards, waitresses, hotel workers, amusement-ride operators, and so on has shrunk dramatically. Many shore towns now rely on a special federal visa program to supply summer help. Workers come from Eastern Europe, Ireland, even Australia. Even so, some businesses have been forced to cut hours or even close.

The change over multiple decades is drastic.

And from the Gulf Coast of Florida:

Anna Maria Island may be largely built-out, but that hasn’t stopped developers from buying older existing homes, tearing them down and replacing them with new high-end homes…

Officials in the cities of Anna Maria, Holmes Beach and Bradenton Beach say it is a worrisome long-term trend and that they are doing their best to maintain the island’s unique character and sense of place…

Stephen Gilbert, building official for the city of Bradenton Beach, said the land is often much more valuable than the existing older home that sits on the lot.

Of the new homes built in the last decade in Bradenton Beach, only a couple were intended as homes for the owners. The others were intended as investments to be quickly turned over for more cash, he said.

While the change here has come more recently, it sounds like a similar process: people with money and/or an interest in investments come in, tear down older homes, and construct beach McMansions. This has happens over a sustained period of time and the feel of neighborhoods and communities changes.

These changes certainly have local effects on hundreds of beach communities across the United States but there are larger processes at work. Are the big homes the cause or the symptom of bigger issues? The nature of real estate capital today plus the rapid rise in real estate values puts even small communities at the mercy of global markets. Communities can respond but turning down big amounts of new money is not easy and often requires significant opposition from local residents and leaders.

McMansion values still slow to recover in one wealthy Chicago suburb

The values of McMansions may be proportionally down and evidence from one well-off Chicago suburb suggests they are selling at similar prices to 15 years ago:

In South Barrington, home to swathes of McMansions, the market has been slow to recover. There, large single family homes regularly hit the market at the same prices they sold for in the ’00s, indicating an enduring lack of demand in the northwestern suburb.

Despite the risk that these homes presented leading up to the recession, it would seem they’re a more sensible investment today — so long as buyers know what they’re getting into. Pound for pound, McMansions are a ton of house for the money. But they’re not speculative equity, and they’re not a retirement account.

It would be helpful to see more data across suburbs. Without such figures, it is hard to know if:

  1. Is this an issue related to Barrington and its location and amenities? The suburb is almost all white and Asian and has a median housing value of just over $800,000. Is there less demand for housing in this particular location?
  2. Is this a problem for all McMansions in the Chicago area? If people are indeed seeking more “surban” locations or Baby Boomers are all trying to unload their McMansions at once, there might be relatively few buyers for such homes in a region of over 9 million residents.
  3. Are the particular features of these homes limiting the value? This could be due to particular features of the homes or many are now up for updates that have not been done.

The issue may not be McMansions at all: perhaps it is the mindset common among Americans that houses should be investments that increase significantly in value.

Will millennials kill McMansions?

Millennials get blamed for a lot of things and here is another possible area where their choices may have consequences: the selling and buying of McMansions.

The end of so-called “McMansions” has been predicted several times over the years, but those large, mass-produced houses that the baby boomer generation (born 1946-1964) favored as a status symbol kept coming back. Now, baby boomers are entering their 70s and 80s and many are looking to downsize, but they are finding it hard to offload these large homes, facing a paucity of buyers among the millennial generation (born 1982-2000), who are unable to pay the prices they want.

For anxious sellers, however, respite could be around the corner as mortgage interest rates ease, and the millennial generation becomes qualified for more and bigger loans, experts say…

A big problem for the McMansion market is the mismatch between where millennials prefer to live and where those large houses have been built. The younger generation gravitates to cities – where their jobs are — whereas baby boomers have built their homes in suburban locations…

Keys wondered if the housing preferences of the younger generation have truly changed or if there is only a “delay” in the demand for McMansions. Those homes may not be desirable to people in their late 20s but instead to people in their late 30s or 40s, he noted.

This is not the first time I have seen the suggestion that millennials have less interest in McMansions: Builder had a piece on this a few years back. And the baby boomers may have a problem bigger than just McMansions: who will buy all their homes, McMansions and otherwise? When housing becomes a primary investment for so many Americans, not having enough future buyers can become problematic.

More broadly, this discussion follows a typical pattern for stories and studies about millennials: will they act like previous generations (and have not done so thus far for a variety of reasons including an economic crisis and student loan debt) or do they truly have different tastes and want to lead different lives? In the realm of those who care about cities and suburbs, this is an ongoing discussion spanning years: will millennials be suburbanites or city-dwellers? Will they reject lives built around single-family homes and driving and prefer denser, diverse, culturally-rich communities (or a mix of both in “surban” places)?

If I had to guess, this group will exhibit some change from previous groups but probably not drastic change (based on the idea that social change tends to happen more slowly over time). Reversing suburban culture, ingrained among many American institutions and residents, would like take decades and not just one generation. The McMansions of older residents may not all sell at their preferred prices but barring another housing bubble (which could happen), they will be worth some money.