Tag Archives: excessive consumption

You don’t have to loathe McMansions to support tiny houses

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An interview with New Zealand actor/musician Bryce Langston about his interest in tiny houses includes his response to growing up in a McMansion:

8. Describe your childhood home.

I grew up in a McMansion, really. My parents have a large house on the Shore, four bedrooms, two lounges, an office. It was a great family home. I actually don’t loathe McMansions at all. I have seen wonderful large homes that have been constructed with great thought and care for the environment around them. They are just not a practical solution for all the people on the planet in a world with limited space and resources. The main problem is the debt associated with owning them. And the lack of freedom that comes with that debt…

10. Are you an evangelist for minimalism?

What I want to do is let people know there’s a choice. If you’re happy with how things are in your life and the work you do to pay for that then that’s fine. But lots of people aren’t. They’re really hurting and unhappy in their jobs and they don’t see a way out of being in debt for 30 years or whatever. People say you have to live in the real world, but the real tangible world is one where food does grow on trees and water falls from the sky and everything is provided for you to survive…

12. Will tiny houses take over the world one day?

That really depends on the path of human consciousness. If we grow into a culture that focuses on fair distribution of resources, care of the planet and pursuit of non-material happiness, then I think downsized homes will become normal. If our society continues down the path of uncontrolled material and economic growth, then it’s unlikely.

Langston offers some of the common critiques of McMansions – they are about materialism, they use too many resources, they put people in debt – while also noting that he enjoyed the large home he grew up in. If you read some of the criticisms of McMansions, it may be hard to imagine anyone could enjoy living in a McMansion.

There are also some religious and moral overtones here. Langston ties living in a home to larger issues in human life including defining success and what it means to achieve something. This isn’t unusual in discussing McMansions (see another example here or this recent case of a Catholic archibishop): homes could be considered necessary structures but they can also be places of meaning as well as important symbols for others to see.

McMansions can derail your retirement plans

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Amidst concerns baby boomers will have difficulty selling their homes, here is a suggestion that buying a McMansion can derail retirement plans:

We occasionally hear about a friend who somehow saved up enough money, or just decided to chuck it, and walks off to retire at age 60, 55 or even 50. It can be done.

Also, some people live in a McMansion, drive a Tesla, and vacation in the south of France. But we know it’s a very expensive lifestyle. And we know we all can’t afford it, as the real estate bust of the 2000s so cruelly reminded us. We need to appreciate that, like buying a McMansion, taking early retirement is a very expensive proposition. Yes, a fortunate few can afford it. But most of us just have to get real.

Two things are interesting here. The first is that purchasing a McMansion seriously hampers retirement plans. Purchasing one uses up a lot of money and saddles the owner with a large mortgage (plus the home might be underwater and it can cost a lot to fill such a large home). A more prudent investor would purchase a more modest home rather than splurging on a McMansion.

The second interesting part of this is the comparison to owning a Tesla or vacationing in France, both relatively rare things. For example, Teslas start around $70,000 and only about 22,500 were sold in 2013. In the 2000s, it was common to see McMansion purchases compared to SUVs, a mass production item that cost much less than a Tesla. The implication then is that McMansions are even rarer today, making it even more of a folly to own one.

Financial advice for young adults: don’t buy a series of McMansions

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A set of “10 Pillars of Financial Independence” includes advice about avoiding McMansions:

Therefore, their choices are to sacrifice a bit now so that in 30 years they have a home paid for and $204,958.63 in the bank, or a slightly smaller house payment and a home paid for without a good start on their nest egg. Many of the choices you make 10-20 years ahead of retirement can pay off very well when you want to retire.

I’m a firm believer in paying for your home as soon as possible. Unfortunately, beginning with a starter home and moving up to McMansion after McMansion has become commonplace; this habit can make it practically impossible to pay off your home in a timely fashion.

The general advice sounds good: beware of long mortgages for houses you don’t need. Instead, take the money you could save with a smaller mortgage over a shorter period of time and invest it.

However, the idea of people buying McMansion after McMansion after having a starter home sounds exaggerated to me. Perhaps I might be wrong: do McMansion owners tend to live in multiple such homes over their lifetime? Are they more or less likely to move than others? The illustration makes sense – don’t keep purchasing home after home that you can’t afford – and fits the idea that Americans overconsumed in the late 1990s and early 2000s. But, I would be interested in knowing more about serial McMansion purchases…

How related are home sales and car sales?

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Americans like big houses as well as cars. But, are sales of homes related to sales of cars?

Driving to work the other day I heard a radio analyst assert that the recent increase in home sales is responsible for the increase in automobile sales (McMansions come with at least two car garages you know!) The short piece didn’t offer much in terms of quantitative information and this made me wonder what data was used to support such a claim. The analyst could have looked at SEC (Securities and Exchange Commission) filings, the equities and derivatives market, or perhaps research from industry associations such as the National Association of Realtors; the latter would prompt me to consider confirmation bias.

If only considering home sales, Federal Reserve Board economist Andrew Paciorek recently published an engaging paper describing the effects of household formation on housing demand. Paciorek asserts that in the past 30 years the aging population has moved into smaller homes, which is intuitive from the practicality it offers seniors. Paciorek also postulates that the poor labor market has depressed the headship rate, which is defined as the percent of people who are heads of household via U.S. Census population projections.

According to the S&P/Case Shiller Home Price Index report, the average U.S. home is now worth approximately 10 percent more than it was a year ago, marking the largest annual improvement since the market turned south in 2006. What of the automobile market though? American popular culture paints home and car ownership as inseparable in the “American Dream”. The most recent J.D. Power report projects August sales to increase 12 percent compared to last year, the highest monthly sales volume since 2006.

It would be easy to paint a picture of recovery for these industries based on sales revenues, although there is no indication of a casual relationship between the two. These reports are meant for the average consumer only in a sense to stir up positive sentiment, which in turn spurs more discretionary spending. It is more plausible that these reports are meant for the real stakeholders: shareholders and potential investors. We can surmise that in a world of algorithmic high frequency trading and complex derivatives based on yet other derivatives, that the common equities market does not always correlate to the real-world P&L performance. I recall a former boss’s retort of traditional value investing: ‘The market can stay irrational longer than you can stay solvent’.

The conclusion here is that this is a “common sense explanation” without much merit in data. And, I wonder if this is a classic case of the casual observer making a spurious association: both car sales and home sales go back in a better economy.

This is also interesting because of the number of times in the last decade or so when journalists and commentators have linked the building of McMansions to consuming other large objects, particularly SUVs. The idea behind these comparisons is that Americans in general have learned to consumer more bigger items. However, I’ve never seen any data that the same people who purchase McMansions are necessarily the same people purchasing SUVs, super-sized fast food, bulk items at big box stores, and other large items that fit into a category of excessive consumption.

Are McMansions due to Baby Boomers?

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I’ve seen this suggestion before: Baby Boomers are responsible for McMansions.

For decades, demographers, marketers and pollsters have been carefully tracking baby boomer trends, from the increasing demand for classroom space during their early school years to the rise of the McMansion as they began to raise families of their own.

This could be a case of confusing correlation and causation. The average new home in the United States in the 1950s was under or around 1,000 square feet while it has risen to near 2,500 square feet in recent years. There is little question that homes have gotten bigger. At the same time, is this due to the actions of the Baby Boomers? Are McMansions really a generational issue? A few thoughts:

1. This could be related to the common argument that McMansions are symptomatic of excessive consumption. After World War II, the prosperity in the United States made possible all sorts of new and more purchases including items like houses, cars, televisions, and more. However, this consumption might cross multiple generations and be the “normal” American pattern.

2. There is recent data suggesting two things. Aging Baby Boomers will look to sell many of these larger homes in future years as they retire and downsize. At the same time, Millennials may be less interested in big houses that their parents purchased. But, might this be more about life stages than generations?

I argue it is too soon to tell whether McMansions and big homes can be closely tied to a specific important American generation or whether McMansions have cross-generational appeal. It may be beneficial to an argument to tie the homes to Baby Boomers (they get blamed for other issues, they are aging so it suggests McMansions could be on the way out, etc.) but we need to see more evidence.

Maybe not just McMansions making a comeback; “Super Gulp” mentality extends to pickup trucks

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A review of the 2014 Chevy Silverado starts with some commentary about American consumer behavior: from McMansions to Super Gulps to large trucks.

North Americans are feeling so comfortable with their bank accounts these days that they’re re-embracing a Super Gulp mentality. They’re eating more hamburgers – at restaurants. They’re back to buying McMansions. And, as the major auto makers reported last month, they’re also buying trucks – especially the sort of full-size pickups that could plow sedans asunder.

General Motors reported sales of its Silverado were up an astounding 25.3 per cent in May compared with a year earlier – and that’s before its long-overdue update, which arrived at dealers this month with the same $32,710 starting price as the outgoing model, despite massive tweaks.

Small might have been big in a down economy, but for the 2014 model year, big is most definitely back en vogue.

I’m not sure exactly why this commentary starts the review as it seems to have a decently positive ending:

The 2014 Chevrolet Silverado may have been redesigned as a boxy utilitarian man wagon, but it’s a muscular manservant that even a woman could love.

At the least, this review draws upon a common critique of McMansions, SUVs, and other large items: they are all part of consumer mindset where bigger is better. These sorts of comparisons to large food portions or vehicles are not unusual when invoking McMansions. And lurking behind this is the issue of how to pay for all this size – the review doesn’t mention it but a fully loaded 2014 Chevy Silverado doesn’t come cheap (MSRP starting at $31,715, according to Chevy). Additionally, the size is anti-social as the truck reviewer dreams transforming her commute in the truck into a demolition derby.

It’s too bad we can’t get this same reviewer to look at a few houses of different sizes, or perhaps an economy car, to see if this worry about the size of consumer items is a bigger issue.

Hoping McMansions aren’t making a comeback

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Not everyone is happy with the idea that McMansions may be making a comeback:

Please don’t tell me we’re picking up where we left off. Don’t get me wrong, I’ve got nothing against big houses in particular, but I had hoped we’d seen the end of over-building tiny residential lots to gain spaces far larger than they really needed to be. If there was a silver lining in the housing downturn, I thought it might be a shift toward smaller spaces that put a premium on creativity, great design, and organization.

Thankfully, I don’t think the census data points toward the whole nation deciding, once again, that bigger is better. Instead, I think we’re seeing the results of a very simple economic fact: When the economy is in the tank—which it undoubtedly was a few years ago, when 2012 completions were in the planning, permitting, and construction phases—the only people building houses were the “Go Big or Go Home” crowd whose members probably splurged for the extra bedroom or three. That’s why the census data is now showing a record high median home size. I hope, at least.

See recent posts about a possible return of McMansions: a CNN report in early June 2013 and a New York Times follow-up on the CNN piece.

Tim Layton hints at several complaints against McMansions. First, the homes are simply too big to start with. They have more space than people really need. This is related to the idea that Americans often think “bigger is better” and don’t think about anything else. Instead, Americans could think more about the design of their homes rather than just focusing on more space. This sounds similar to Sarah Susanka’s arguments about her Not-So-Big House.

Additionally, this also gets at trends and cycles in housing. McMansion-type homes emerged in the 1980s with the term exploding in the early 2000s. But, the economic crisis led to smaller homes for several years. The question is what will come next. Layton does not want McMansions to return but he also notes that we may also be in new kind of market where the wealthy continue to purchase such homes while they don’t really extend to the larger housing market. Perhaps there will be a limited McMansion comeback? If so, there may be plenty of opportunity for builders and others to be more creative with smaller homes.

Uptick in SUV/light truck sales alongside increase in big houses

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Following up on a supposed McMansion comeback, Jordan Weissmann notes that SUV sales have also increased:

And how about those gas guzzlers? They’re on the rebound too. More than 51 percent of new autos sold today are light trucks, a category which includes SUVs. That’s right where we were in the Spring of 2007, though below the all-time peak of around 6 percent.

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Now some caveats. The light truck category also includes increasingly popular crossover vehicles, which share some of the space and styling of SUVs, but are more fuel efficient. So the big cars being bought today aren’t quite the same as the big cars that were being bought yesterday. Meanwhile, mortgage credit is hard to come by, and perhaps as a result, the average new home buyer is a bit richer than before the crash, according to the NAHB’s data. That might partly explain our growing abodes, since wealthier families tend to buy larger homes. And as recession-scarred Millennials start entering the home market, there’s a chance they’ll start opting for smaller houses, as some real estate experts believe they will.

But sometimes it just feels like we never learn.

This builds on one of the most common critiques of McMansions: they are part of a package deal of excessive consumption that includes SUVs, bulk purchases at big box stores, and oversized food portions. There is little doubt that Americans consume a lot, particularly in comparison to many other nations, but it is not just about having a lot. This critique also is about being green and asking whether these levels of consumption can continue or could be extended to all that many other humans before resources run out. And, it often seems that there is a moral argument underlying this critique: should people have this size house and this size vehicle? This is why I think it would get really interesting if McMansions could be much greener (sustainable materials, low energy usage, less reliant on automobiles and built in denser areas) and SUVs could be more fuel efficient (is 40 mpg doable?).

McMansions = SUVs, large TVs, air conditioning, and steaks

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Here is another example of how McMansions are tied to larger patterns of excessive consumption:

OK. Move along. Nothing more to say. Earth Day is over. Get back into your SUV, drive to your 5000 square foot McMansion, flip on your 80-inch plasma TV, crank down the AC, crank up the grill, throw on a big slab of carbon-laden beef, secure in the knowledge you’ve done your duty, paid homage to the lonely little rock in space upon which we depend for life.

Whew. Hard work, great sacrifices. Sure glad Earth Day only comes once a year.

One way to interpret this is someone could fight against McMansions and their construction and still have to deal with a whole host of other issues including driving, entertainment options, and what kind of food Americans eat. In other words, McMansions are just one part of a larger issue of American consumption. Perhaps the kind of people who purchase McMansions in the first place are more likely to purchase the other listed products but I haven’t seen this kind of evidence.

Drawing the line: an 18,000 square foot, $45 million home IS NOT a McMansion

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I know the line and price point between a mansion and a McMansion is not exact but this goes way over the line: an 18,000 square foot, $45 million home in the Hamptons is definitely not a McMansion.

Even in a rich man’s playground lined with one McMansion after another, the Linden Estate in Southampton, N.Y., stands out as one of the best. The stately — and gigantic — home sprawls across 18,000 square feet on a 9.11-acre plot, and it has not one but two outdoor pavilions and a bevy of resort-style amenities (including indoor and outdoor pools). But it seems like that might not have been enough to satisfy one tech tycoon.

James H. Clark, co-founder of Netscape (you remember that, right?), was reportedly under contract to buy the glorious property at a $49 million price tag last July — after the mansion spent a staggering four years on the market. Clark and his wife (both pictured at left) even gave Haute Living magazine a tour of the home’s immaculate grounds. But the sale was never completed, and now, less than a year later, the home is once again up for sale for $45 million, Curbed reported. It’s unclear exactly what happened, but man, what a bummer for the owner.

I’m not sure exactly what McMansion means in this setting. Mass-produced? Probably not homes of this size. A large house? This one is extra large, or gigantic as noted in the story. A home for the wealthy? Clearly.

I wonder if there is something else going on here. One idea about McMansions is that they are about excessive consumption. This often refers to the average American taking on too big of a mortgage or purchasing a lot of space that they don’t need. But, might this also refer to excessive consumption by the ultra-wealthy? Of course, the wealthy may not have the financial difficulties in purchasing some homes but the tone here might be that the even the wealthy don’t need a home like this. Then, the term McMansion applies even more broadly to any home consumption that might be considered out of the ordinary.