Where is the evidence? McMansion owners “favor” Cadillac Escalades

The connections between SUVs and McMansions continue: this article features a list of traits of Cadillac Escalade owners and their favored kind of housing.

The Escalade has long dominated the Navigator both in sales and cultural currency. Check out this list of Ten Seriously Dope Cadillac-Inspired Hip Hop Tracks. Indeed, the Escalade has long been a favored ride of the hip-hop crowd, pro athletes, Wall Streeters, business owners, drug kingpins and “McMansion” owners…

Who’s buying these hulking SUVs, according to the data? Rebecca Lindland, senior analyst for KBB.com, says it’s more than just the bling and business tycoon sets. “The Escalade and Navigator shoppers on kbb.com are very similar, leaning heavily toward a domestic, family-oriented mindset. But the Escalade buyer tends toward techie side, so if the new Navigator is stacking up well against Escalade on the telematics interface, Cadillac could have its hands full.”…

The market for large luxury SUVs is as well established as cigars, expensive brandy and coal furnaces. Even these harsh words from Consumer Reports can’t dampen the enthusiasm for these vehicles among the rich and brash. “This hulking SUV can comfortably accommodate seven, effortlessly tow more than 4 tons, and practically cast the shadow of the Queen Mary II. While the Navigator pampers you with power everything and a rich interior ambience, a few details detract from the idea of embracing this almost $90,000 behemoth.”

That people of different class statuses purchase different brands and models is well-established, going back to the General Motors brand for every buyer as well as more academic studies showing different tastes among different social classes. What I would want to see in this case involves something more: where is the data that shows McMansion owners favor Escalades over Navigators? Or, that people who own Escalades are more likely to live in McMansions than other kinds of homes?

This is not the first time McMansions have been connected to Escalades. For example, take the New York Times. From a July 2001 story:

There are those who are drawn to the Escalade simply because it is so far over the top. You see them pulling up to McMansions in the suburbs and to hip-hop clubs downtown, making a statement before the truck comes to a halt. On the flip side, it is not hard to find people who are appalled, sometimes with fanatical fervor, by what the Escalade represents. Glaring from subcompacts or crosswalks, they seem to hold this hulk of metal responsible for global warming and dolphins in tuna nets.

Or an October 2005 review of a Lincoln SUV subtitled “A McTruck for the McMansion“:

The Mark LT is priced thousands below its prime competitor, the Cadillac Escalade EXT, but the equipment list shows why. The Caddy has 45 more horsepower and comes only with full-time four-wheel drive. (Lincoln’s system is part time, and costs extra.) Lincoln doesn’t offer a navigation system, air-conditioned seats, traction assist, stability control or power folding mirrors. Its power seats have manual recliners.

Or a January 2014 story titled “In Housing, Big is Back”:

Affluent buyers are drawn to new homes in part because the market for existing homes is so competitive, said Stephen Kim, a Barclays analyst. Inventories of existing homes for sale remain low, and buyers are less interested in large homes in far-flung developments — the McMansions of the exurbs that were emblematic of the boom and bust…

In April 2012, they selected a model costing about $850,000 from a luxury builder and chose a number of standard options for an additional $650,000. Ms. Sleep, who was in the process of selling the software firm she founded nearly two decades earlier, added a wall of windows to the basement and furnished it with a pool table, a media room, a wet bar, a home office and a suite for their youngest daughter to use when she was home from college.

They added a second master bedroom suite, on the ground level, for use when they are older and stairs become tougher to climb. They upgraded floors, carpeting and molding, added a sunroom and a large deck and supersized the garage door to fit Ms. Sleep’s Cadillac Escalade. The home’s lighting and temperature, as well as media on any of 14 televisions and the sound system, can be controlled remotely.

I get that it takes a certain amount of wealth to own either an Escalade or McMansion – and linking McMansions to wealthy people is common – but I have yet to see more evidence that McMansion owners prefer Escalades.

McMansion as a symbol of wealth in America

A Washington Post review of a new book on social class suggests McMansions help illustrate class differences:

Its influence begins before birth and holds sway beyond the grave. It can determine who goes to prison and who goes to the Ivy League, who drinks bottled prestige water and who swigs from a foul tap, who rents rooms and who rattles around in a McMansion…

Fraser uses iconic events, documents and images from American history as his raw material for six essays on why class matters. The reality of class — not just patterns of consumption and markers of wealth and privilege, but raw power — had largely been expunged from our national vocabulary by political elites pushing the American Dream, he argues. But the dirty secret of class emerged a decade or so ago in the unequal wreckage of the global financial meltdown, he contends.

Throughout the use of the word McMansion from the late 1990s to today, it has often been used in this way: to symbolize the wealthy in America who can purchase and live in large new homes. At the same time, it is a little less clear what strata of Americans can live in McMansions. Is this the top 20%? The 1%? The “Dream Hoarders“? This depends somewhat on the metropolitan region as McMansions can differ significantly in size and price but I would guess McMansions are for those in the top 10-30% of American earners. Those who earn less cannot live in such a home while those above that level would not not want to be associated with McMansions and/or have enough resources to access even better housing.

At a broader level, where one can live is an excellent marker of social class: it hints at the wealth the homeowner has (it takes a certain level of wealth to purchase any home), the neighborhood or community in which the home is in hints at relative status, and the size and features of the housing is often taken to say much about the resident. A McMansion owner has a certain lifestyle and status.

Understanding car ownership in the United States through comparative data

Americans like cars. Just how much they do is easier to see with two sets of comparative data (first image, second image).

MotorVehiclesPerThousand

1510B35-vehicles per person finland andorra

Several things to note:

  1. The United States is toward the top of the list with a number of notable smaller countries. Other large countries tend to be further down the list (except for Italy).
  2. It is interesting that the number of vehicles per person is so high in many countries that have smaller populations and a smaller land area. In the United States, cars often seem necessary because it is a big country and the population is spread out. (This would be interesting to measure exactly: before the widespread popularity of cars, was the dispersion of the American population significantly different from other countries? This would help get at whether the car caused greater American sprawl or Americans had already spread out and it only accelerated with the availability of cars.)
  3. Having higher levels of wealth seems to be at least slightly connected to higher rates of car ownership. However, this is not necessarily a strong relationship. In other words, different wealthy countries have different approaches to vehicles. Compared to the United States, the other G7 members are far down the list.

Tiny houses with the luxury touches

Tiny houses could be used to address affordable housing or provide housing for the homeless – or they could be luxurious and appeal to the middle and upper classes:

The reality television series “Tiny Luxury” aims to bridge that gap, enticing viewers with high-end, highway-ready homes built on trailer chassis, all under 400 square feet…

Do new homeowners experience any angst about the size of the homes?

Tyson: They’ve anticipated what it’s going to be like. For people who can work remotely, it’s a traveler’s delight. They see it as having four times the freedom for a fourth of the price…

When you design for just a few hundred square feet, your homes can splurge on quality.

Tyson: We do a lot of granite and quartz countertops, or custom tops like slate, stone and butcher block. We can do really premium backsplashes and tile work in showers. We’re able to upgrade all the lighting and use better hardware.

The tiny house movement is not very big and I suspect the largest market involves people with means who either want to (1) downsize and live a different kind of life or (2) be more mobile and have a nicer house than an RV. If this is the case, then the tiny house becomes another luxury good that is not really within the reach of many Americans.

I know this might go against the audience of networks like DIY or HGTV that likely skew toward better off viewers but it would be interesting to see someone providing tiny houses to those who truly need one. It does not have to happen on a mass scale – imagine twenty episodes where one tiny house is built on each show – but it could generate a lot of positive sentiment toward tiny houses. Imagine “Extreme Home Makeover” with tiny houses.

Locating a supersized home for the young and wealthy

A recent report from Luxury Portfolio International suggests some young wealthy Americans want giant houses:

About 40% of wealthy younger buyers — those aged 25 to 49 — told real estate broker Luxury Portfolio International they hope to own a house larger than 10,000 square feet, long considered the upper range for McMansions, in a survey published this week. Nearly a quarter — 23% — said they want a home 20,000 square feet or larger.

If you didn’t think people bought houses that big, you’re kind of right. The average U.S. home size was about 2,400 square feet in 2016, according to government data. The survey’s respondents, who were an average of 37 years old with assets of $1 million or more, want a house about eight times that size.

Need help picturing that? Think four times the size of Kendall Jenner’s $8.55 million Los Angeles spread or about the size of Taylor Swift’s Rhode Island estate and DJ Khaled’s Florida mansion — combined.

And the size of their desired home differs quite a bit from what older Americans with wealth want:

ElbowRoomBloombergGraphic

As the first article above notes, these are not just large homes: they are supersized homes. Beyond following some celebrity model or some cultural image of what constitutes a significant home, I wonder if this is also affected by where these different generations want to live. To have such a large home, an owner probably needs a sizable property in a more suburban setting. In contrast, those 50+ and wealthy may prefer smaller places but in urban centers. Those city homes or condos or penthouses may not be much cheaper or any cheaper but they certainly are connected to a different kind of life compared to the suburban estate.

Percent of homes worth over $1 million quadruples in last 15 years

Rising housing values, particularly in certain markets, mean that there are now more American homes worth over $1 million:

The share of homes valued at more than $1 million has surged more than fourfold since 2002, according to new data from real estate site Trulia, which analyzed the luxury real estate market in the top 100 U.S. metropolitan areas. Across those regions, about 4.3 percent of homes are now worth at least $1 million, compared with about 1 percent in 2002, said Trulia senior economist Cheryl Young…

The share of homes valued below $1 million is “decreasing at a rate we’re surprised by,” Young said. “It was 98.9 percent in 2002, and now it’s 95.7 percent. That is pretty shocking.”

Rising real estate values, tight inventory and a lack of new construction are contributors the surge in million-dollar homes. Yet another factor may be at play: rising income inequality, which has benefited the bank accounts of America’s richest families…

It may explain why the share of homes worth $5 million or more is growing even faster. This segment is what Trulia describes as “the most luxurious homes available.” To be sure, it remains a tiny part of the real estate market, accounting for just 0.28 percent of overall sales. Still, that figure is five times higher than in 2002, Trulia said.

In the abstract, who is opposed to rising housing values and the benefits that confers to homeowners and communities? Yet, the flip side of rising housing values is that more homes might then be out of reach for average or even well-off residents.

Three related thoughts:

  1. While those fighting for more affordable housing have discussed this flip side for decades, I wonder at what point it may be viewed as immoral to live in an expensive dwelling.
  2. Expensive homes do not usually exist in isolation. For example, it would be very unusual to drive down a street of low-value homes and all of the sudden see a large expensive home. Expensive homes are often part of larger projects – buildings or developments or subdivisions – that give way to a whole wealthier lifestyle that include expensive homes. In other words, this is not just about the value of individual homes: it is about clusters of homes and locations that help elevate some housing values.
  3. Related to both #1 and #2, can we expect some residents to underestimate their housing values or sell at lower price points than they could get?

Successful Naperville also linked to stressed out teenagers

Naperville is not the only wealthy suburb to experience issues related to anxiety. Here is how one expert describes how community success can be related to worries:

Michelle Rusk, former president of the American Association of Suicidology, said when it comes to community pressure placed on teens to succeed and families to maintain the idealized “white picket fence” life, little has changed since she grew up in Naperville in the 1970s and ’80s…

Experts who work with Naperville students say they are treating more children experiencing signs of distress at a younger age…

Growing up in Naperville, Rusk, formerly known as Michelle Linn-Gust, said she heard stories of big houses with empty rooms because the owners couldn’t afford to furnish them or men who left their wives because they felt they weren’t making enough money.

People move to Naperville because it’s recognized as a great place to raise a family, but maintaining that image is challenging enough for adults let alone kids, she said.

In the 1990s, historian Michael Ebner argued Naperville was a “technoburb” – a suburb with a high number of high-tech and white-collar jobs – and this was accompanied by the development of high-performing schools. Naperville was not always like this; before the 1960s, Naperville was just a small town surrounded by farms.

But, is there a way to get out of this spiral of wealth, success, and anxiety and suicides? As Rusk noted above, Naperville is attractive in part because of its high-achieving environment. In communities like this with residents ranging from the middle-class to upper-class, families want only the best for their kids. Would residents and others be willing to give up some of the success to have better lives?