The McMansion is Dead
Once upon a time, the McMansion was a symbol of prosperity for the American middle class. After the 2008 recession, trends shifted. Today’s home buyers are more concerned with quality and the environment, rather than keeping up with the Joneses.
The stereotypical image of a McMansion is a six-bedroom and four-bathroom ranch house on steroids, with a driveway filled with gas-guzzling SUVs. A perfectly manicured green lawn fertilized with chemicals, sprinkling (and wasting) hundreds of gallons of water every day completes the picture. It’s a wastefully large home that doesn’t fit the image Millennials want to convey. Furthermore, repairing them is exceedingly expensive, due to their size and complexity.
There is no doubt that shifting demographics and the aging population are influencing the future of real estate in the United States.
These once glorious examples of success are losing their appeal as baby boomers downsize and increasingly want low maintenance living in communities with comfort and amenities.
As the US experiences the retirement of 3.7 million people per year, those retirees are also changing real estate. The baby boomers are unwilling to spend their retirement years boxed into an apartment. They want to retain:
- purpose and importance
- continue to pursue their causes, hobbies, and passion
- live happily with their pets
- be surrounded by people they enjoy
Real estate developers are catching on. Developments are larger and have more independent living spaces, with more amenities, entertainment, and autonomy. Gone are the restrictions about 1 small dog and quiet hours at 8 PM.
Millennial preferences shifted as well. Millennials thought they liked tiny homes or UDPs, until they tried living in one. Then some brave parents tried living in one with children.
Americans, even millennials, still want a large home. According to the US Census Bureau’s most recent study, homes continue to grow in square footage, while families continue to grow smaller. The national average single-family home’s square footage was 2,467 in 2015, compared to 1,595 in the 1980s.
Some of the factors influencing the future of real estate in the United States include shifting demographics and an aging population.
An Aging Population: By the year 2050, there will be more people over the age of 60 than young people younger than 15. This trend is happening globally.
Expanding Cities: Worldwide migration means the big cities will get bigger. More and more of the population is concentrated in big urban centers, and people find they like living in cities areas where they can walk to work, stores, and restaurants.
Diversity: Urban housing specifically catering to new immigrant, international workers, and people seeking to expand their cultural experiences is a growing market.
Creative living spaces: Likewise, adaptive reuse of existing buildings into innovative living spaces is a developing market. Affordable housing, inclusionary upzoning and infill development are all trending. Reworking the existing city landscape to efficiently include more people is the way of the future.
Environmentally Friendly Homes: The children who grew up in those McMansions are now the millennial generation. This generation has a deep concern for the environment, and the future of real estate is green. Homes made of recycled or “green” materials and outfitted with solar panels are extremely appealing to this younger generation of home buyers. Likewise, the concept of adaptive reuse appeals to millennials.
These shifts will continue to drive real estate purchases, developments, and the services that emerge to support the population living in them.