There was a small ray of hope just after the Lehman collapse that one of the most lamentable characteristics of US society – the relentless urge to build massive McMansions (funding questions aside) – was fading. Alas, as the Census Bureau confirmed this week, that normalization in the innate American desire for bigger, bigger, bigger not only did not go away but is now back with a bang.
According to just released data, both the median and average size of a new single-family home built in 2015 hit new all time highs of 2,467 and 2,687 square feet, respectively.
And while it is known that in absolute number terms the total number of new home sales is still a fraction of what it was before the crisis, the one strata of new home sales which appears to not only not have been impacted but is openly flourishing once more, are the same McMansions which cater to the New Normal uber wealthy (which incidentally are the same as the Old Normal uber wealthy, only wealthier) and which for many symbolize America’s unbridled greed for mega housing no matter the cost.
Not surprisingly, as size has increased so has price: as we reported recently, the median price for sold new single-family homes just hit record a high of $321,100.
The data broken down by region reveals something unexpected: after nearly two decades of supremacy for the Northeast in having the largest new homes, for the past couple of years the region where the largest homes are built is the South.
While historically in the past the need for bigger housing could be explained away with the increase in the size of the US household, this is no longer the case, and as we showed last week, household formation in the US has cratered. In fact, for the first time In 130 years, more young adults live with parents than with partners…
…so the only logical explanation for this latest push to build ever bigger houses is a simple one: size matters.
Furthermore it turns out it is not only size that matters but amenities. As the chart below shows, virtually all newly-built houses have A/Cs, increasingly more have 3 or more car garages, 3 or more bathrooms, and for the first time, there were more 4-bedroom than 3-bedroom new houses built.
In conclusion it is clear that the desire for McMansions has not gone away, at least not among those who can afford them. For everyone else who can’t afford a mega home or any home for that matter: good luck renting Blackstone’s McApartment, whose price incidentally has soared by 8% in the past year.
For those curious for more, here is a snapshot of the typical characteristics of all 2015 new housing courtesy of the Census Bureau:
Of the 648,000 single-family homes completed in 2015:
- 600,000 had air-conditioning.
- 66,000 had two bedrooms or less and 282,000 had four bedrooms or more.
- 25,000 had one and one-half bathrooms or less, whereas 246,000 homes had three or more bathrooms.
- 122,000 had fiber cement as the principal exterior wall material.
- 183,000 had a patio and a porch and 14,000 had a patio and a deck.
- 137,000 had an open foyer.
The median size of a completed single-family house was 2,467 square feet.
Of the 320,000 multifamily units completed in 2015:
- 3,000 were age-restricted.
- 146,000 were in buildings with 50 units or more.
- 148,000 had two or more bathrooms.
- 35,000 had three or more bedrooms.
The median size of multifamily units built for rent was 1,057 square feet, while the median of those built for sale was 1,408 square feet.
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Of the 14,000 multifamily buildings completed in 2015:
- 7,000 had one or two floors.
- 12,000 were constructed using wood framing.
- 6,000 had a heat pump for the heating system.
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Of the 501,000 single-family homes sold in 2015:
- 453,000 were detached homes, 49,000 were attached homes.
- 327,000 had a 2-car garage and 131,000 had a garage for 3 cars or more.
- 200,000 had one story, 278,000 had two stories, and 24,000 had three stories or more.
- 348,000 were paid for using conventional financing and 42,000 were VA-guaranteed.
The median sales price of new single-family homes sold was $296,400 in 2015, compared with the average sales price of $360,600.
The median size of a new single-family home sold was 2,520 square feet.
The type of foundation was a full or partial basement for 80% percent of the new single-family homes sold in the Midwest compared with 8% in the South.
109,000 contractor-built single-family homes were started in 2015.