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A Growing Problem in Real Estate: Too Many Too Big Houses

hycaria 7y ago
Ah I always forget, what's the trick to read wsj articles again ?
- docdeek 7y ago
  Outline.com - in this case: https://outline.com/SAJ7yR https://outline.com/SAJ7yR
  - hycaria 7y ago
    Thank you very much !
    - DennisP 7y ago
      Another way is to append "?mod=rsswn" to the URL.
- dymk 7y ago
  Pay for a subscription
Blackstone4 7y ago
We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.
- dogma1138 7y ago
  The UK has a different issue. The size of the homes is just absolutely tiny even for the same number of bedrooms it has been shrinking and it shrinking still. The houses in the article aren’t Victorian era detached houses that are being hogged they are fairly new built homes just big ones. Also council tax even for a large house is often quite lower than 4K, stamp duty starts at 125K and between that and 250K it’s just 2%. So with the exception of London and a few other cities in not sure it’s what is preventing retired people form buying newer builds, the fact that the new build is likely considerably worse than the 80 year old house they live in just might be however.
- eertami 7y ago
  Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need property taxes to put and end to the situation you describe, amongst others. But the UK has a fetish for homeownership, culturally people are convinced they _must_ own a house or multiple, and so many homes were practically given away for free by past governments. Any Government trying to implement policies that try to fix our housing crisis will be voted out almost instantly by a class of people who do not care what is for the public good, only that things benefit them.
  - Blackstone4 7y ago
    I feel that it was not "extremely misleading" within the given context which referenced older couples in larger properties. In this case, they are the ones typically paying the council tax. I agree with you that the UK needs property taxes to be paid for by the owners. This would help reduce speculation and encourage utilisation of the existing housing stock. But as another post has mentioned, objections include "think of the old people who are worth $1m+ in property but would have to move out because they have low income"....boohoo...
    - smcl 7y ago
      You need to be careful when dismissing caution about the elderly who have - through whatever means - found themselves living in a valuable property. The following are just as likely: - a wealthy individual with many properties who can easily afford a few extra hundred quid a month - someone living just above poverty level in a property in a previously modest area that, thanks to a gentrification, has exploded in value - and would to move out if their tax band was bumped up a bit We cannot just dismiss the plight of the latter simply because we want to disincentivise the former. I'd like to add that the vulnerable (including but not limited to - elderly, long-term unemployed, immigrants, disabled) in the UK have already had to deal with cuts in local services as well as periodically being labelled by the government and the press as lazy or pathetic or scroungers. I'd encourage anyone to resist anything that could be used to further victimize or immiserate them - even if it is just in the form of a casual tweet or comment. Edit: My last paragraph really sounds a little harsh on re-reading. This is because it was meant to be an "as an aside" comment and not accusing Blackstone4 of anything sinister! I'm generally in favour of taxing the rich and powerful.
- circlefavshape 7y ago
  Oh come on. My youngest will be 18 in 8 years, so I should be squeezed out of my 180m2 (1800 square foot) home when she goes to college? When I'm 55?
  - masklinn 7y ago
    The article is about single-child couples who built 400~700m² houses as their children were already adults. Checking the numbers, Bethell is 78 so bought / built a 700m² house at 69. Their monstrosity of a house has 4m ceilings from the pictures. The Hambleton built their house at 82 and 68.
  - coldtea 7y ago
    As if 150, 120, even 100m2 homes aren't big enough for a couple, and anything below 180m2 is "squeezing"?
    - circlefavshape 7y ago
      Haha, sorry - bad choice of word there. I simply meant "forced to leave" The issue isn't whether it's big enough - it's that it's my home.
      - coldtea 7y ago
        Yeah, that's totally fair! People shouldn't be forced to leave their houses because of rising taxes...
- deleted 7y ago
  [deleted]
- NeedMoreTea 7y ago
  That was one of the advertising, rather than real justifications for getting rid of the rates - which was on ownership rather than occupation, and replacing it with first the poll tax - and we know how popular that was. Then council tax. It was nothing other than a massive subsidy for the most wealthy as the top band is reached so early - it's only slightly less regressive than the poll tax was. The Tory campaigns were built around how "unfair" it was for the old widow or couple, who'd worked all their lives, to pay the same as a family of 5. No mention that no one in their right mind thinks a widow still needs a 4 or 5 bed house. Double bonus: In bringing in council tax local finance could be massively further centralised, weakening the regions even more. It's really surprising how little push there is to get shot of council tax, bring back rates or some properly progressive tax.
  - tomatocracy 7y ago
    Part of the idea of the ‘poll tax’ was also to increase accountability of local government by making it more transparent - ‘why do you charge twice what the neighbouring council does?’ Council tax actually is relatively progressive when you consider that council tax benefit is also part of the system. Very few areas have a large number of band H homes - parts of central London do, but even there you might be surprised how small a number you’re talking about - there are only c15k in the City of Westminster for example, the borough which includes the whole of Mayfair and Belgravia.
    - TheOtherHobbes 7y ago
      The difference between a multi-million pound mansion owned by an offshore holding company on behalf of a billionaire and sort-of-okay almost affordable housing is usually only a few hundred pounds a year. And accountability has clearly not been improved in any way. In fact billionaires rarely pay council tax at all because councils rarely chase them. There's no point sending bailiffs to an empty property protected by professional security owned by a company with an offshore address that's effectively immune to any form of legal action.
      - tomatocracy 7y ago
- pjc50 7y ago
  The UK also has Stoke-on-Trent giving away houses for £1 in a desperate attempt to unblight the place. The UK's problem is not so much lack of houses (although the planning system really doesn't help) as a combination of over-financialisation and over-centralisation. People believe that all the high-paying employment, entertainment, and oligarch money is in London. It's also the default destination for immigrants. As a result you've got people trying to live in sheds there. Meanwhile everywhere from seaside towns to Birmingham gets treated as second-class citizens, with inadequate public transport and little inward investment.
  - tomatocracy 7y ago
    It’s largely internal migration driving that effect in the UK, not external migration or financialisation. Children go to university and never come back. The good jobs ARE largely in London and the South East, and people follow their friends creating a network effect too. It’s also not new - it’s been going on since the end of the Second World War pretty much.
    - TheOtherHobbes 7y ago
      The jobs are in London, but so are the costs. In terms of living expenses, the cost/benefit ratio for other cities is much higher. The real benefit of London is the networking and the culture. There's a lot of both - more so than elsewhere. Whether it's worth the insane housing costs is debatable.
      - tomatocracy 7y ago
        Housing costs aren’t insane in the commuter belt if you have a decent job in London. Most people working in London don’t live in London. Good job in London, house in the South East, commute by train, still looks better to a lot of people than poor job in a rural area of the North or Wales and getting a less good house. Of course there are some professions where the equation works the other way - medicine being one obvious example.
    - pjc50 7y ago
- camelNotation 7y ago
  What about the headache of maintaining a big home? I've seen what it is like to care for a large home. It's a nightmare, whether you have money or not. Every pool, every gymnasium, every commercial-grade appliance, etc. They all require maintenance, repair, and eventual replacement. To do that, it costs a lot more and the available labor is much more limited. You have to wait weeks for some guy who lives two states away to come in and work on your elevator and when he gets there he charges you an unbelievable amount of money to do basic things. And when things aren't broken, you have to always be renovating or updating something. Things that look like they are aging or out of style don't signal your status because they tell your guests and visitors that you have a big home, but maybe can't afford it. So you're always updating. Always renovating. It's all a show. The idea of dealing with all of these "luxuries" is awful to me and I've seen wealthy people who didn't have to work basically turn home maintenance into their job because it required just as much time and stress as anything else. What is the point of wealth if things you use it for give you just as much headache as a middle class person's job?
  - deleted 7y ago
    [deleted]
  - pnutjam 7y ago
    Why maintain it when you can pack it with junk. (what I've seen way too often)
pjc50 7y ago
This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-states/ https://dqydj.com/net-worth-percentile-calculator-united-sta... and you find that they are at least in the 96.5 percentile. (They are unlikely to have mortgaged it, as most lenders won't lend past retirement for obvious reasons) The house is 700 (seven hundred) square meters. By comparison, London is banning the construction of "mega homes" over 150m2 in an attempt to prevent hypergentrification by oligarchs. These people in the article are the wealthy who haven't noticed that the ladder has fallen away behind them leaving nobody to buy their mansion.
- ptah 7y ago
  you mean american, not first world problem. everything is big in america
  - oasisbob 7y ago
    There's certainly some truth in what you say, but a lot of variability in such a large country too.
- mruts 7y ago
  I mean, not really. I knew plenty of people buying new mcmansions on credit when their household income wasn’t above 80k. Many many Americans over leveraged themselves by buying up huge properties with no down payment.
  - masklinn 7y ago
    > McMansion is a pejorative term for a large "mass-produced" dwelling The subjects of the article: > Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. > Robin and David Saltman moved from New Jersey to Ponte Vedra Beach, Fla., where they spent more than a year custom-building their dream house with a pool on the ocean. > George and Diana Hambleton […] selected the materials for the roughly 4,200-square-foot house, including reclaimed barn wood and Wisconsin flagstone.
LifeLiverTransp 7y ago
I never understood this? Is this codified, that those big houses can not be subdivided? Imagine you have a big house in LA or SA - just build a capsule hotel in it and solve a lot of peoples problems.
Vizarddesky 7y ago
Are we supposed to be sympathetic to the “problems” these people are facing selling their overpriced real estate? My only regret is that they’re not getting screwed over harder.
- rcar1046 7y ago
  You wish hardship upon them because...why exactly?
  - TheOtherHobbes 7y ago
    Because in real terms it may not be real hardship so much as inconvenience - unless they're hugely indebted, which then makes it a much bigger problem for everyone. But also because done the right way, it could help alleviate real hardship elsewhere.
    - atonse 7y ago
      Not sure how them having to sell their house for $1m less would somehow alleviate hardship elsewhere. It's not like it would go into taxes or something.
hsnewman 7y ago
We built a 4200 sq/ft home 8 years ago, now trying to sell it in a gated community. The more expensive homes around ours are selling, ours has sat for over 3 months. We have alot of traffic seeing the house but because it doesn't have all the extras (pool, outdoor kitchen, etc) people are not buying. Sad.
- coldtea 7y ago
  Not exactly "plight" level tho...
- chrisan 7y ago
  Perhaps you need a further price adjustment to account for the lack of extras?
- tathougies 7y ago
  I mean... you bought a house no one wants at the price you want? What do you want us to do? Force someone to buy it from you? Were you coerced into buying the house? If so, you should probably file a lawsuit claiming fraud. Otherwise, what is your complaint?
imgabe 7y ago
Why is this a problem? Some very rich people become a little bit less rich. None of them seem to be in danger of falling into penury over only getting $1M for their house instead of $2M. Sounds like the supply and demand working the way they're supposed to.
- tomatocracy 7y ago
  At a macro level and over the long term, even if prices fall and this means that slightly less rich people can buy them instead, big houses are more expensive and more work to look after and maintain and there is a limit to the number of people willing and able to do that. The ultimate end result could be that some of these houses become derelict, which isn’t really good for anyone. This is what happened to a good number of the large country houses in England after food prices fell in the late 19th and early 20th century.
  - 0xDEFC0DE 7y ago
    Knock $10-20k off the price and put that towards hiring people to clean it. Bundle the house sale with cleaning services for a few years or something. The amount of people willing to deal with it will grow as the price falls, but that's not newsworthy. That's the uncomfortable truth for people wanting to sell.
    - kevin_thibedeau 7y ago
      There's still energy costs wasted on heating and cooling 4x more space than you need.
      - tomatocracy 7y ago
        Not just energy costs - replacements for kitchen/bathroom fittings as they fail, painting/decorating, cleaning, basic maintenance to ensure the place doesn’t fall down, keeping gardens from becoming overgrown, the list goes on.
  - Dumblydorr 7y ago
joyjoyjoy 7y ago
Too Big To Sell https://moneymaven.io/mishtalk/economics/too-big-to-sell-C9LM57-3i06ve1scg9x_ww/ https://moneymaven.io/mishtalk/economics/too-big-to-sell-C9L...
willart4food 7y ago
If they are Too Big they are also Too Big To fail, taxpayers money will rescue those homeowners. /s
wayoutthere 7y ago
At least in my area, the cost of permitting and labor is such that it’s simply not worth building a house unless you can sell it for over $500k. Which means they’re only building large, 4 bedroom houses, most in the $750k range. The vast majority of prospective homebuyers cannot qualify for a loan that big. Meanwhile the rent on a 2 bedroom apartment is more than a mortgage on one of those houses. So guess why so many people are renting?
hn_throwaway_99 7y ago
One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs - and this is even after outsourcing as much of that work as possible. Compare that to renting an apartment, which I loved. If something broke, I just called the super, and that was that. This ridiculous idea that renting is "throwing money away" is absurd. I'm paying someone to deal with all the shit I absolutely don't want to deal with, and more importantly I'm paying for the freedom to easily up and move if something else fits my fancy.
- maxsilver 7y ago
  I also hate maintaining a detached single family home with a yard. I also hate being responsible for the fixes. But that situation is still far better than renting. When we rented, we were subjected to eviction at any time, for nearly any reason, for basically no notice (60 days, which in the US is effectively zero notice). Your subjected to every whim the crazy wildly-irrational housing market throws at you (we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest). Renting in the US today is capital-e Evil, and just wholly broken. Unless we're ready to implement some guaranteed nationwide rent controls and guarantees against unjust eviction and harassment, making housing ownership possible for all citizens has to be the number 1 goal. Because home/condo ownership is the only way to gain any sort of housing security in most of the USA today.
  - Balgair 7y ago
    > we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest Quick math for the rest of you out there: That means they paid 1000 in 2009 and now pay ~3500 in 2019. Also, yes, I feel you there. Our rental agreement states a mandatory 10% increase if you rent from year to year. I've no idea why the company is this stupid though. The rents around us are falling or staying steady these days. So we just move to the block over every year and the old place stays empty for 3 months before then being rented out for the same or less than we paid. I'm sure there is some tax thing involved here that makes it so they don't have to care all that much. Also, yeah, we don't have a lot, and we can just move houses in about a weekend in my 4-door.
pbuzbee 7y ago
This article claims that these homes are going because buyer preferences have shifted towards smaller homes in walkable areas. I don't disagree with this, but I'm surprised the article didn't factor in the cost of these homes. These homes are priced in the millions and are generally not in areas known for high salaries. Coming up with that much money is out of reach for most members of younger generations. Some people may be interested in buying these gargantuan homes, but they can't afford it. And as the article states, the generation that can most afford these homes, boomers, is losing interest in these homes because they are coming to terms with how impractical they are as they age.
- sct202 7y ago
  Yeah I live in a 2 bed room condo because it's cheap. I would prefer to live in a house and could afford it, but the ones in my area are pricey with fairly high property taxes (2-3%). Mortgage rates are 4-5%, so that all adds up with maintenance and insurance. It would just be a really big commitment to take on those costs just to gain a yard and few extra rooms.
- deleted 7y ago
  [deleted]
- mywittyname 7y ago
  What's also interesting is the article claims that the Mediterranean look is out of style -- which I totally agree with -- but that house is decidedly not Mediterranean. It's more of a Tutor style, which is an trendy in high-end homes right now. So it's absolutely an issue of price and lack of salaries in the middle of nowhere.
- tim58 7y ago
  For $3 million far from town why wouldn't you just build yourself?
- munificent 7y ago
  I hate to sound so cynical and negative, but, God, this article is really just a case study in how stupid, materialistic, and short-sighted many Boomers are. That generation was raised on the idea that happiness comes from owning as many things as possible. They've had decades to learn — like the generations after them did — that this is nonsense and that happiness comes from connection to family, friends, and community. But, instead, some segment of them still build giant empty monoliths to consumerism out in the middle of nowhere and then get surprised when they discover that they are still old and approaching death and that they still don't feel good.
Dirlewanger 7y ago
Rich people upset upset at supply and demand: more at 11.
sys_64738 7y ago
They're too expensive for buyers which means they're not being sold for the going rate. If you divide the price by 5 then I'm sure people will come. Maybe the people are underwater for their mortgage. But mortgage outstanding != house selling price.
bfrog 7y ago
Well the solution is communal living in these large homes. I'm doing just such a thing with extended family and children and its quite nice. I get not everyone loves being around their family, so its not for everyone, but it makes things far more affordable, and the house you can get by pooling money together can be quite amazing compared to what you can get by splitting the pot. There are fewer people wanting to buy these homes which means the deals you can get are quite good.
- kazen44 7y ago
  this is actually the classic use case of a real mansion. Almost all old mansions, especially in Europe used to be owned by the aristocracy, and they lived their with the entire (extended) family and servants. A 700m2 house is terrible to live in the place is inhabited by 2 people. 10 or 15 on the other hand, make living in such a home a completely different experience.
- taurath 7y ago
  Thats what I and my friends do do - however, in the areas of these homes the cost can be absolutely gargantuan to buy - like completely out of range. A $3mil house is $15,200 per month just for the mortgage, round up other expenses to around $18,000. Its very hard to get 10 people together that can afford $1800/mo that wouldn't prefer their own place, and as the amount of people go up the risk of people moving in and out constantly goes higher. We live in a $600k large house and pay a lot less. We may upgrade eventually, but keeping a group of people together for that long can be difficult - even if socially there's a lot of cohesion, most often its a job opportunity that requires someone to move.
chrisBob 7y ago
I built a house last year, and had to work with a few different banks to finally get a construction loan. One of the fist ones said to me "1900 sq-ft? You shouldn't be building a house that small". We made it work, but would have gone with a manufactured home before we would have built something with 3k+ square feet just to make the bank happy.
- jawns 7y ago
  I would assume the first bank advised against it, and the other banks passed on it, is because they need to think not only about whether you can be expected to repay the loan, but also about how easy it is going to be to offload the property if you can't afford the loan and they need to foreclose. Yes, YOU might be perfectly happy in a 1,900 square foot home, but if the market demand is for houses significantly larger, then you, or the bank, might find it (relatively) hard to find a buyer if you ever need to sell.
  - BeetleB 7y ago
    I was about to say the same. I know someone in the Salt Lake City area who built his own home. His realtor told him "You can build what you want, but a house with 4 bedrooms will not sell well". People have a lot of kids there.
dfischer 7y ago
Insight into younger generations: I hate the idea of owning property. I don't want to be stuck to a city or a location. The world, and the universe have so much to offer. To me, buying a house is cementing your location and stunting the amount of knowledge you can acquire by handcuffing you to a location and limiting your exposure to the world. That is the philosophical side, then there's the debt and the overall asset appreciation game that everyone else plays. I have no interest in owning a home to settle down. If I do it, it would be to exploit financial interests with the right opportunity. I think we can use a radically different model for housing and what we consider livable spaces for our species. I'd love to see cities built around the Dunbar number and with transportation making travel times easier, we can see some interesting designs. Foster community and allow communication and personal reach across distances. This is probably going to be forced by warehouse space in relation to live space. We're going to need more and more land for manufacturing and storage of goods compared to retail and shopping experiences. We'll have living communities without much need to venture into markets. Markets will be VR, and many jobs will be remote. Foster community with "villages" within a city that is related to the Dunbar number.
- lotsofpulp 7y ago
  Most people have the same thoughts (at least in the income class that can afford to move around), until they have children and need a good school district.
  - dfischer 7y ago
    School today is an archaic design. Education has no bounds with the internet and the spread of information where it is no longer asymmetric. School and universities are falling out of favor. What matters is what skills you have over what degree. The internet and the corpus of knowledge equalizes this. This assumes connectivity is a given – I believe connectivity will be tablestakes in a variety of situations and incentives by those that can provide it. Additionally again, education outside of pure learning like we're limited today on the internet will be more immersive with VR/AR and your need to go to a physical location will differ.
SwellJoe 7y ago
Several of my younger friends live in cooperative housing, where they rent a big house, and individually rent out the rooms. Sometimes as many as 8 or 10 people live in a "single family" home. This seems like a great solution for all parties involved (including cities with very high rents), until you learn that the cities they're in often consider this an illegal use of the property and will force their landlord to evict them on short notice if neighbors complain. And, because it's technically an "illegal" living situation, they don't get a lot of the same protections they'd get if they were "legal" tenants. So, leases are kinda meaningless, if the landlord can evict at any time. It's a sort of housing insecurity that makes their lives a lot more stressful than anyone should have to deal with, and it gives landlords a dangerous amount of leverage over tenants (they charge more, knowing it's being used by multiple tenants, but they'll claim lack of knowledge when the neighbors complain and the city comes knocking). And, of course, they'll ignore the lease if they get a buy offer that they don't want to say no to. Cities, especially those experiencing dramatic rent increases and that have a history of only allowing single-family homes in much of their livable land (as most US cities do), need to remove zoning impediments to multi-family housing. There was a project published a couple days ago to map the zoning in a bunch of major cities, and it's eye-opening how tiny the available space for multi-family dwellings is in a lot of them, and it makes it make sense that there is a housing crisis in a lot of major cities. Maps are here: https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html?module=inline https://www.nytimes.com/interactive/2019/06/18/upshot/cities... Of course, that won't solve the too-big-too-far houses. The other problem with a lot of McMansions is that they were built in the middle of nowhere. Younger people want shorter commutes, the ability to bike or take mass transit, a neighborhood with shopping in walking distance, etc. People have figured out that quality of life in cities is just plain better than suburban life.
- secabeen 7y ago
  There's fun history to that here in California. There was an older woman here in Santa Barbara that ran a house like that. Lots of rented out rooms, they ate communal dinners, but you didn't have to come, etc. The city tried to shut it down, she took it to the state Supreme court, where they ruled in the homeowners' favor, saying essentially "the city doesn't get to decide what a family is. If these people want to call themselves a family, then they are a family, and this is a single-family home." As such, the restrictions now are on separate dwellings, as defined more by number of kitchens, sub-dividability, etc., not number of people.
taurath 7y ago
I have a group of very close friends that I've lived with off and on for the better part of 15 years - this allows us to sort of "hack" the system, buy up a very extra large house and just have more or less a communal living environment, out in the suburbs. The biggest issue is parking in a cul-de-sac, but currently its a 3600 sq foot house with 7 people living in it - 2 kitchens. TBH, its great, especially when you compare what you can get for the same mortgage in the city, where even a 2 bedroom is considered too big. Anything over 2.5k sq feet in the city is either a triplex (and thereby 3x as expensive per sq foot), or a mansion that costs >$500/sq foot. We get to have nice amenities like a hot tub, gym room, etc, and not feel like we have "too much" stuff because almost everything is actually used. It wouldn't work if we wanted to have kids of course, but we're pretty much all lgbt. The social group also has to be not only tight, but also already has good way of dealing with conflict.
jlj 7y ago
Split them into multi-family houses. Cheap density increase, higher revenue to the landlord, and more supply to soften housing costs for tenants.
segmondy 7y ago
The property taxes are horrible too. They are the equivalent of a mortgage! Older folks have the money, young people don't, most are struggling to afford a mortgage, let alone taxes that is the equivalent for a mortgage. Not to talk about the cost of heating/cooling such houses.
- bwb 7y ago
  Other countries tax differently there, some do a upfront tax during the purchase and then very little property tax.
cestith 7y ago
A huge demographic is aging out of real estate ownership. There are far fewer Gen Xers than Boomers. Even if Millennials had the same economy the Boomers had, they're a full generation behind the Boomer's retirement curve. So, yeah, there aren't as many people producing demand for these houses even before considering different tastes in living style. It's a bad investment to put your life's savings in something with a plan to resell it to a less interested market. Either retire into it and get the use out of it or don't put your money there. The market is just correcting in a quite foreseeable way.
pmoriarty 7y ago
There's a great documentary called The Queen of Versailles about a rich family who bought a McMansion shortly before the recession of 2008. https://dvd.netflix.com/Movie/The-Queen-of-Versailles/70229267 https://dvd.netflix.com/Movie/The-Queen-of-Versailles/702292... https://en.wikipedia.org/wiki/The_Queen_of_Versailles https://en.wikipedia.org/wiki/The_Queen_of_Versailles
anbop 7y ago
I moved from a 3500 square foot house to a 1400 square foot house with 3 kids and my quality of life has not gone down at all. Threw out most of my stuff out of necessity, haven’t needed it.
rdiddly 7y ago
On one of my harder-hearted days I would've felt schadenfreude (rich assholes waste obscene amounts of money on tacky shit, get burned, film at 11), but today I feel sorry for them. The whole thing is just sad. On the macro level, such a tragic mis-deployment of resources. And on the micro level, misplacing one's priorities on material things and finding out the hard way that it doesn't bring any meaning to your life. I know someone going through this now in a more modest house... slowly but surely, starting to get tired earlier and earlier in the afternoons (granted, she smokes), getting sick of chores like cleaning gutters, mowing, clearing spiderwebs etc. And all those empty rooms in the photographs! I don't imagine they see many days of being filled with smiling, laughing guests. Which is really the only true use of a house that big... you need to entertain, you need hundreds of friends to share it with, right? Otherwise what's the use? Maybe that's just me. I would probably get supremely depressed otherwise, all that space around me, waiting to be used, reminding me how empty it is. Everybody gets old. Everybody dies. Everybody follows each other in a grand parade to oblivion. These people won the game the mid-20th century told them was being played, but everybody ultimately loses the Big Game.
- mensetmanusman 7y ago
  Maybe someone could disrupt the ownership model here and invite a number of families to move in together?
  - ethagknight 7y ago
    Not so much a disruption, but splitting these huge homes into duplexes is an easy ticket. HOAs and neighborhoods will fight it because "there goes the neighborhood"
    - malandrew 7y ago
      The design of many of these doesn't really lend themselves into being split into duplexes.
      - 2a96eb7d685a49c 7y ago
partiallypro 7y ago
I generally wonder what is going to happen to the real estate market once retirees are forced to sell their homes to stay in nursing homes, or just pass away, etc. The kids could inherit the homes, but that will still leave a flood of houses on the market. It will be interesting to see play out.
- BeetleB 7y ago
  >The kids could inherit the homes, but that will still leave a flood of houses on the market. It will be interesting to see play out. Investors will buy them, and get the city/county to rezone those properties for multiple houses. They will tear the house down, and build N houses on it and sell it. In the short term, there might be a local HOA that will fight it. But when the oversupply gets large enough to really impact everyone's prices, the existing owners will favor this solution, as it will raise the value of their own mansion.
  - partiallypro 7y ago
    Or it could be like Japan, and the real estate market is flat for decades. In fact, Japanese median home prices are lower than they were in 1992. The stock market had flat phases for decades in US history...I don't see why housing as an asset class is immune to it.
thorwasdfasdf 7y ago
I'm not the least bit surprised that no one is buying it. It sounds like they got hugely ripped off "spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains" That's ridiculous: almost 500$/sq foot. That's almost bay area east bay pricing! Why do that when you can go to Houston and get the same thing at 100$/sq foot?
Theodores 7y ago
What gets me is the absence of ballrooms. Yes, ballrooms. In former times grand mansions would have a ballroom. There would be hundreds of people or even just modest gatherings of thirty people, which could be just a few families with a huge amount of kids each. But the McMansions never seem to have a ballroom. There may be vast swimming pools and all kinds of huge extra bedrooms but they lack the fantasy aspect that goes with a grand ball. The grand ball could be a wedding or a birthday or just a seasonal event. People would have to dress up for it in very impractical clothes. A certain level of class hierarchy goes with it though, not very American doing that. I can't remember which one, but years ago the English king would not really use the grand palaces but stay in a regular house in the grounds. He just preferred everything on a practical scale. I think I would be the same had I been born with parents with one of these McMansions, for them to pass the behemoth on to me. The place would have to be in some storage mode and I would live in some small one room caravan out the back, to only use the big house when guests arrive. How does the heating work out for these McMansions? I don't see a lot of doors. Do these people just have huge electricity and other bills to keep the lights and HVAC on the whole time?
- taurath 7y ago
  Because these are not estates (which might own a lot of land, have vassals, and have economic and social connections to the surrounding area), so there is nobody to use the ballrooms, even if they invited everyone they knew. Its cargoculting for the rich with no sense whatsoever.
adrianmonk 7y ago
Luxury items of any type are usually poor investments, for several reasons: 1. Price range. By definition, you're above the normal price range. This means fewer potential buyers, thus less liquidity. 2. Over-specialized. The upgrades or enhancements that made it into a luxury item, which were valuable to you, may not be valuable to someone else. You will take a loss on features that are included but others don't care about. 3. Experimental. People who make luxury items tend to include novel things that sound nice but don't pan out and turn out to be useless or even undesirable. 4. Status. Luxury and status are often linked. Luxury buyers aren't too excited about secondhand. A used sports car doesn't impress your friends like a new one. If you buy a luxury item (like a giant house), the most rational thing to do is just accept that you are buying it because you want that luxury for yourself, and don't expect to get the money out of it later.
santa_boy 7y ago
Deviating perhaps ... but I always wonder if having a big house makes a family happier or more efficient? Small house have their own problems but bigger houses instinctively don't seem to be the right solution to me.

Ah I always forget, what's the trick to read wsj articles again ?

docdeek 7y ago
Outline.com - in this case: https://outline.com/SAJ7yR https://outline.com/SAJ7yR
- hycaria 7y ago
  Thank you very much !
  - DennisP 7y ago
    Another way is to append "?mod=rsswn" to the URL.
dymk 7y ago
Pay for a subscription

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

dogma1138 7y ago
The UK has a different issue. The size of the homes is just absolutely tiny even for the same number of bedrooms it has been shrinking and it shrinking still. The houses in the article aren’t Victorian era detached houses that are being hogged they are fairly new built homes just big ones. Also council tax even for a large house is often quite lower than 4K, stamp duty starts at 125K and between that and 250K it’s just 2%. So with the exception of London and a few other cities in not sure it’s what is preventing retired people form buying newer builds, the fact that the new build is likely considerably worse than the 80 year old house they live in just might be however.
eertami 7y ago
Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need property taxes to put and end to the situation you describe, amongst others. But the UK has a fetish for homeownership, culturally people are convinced they _must_ own a house or multiple, and so many homes were practically given away for free by past governments. Any Government trying to implement policies that try to fix our housing crisis will be voted out almost instantly by a class of people who do not care what is for the public good, only that things benefit them.
- Blackstone4 7y ago
  I feel that it was not "extremely misleading" within the given context which referenced older couples in larger properties. In this case, they are the ones typically paying the council tax. I agree with you that the UK needs property taxes to be paid for by the owners. This would help reduce speculation and encourage utilisation of the existing housing stock. But as another post has mentioned, objections include "think of the old people who are worth $1m+ in property but would have to move out because they have low income"....boohoo...
  - smcl 7y ago
    You need to be careful when dismissing caution about the elderly who have - through whatever means - found themselves living in a valuable property. The following are just as likely: - a wealthy individual with many properties who can easily afford a few extra hundred quid a month - someone living just above poverty level in a property in a previously modest area that, thanks to a gentrification, has exploded in value - and would to move out if their tax band was bumped up a bit We cannot just dismiss the plight of the latter simply because we want to disincentivise the former. I'd like to add that the vulnerable (including but not limited to - elderly, long-term unemployed, immigrants, disabled) in the UK have already had to deal with cuts in local services as well as periodically being labelled by the government and the press as lazy or pathetic or scroungers. I'd encourage anyone to resist anything that could be used to further victimize or immiserate them - even if it is just in the form of a casual tweet or comment. Edit: My last paragraph really sounds a little harsh on re-reading. This is because it was meant to be an "as an aside" comment and not accusing Blackstone4 of anything sinister! I'm generally in favour of taxing the rich and powerful.
circlefavshape 7y ago
Oh come on. My youngest will be 18 in 8 years, so I should be squeezed out of my 180m2 (1800 square foot) home when she goes to college? When I'm 55?
- masklinn 7y ago
  The article is about single-child couples who built 400~700m² houses as their children were already adults. Checking the numbers, Bethell is 78 so bought / built a 700m² house at 69. Their monstrosity of a house has 4m ceilings from the pictures. The Hambleton built their house at 82 and 68.
- coldtea 7y ago
  As if 150, 120, even 100m2 homes aren't big enough for a couple, and anything below 180m2 is "squeezing"?
  - circlefavshape 7y ago
    Haha, sorry - bad choice of word there. I simply meant "forced to leave" The issue isn't whether it's big enough - it's that it's my home.
    - coldtea 7y ago
      Yeah, that's totally fair! People shouldn't be forced to leave their houses because of rising taxes...
deleted 7y ago
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NeedMoreTea 7y ago
That was one of the advertising, rather than real justifications for getting rid of the rates - which was on ownership rather than occupation, and replacing it with first the poll tax - and we know how popular that was. Then council tax. It was nothing other than a massive subsidy for the most wealthy as the top band is reached so early - it's only slightly less regressive than the poll tax was. The Tory campaigns were built around how "unfair" it was for the old widow or couple, who'd worked all their lives, to pay the same as a family of 5. No mention that no one in their right mind thinks a widow still needs a 4 or 5 bed house. Double bonus: In bringing in council tax local finance could be massively further centralised, weakening the regions even more. It's really surprising how little push there is to get shot of council tax, bring back rates or some properly progressive tax.
- tomatocracy 7y ago
  Part of the idea of the ‘poll tax’ was also to increase accountability of local government by making it more transparent - ‘why do you charge twice what the neighbouring council does?’ Council tax actually is relatively progressive when you consider that council tax benefit is also part of the system. Very few areas have a large number of band H homes - parts of central London do, but even there you might be surprised how small a number you’re talking about - there are only c15k in the City of Westminster for example, the borough which includes the whole of Mayfair and Belgravia.
  - TheOtherHobbes 7y ago
    The difference between a multi-million pound mansion owned by an offshore holding company on behalf of a billionaire and sort-of-okay almost affordable housing is usually only a few hundred pounds a year. And accountability has clearly not been improved in any way. In fact billionaires rarely pay council tax at all because councils rarely chase them. There's no point sending bailiffs to an empty property protected by professional security owned by a company with an offshore address that's effectively immune to any form of legal action.
    - tomatocracy 7y ago
pjc50 7y ago
The UK also has Stoke-on-Trent giving away houses for £1 in a desperate attempt to unblight the place. The UK's problem is not so much lack of houses (although the planning system really doesn't help) as a combination of over-financialisation and over-centralisation. People believe that all the high-paying employment, entertainment, and oligarch money is in London. It's also the default destination for immigrants. As a result you've got people trying to live in sheds there. Meanwhile everywhere from seaside towns to Birmingham gets treated as second-class citizens, with inadequate public transport and little inward investment.
- tomatocracy 7y ago
  It’s largely internal migration driving that effect in the UK, not external migration or financialisation. Children go to university and never come back. The good jobs ARE largely in London and the South East, and people follow their friends creating a network effect too. It’s also not new - it’s been going on since the end of the Second World War pretty much.
  - TheOtherHobbes 7y ago
    The jobs are in London, but so are the costs. In terms of living expenses, the cost/benefit ratio for other cities is much higher. The real benefit of London is the networking and the culture. There's a lot of both - more so than elsewhere. Whether it's worth the insane housing costs is debatable.
    - tomatocracy 7y ago
      Housing costs aren’t insane in the commuter belt if you have a decent job in London. Most people working in London don’t live in London. Good job in London, house in the South East, commute by train, still looks better to a lot of people than poor job in a rural area of the North or Wales and getting a less good house. Of course there are some professions where the equation works the other way - medicine being one obvious example.
  - pjc50 7y ago
camelNotation 7y ago
What about the headache of maintaining a big home? I've seen what it is like to care for a large home. It's a nightmare, whether you have money or not. Every pool, every gymnasium, every commercial-grade appliance, etc. They all require maintenance, repair, and eventual replacement. To do that, it costs a lot more and the available labor is much more limited. You have to wait weeks for some guy who lives two states away to come in and work on your elevator and when he gets there he charges you an unbelievable amount of money to do basic things. And when things aren't broken, you have to always be renovating or updating something. Things that look like they are aging or out of style don't signal your status because they tell your guests and visitors that you have a big home, but maybe can't afford it. So you're always updating. Always renovating. It's all a show. The idea of dealing with all of these "luxuries" is awful to me and I've seen wealthy people who didn't have to work basically turn home maintenance into their job because it required just as much time and stress as anything else. What is the point of wealth if things you use it for give you just as much headache as a middle class person's job?
- deleted 7y ago
  [deleted]
- pnutjam 7y ago
  Why maintain it when you can pack it with junk. (what I've seen way too often)

pjc50 7y ago

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-states/ https://dqydj.com/net-worth-percentile-calculator-united-sta... and you find that they are at least in the 96.5 percentile. (They are unlikely to have mortgaged it, as most lenders won't lend past retirement for obvious reasons) The house is 700 (seven hundred) square meters. By comparison, London is banning the construction of "mega homes" over 150m2 in an attempt to prevent hypergentrification by oligarchs. These people in the article are the wealthy who haven't noticed that the ladder has fallen away behind them leaving nobody to buy their mansion.

ptah 7y ago
you mean american, not first world problem. everything is big in america
- oasisbob 7y ago
  There's certainly some truth in what you say, but a lot of variability in such a large country too.
mruts 7y ago
I mean, not really. I knew plenty of people buying new mcmansions on credit when their household income wasn’t above 80k. Many many Americans over leveraged themselves by buying up huge properties with no down payment.
- masklinn 7y ago
  > McMansion is a pejorative term for a large "mass-produced" dwelling The subjects of the article: > Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. > Robin and David Saltman moved from New Jersey to Ponte Vedra Beach, Fla., where they spent more than a year custom-building their dream house with a pool on the ocean. > George and Diana Hambleton […] selected the materials for the roughly 4,200-square-foot house, including reclaimed barn wood and Wisconsin flagstone.

LifeLiverTransp 7y ago

I never understood this? Is this codified, that those big houses can not be subdivided? Imagine you have a big house in LA or SA - just build a capsule hotel in it and solve a lot of peoples problems.

Vizarddesky 7y ago

Are we supposed to be sympathetic to the “problems” these people are facing selling their overpriced real estate? My only regret is that they’re not getting screwed over harder.

rcar1046 7y ago
You wish hardship upon them because...why exactly?
- TheOtherHobbes 7y ago
  Because in real terms it may not be real hardship so much as inconvenience - unless they're hugely indebted, which then makes it a much bigger problem for everyone. But also because done the right way, it could help alleviate real hardship elsewhere.
  - atonse 7y ago
    Not sure how them having to sell their house for $1m less would somehow alleviate hardship elsewhere. It's not like it would go into taxes or something.

hsnewman 7y ago

We built a 4200 sq/ft home 8 years ago, now trying to sell it in a gated community. The more expensive homes around ours are selling, ours has sat for over 3 months. We have alot of traffic seeing the house but because it doesn't have all the extras (pool, outdoor kitchen, etc) people are not buying. Sad.

coldtea 7y ago
Not exactly "plight" level tho...
chrisan 7y ago
Perhaps you need a further price adjustment to account for the lack of extras?
tathougies 7y ago
I mean... you bought a house no one wants at the price you want? What do you want us to do? Force someone to buy it from you? Were you coerced into buying the house? If so, you should probably file a lawsuit claiming fraud. Otherwise, what is your complaint?

imgabe 7y ago

Why is this a problem? Some very rich people become a little bit less rich. None of them seem to be in danger of falling into penury over only getting $1M for their house instead of $2M. Sounds like the supply and demand working the way they're supposed to.

tomatocracy 7y ago
At a macro level and over the long term, even if prices fall and this means that slightly less rich people can buy them instead, big houses are more expensive and more work to look after and maintain and there is a limit to the number of people willing and able to do that. The ultimate end result could be that some of these houses become derelict, which isn’t really good for anyone. This is what happened to a good number of the large country houses in England after food prices fell in the late 19th and early 20th century.
- 0xDEFC0DE 7y ago
  Knock $10-20k off the price and put that towards hiring people to clean it. Bundle the house sale with cleaning services for a few years or something. The amount of people willing to deal with it will grow as the price falls, but that's not newsworthy. That's the uncomfortable truth for people wanting to sell.
  - kevin_thibedeau 7y ago
    There's still energy costs wasted on heating and cooling 4x more space than you need.
    - tomatocracy 7y ago
      Not just energy costs - replacements for kitchen/bathroom fittings as they fail, painting/decorating, cleaning, basic maintenance to ensure the place doesn’t fall down, keeping gardens from becoming overgrown, the list goes on.
- Dumblydorr 7y ago

joyjoyjoy 7y ago

Too Big To Sell https://moneymaven.io/mishtalk/economics/too-big-to-sell-C9LM57-3i06ve1scg9x_ww/ https://moneymaven.io/mishtalk/economics/too-big-to-sell-C9L...

willart4food 7y ago

If they are Too Big they are also Too Big To fail, taxpayers money will rescue those homeowners. /s

wayoutthere 7y ago

At least in my area, the cost of permitting and labor is such that it’s simply not worth building a house unless you can sell it for over $500k. Which means they’re only building large, 4 bedroom houses, most in the $750k range. The vast majority of prospective homebuyers cannot qualify for a loan that big. Meanwhile the rent on a 2 bedroom apartment is more than a mortgage on one of those houses. So guess why so many people are renting?

hn_throwaway_99 7y ago

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs - and this is even after outsourcing as much of that work as possible. Compare that to renting an apartment, which I loved. If something broke, I just called the super, and that was that. This ridiculous idea that renting is "throwing money away" is absurd. I'm paying someone to deal with all the shit I absolutely don't want to deal with, and more importantly I'm paying for the freedom to easily up and move if something else fits my fancy.

maxsilver 7y ago
I also hate maintaining a detached single family home with a yard. I also hate being responsible for the fixes. But that situation is still far better than renting. When we rented, we were subjected to eviction at any time, for nearly any reason, for basically no notice (60 days, which in the US is effectively zero notice). Your subjected to every whim the crazy wildly-irrational housing market throws at you (we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest). Renting in the US today is capital-e Evil, and just wholly broken. Unless we're ready to implement some guaranteed nationwide rent controls and guarantees against unjust eviction and harassment, making housing ownership possible for all citizens has to be the number 1 goal. Because home/condo ownership is the only way to gain any sort of housing security in most of the USA today.
- Balgair 7y ago
  > we've had 12% yearly rental increases for a decade straight now, despite living in bumblefudge-nowhere Midwest Quick math for the rest of you out there: That means they paid 1000 in 2009 and now pay ~3500 in 2019. Also, yes, I feel you there. Our rental agreement states a mandatory 10% increase if you rent from year to year. I've no idea why the company is this stupid though. The rents around us are falling or staying steady these days. So we just move to the block over every year and the old place stays empty for 3 months before then being rented out for the same or less than we paid. I'm sure there is some tax thing involved here that makes it so they don't have to care all that much. Also, yeah, we don't have a lot, and we can just move houses in about a weekend in my 4-door.

pbuzbee 7y ago

This article claims that these homes are going because buyer preferences have shifted towards smaller homes in walkable areas. I don't disagree with this, but I'm surprised the article didn't factor in the cost of these homes. These homes are priced in the millions and are generally not in areas known for high salaries. Coming up with that much money is out of reach for most members of younger generations. Some people may be interested in buying these gargantuan homes, but they can't afford it. And as the article states, the generation that can most afford these homes, boomers, is losing interest in these homes because they are coming to terms with how impractical they are as they age.

sct202 7y ago
Yeah I live in a 2 bed room condo because it's cheap. I would prefer to live in a house and could afford it, but the ones in my area are pricey with fairly high property taxes (2-3%). Mortgage rates are 4-5%, so that all adds up with maintenance and insurance. It would just be a really big commitment to take on those costs just to gain a yard and few extra rooms.
deleted 7y ago
[deleted]
mywittyname 7y ago
What's also interesting is the article claims that the Mediterranean look is out of style -- which I totally agree with -- but that house is decidedly not Mediterranean. It's more of a Tutor style, which is an trendy in high-end homes right now. So it's absolutely an issue of price and lack of salaries in the middle of nowhere.
tim58 7y ago
For $3 million far from town why wouldn't you just build yourself?
munificent 7y ago
I hate to sound so cynical and negative, but, God, this article is really just a case study in how stupid, materialistic, and short-sighted many Boomers are. That generation was raised on the idea that happiness comes from owning as many things as possible. They've had decades to learn — like the generations after them did — that this is nonsense and that happiness comes from connection to family, friends, and community. But, instead, some segment of them still build giant empty monoliths to consumerism out in the middle of nowhere and then get surprised when they discover that they are still old and approaching death and that they still don't feel good.

Dirlewanger 7y ago

Rich people upset upset at supply and demand: more at 11.

sys_64738 7y ago

They're too expensive for buyers which means they're not being sold for the going rate. If you divide the price by 5 then I'm sure people will come. Maybe the people are underwater for their mortgage. But mortgage outstanding != house selling price.

bfrog 7y ago

Well the solution is communal living in these large homes. I'm doing just such a thing with extended family and children and its quite nice. I get not everyone loves being around their family, so its not for everyone, but it makes things far more affordable, and the house you can get by pooling money together can be quite amazing compared to what you can get by splitting the pot. There are fewer people wanting to buy these homes which means the deals you can get are quite good.

kazen44 7y ago
this is actually the classic use case of a real mansion. Almost all old mansions, especially in Europe used to be owned by the aristocracy, and they lived their with the entire (extended) family and servants. A 700m2 house is terrible to live in the place is inhabited by 2 people. 10 or 15 on the other hand, make living in such a home a completely different experience.
taurath 7y ago
Thats what I and my friends do do - however, in the areas of these homes the cost can be absolutely gargantuan to buy - like completely out of range. A $3mil house is $15,200 per month just for the mortgage, round up other expenses to around $18,000. Its very hard to get 10 people together that can afford $1800/mo that wouldn't prefer their own place, and as the amount of people go up the risk of people moving in and out constantly goes higher. We live in a $600k large house and pay a lot less. We may upgrade eventually, but keeping a group of people together for that long can be difficult - even if socially there's a lot of cohesion, most often its a job opportunity that requires someone to move.

chrisBob 7y ago

I built a house last year, and had to work with a few different banks to finally get a construction loan. One of the fist ones said to me "1900 sq-ft? You shouldn't be building a house that small". We made it work, but would have gone with a manufactured home before we would have built something with 3k+ square feet just to make the bank happy.

jawns 7y ago
I would assume the first bank advised against it, and the other banks passed on it, is because they need to think not only about whether you can be expected to repay the loan, but also about how easy it is going to be to offload the property if you can't afford the loan and they need to foreclose. Yes, YOU might be perfectly happy in a 1,900 square foot home, but if the market demand is for houses significantly larger, then you, or the bank, might find it (relatively) hard to find a buyer if you ever need to sell.
- BeetleB 7y ago
  I was about to say the same. I know someone in the Salt Lake City area who built his own home. His realtor told him "You can build what you want, but a house with 4 bedrooms will not sell well". People have a lot of kids there.

dfischer 7y ago

Insight into younger generations: I hate the idea of owning property. I don't want to be stuck to a city or a location. The world, and the universe have so much to offer. To me, buying a house is cementing your location and stunting the amount of knowledge you can acquire by handcuffing you to a location and limiting your exposure to the world. That is the philosophical side, then there's the debt and the overall asset appreciation game that everyone else plays. I have no interest in owning a home to settle down. If I do it, it would be to exploit financial interests with the right opportunity. I think we can use a radically different model for housing and what we consider livable spaces for our species. I'd love to see cities built around the Dunbar number and with transportation making travel times easier, we can see some interesting designs. Foster community and allow communication and personal reach across distances. This is probably going to be forced by warehouse space in relation to live space. We're going to need more and more land for manufacturing and storage of goods compared to retail and shopping experiences. We'll have living communities without much need to venture into markets. Markets will be VR, and many jobs will be remote. Foster community with "villages" within a city that is related to the Dunbar number.

lotsofpulp 7y ago
Most people have the same thoughts (at least in the income class that can afford to move around), until they have children and need a good school district.
- dfischer 7y ago
  School today is an archaic design. Education has no bounds with the internet and the spread of information where it is no longer asymmetric. School and universities are falling out of favor. What matters is what skills you have over what degree. The internet and the corpus of knowledge equalizes this. This assumes connectivity is a given – I believe connectivity will be tablestakes in a variety of situations and incentives by those that can provide it. Additionally again, education outside of pure learning like we're limited today on the internet will be more immersive with VR/AR and your need to go to a physical location will differ.

SwellJoe 7y ago

Several of my younger friends live in cooperative housing, where they rent a big house, and individually rent out the rooms. Sometimes as many as 8 or 10 people live in a "single family" home. This seems like a great solution for all parties involved (including cities with very high rents), until you learn that the cities they're in often consider this an illegal use of the property and will force their landlord to evict them on short notice if neighbors complain. And, because it's technically an "illegal" living situation, they don't get a lot of the same protections they'd get if they were "legal" tenants. So, leases are kinda meaningless, if the landlord can evict at any time. It's a sort of housing insecurity that makes their lives a lot more stressful than anyone should have to deal with, and it gives landlords a dangerous amount of leverage over tenants (they charge more, knowing it's being used by multiple tenants, but they'll claim lack of knowledge when the neighbors complain and the city comes knocking). And, of course, they'll ignore the lease if they get a buy offer that they don't want to say no to. Cities, especially those experiencing dramatic rent increases and that have a history of only allowing single-family homes in much of their livable land (as most US cities do), need to remove zoning impediments to multi-family housing. There was a project published a couple days ago to map the zoning in a bunch of major cities, and it's eye-opening how tiny the available space for multi-family dwellings is in a lot of them, and it makes it make sense that there is a housing crisis in a lot of major cities. Maps are here: https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html?module=inline https://www.nytimes.com/interactive/2019/06/18/upshot/cities... Of course, that won't solve the too-big-too-far houses. The other problem with a lot of McMansions is that they were built in the middle of nowhere. Younger people want shorter commutes, the ability to bike or take mass transit, a neighborhood with shopping in walking distance, etc. People have figured out that quality of life in cities is just plain better than suburban life.

secabeen 7y ago
There's fun history to that here in California. There was an older woman here in Santa Barbara that ran a house like that. Lots of rented out rooms, they ate communal dinners, but you didn't have to come, etc. The city tried to shut it down, she took it to the state Supreme court, where they ruled in the homeowners' favor, saying essentially "the city doesn't get to decide what a family is. If these people want to call themselves a family, then they are a family, and this is a single-family home." As such, the restrictions now are on separate dwellings, as defined more by number of kitchens, sub-dividability, etc., not number of people.

taurath 7y ago

I have a group of very close friends that I've lived with off and on for the better part of 15 years - this allows us to sort of "hack" the system, buy up a very extra large house and just have more or less a communal living environment, out in the suburbs. The biggest issue is parking in a cul-de-sac, but currently its a 3600 sq foot house with 7 people living in it - 2 kitchens. TBH, its great, especially when you compare what you can get for the same mortgage in the city, where even a 2 bedroom is considered too big. Anything over 2.5k sq feet in the city is either a triplex (and thereby 3x as expensive per sq foot), or a mansion that costs >$500/sq foot. We get to have nice amenities like a hot tub, gym room, etc, and not feel like we have "too much" stuff because almost everything is actually used. It wouldn't work if we wanted to have kids of course, but we're pretty much all lgbt. The social group also has to be not only tight, but also already has good way of dealing with conflict.

jlj 7y ago

Split them into multi-family houses. Cheap density increase, higher revenue to the landlord, and more supply to soften housing costs for tenants.

segmondy 7y ago

The property taxes are horrible too. They are the equivalent of a mortgage! Older folks have the money, young people don't, most are struggling to afford a mortgage, let alone taxes that is the equivalent for a mortgage. Not to talk about the cost of heating/cooling such houses.

bwb 7y ago
Other countries tax differently there, some do a upfront tax during the purchase and then very little property tax.

cestith 7y ago

A huge demographic is aging out of real estate ownership. There are far fewer Gen Xers than Boomers. Even if Millennials had the same economy the Boomers had, they're a full generation behind the Boomer's retirement curve. So, yeah, there aren't as many people producing demand for these houses even before considering different tastes in living style. It's a bad investment to put your life's savings in something with a plan to resell it to a less interested market. Either retire into it and get the use out of it or don't put your money there. The market is just correcting in a quite foreseeable way.

pmoriarty 7y ago

There's a great documentary called The Queen of Versailles about a rich family who bought a McMansion shortly before the recession of 2008. https://dvd.netflix.com/Movie/The-Queen-of-Versailles/70229267 https://dvd.netflix.com/Movie/The-Queen-of-Versailles/702292... https://en.wikipedia.org/wiki/The_Queen_of_Versailles https://en.wikipedia.org/wiki/The_Queen_of_Versailles

anbop 7y ago

I moved from a 3500 square foot house to a 1400 square foot house with 3 kids and my quality of life has not gone down at all. Threw out most of my stuff out of necessity, haven’t needed it.

rdiddly 7y ago

On one of my harder-hearted days I would've felt schadenfreude (rich assholes waste obscene amounts of money on tacky shit, get burned, film at 11), but today I feel sorry for them. The whole thing is just sad. On the macro level, such a tragic mis-deployment of resources. And on the micro level, misplacing one's priorities on material things and finding out the hard way that it doesn't bring any meaning to your life. I know someone going through this now in a more modest house... slowly but surely, starting to get tired earlier and earlier in the afternoons (granted, she smokes), getting sick of chores like cleaning gutters, mowing, clearing spiderwebs etc. And all those empty rooms in the photographs! I don't imagine they see many days of being filled with smiling, laughing guests. Which is really the only true use of a house that big... you need to entertain, you need hundreds of friends to share it with, right? Otherwise what's the use? Maybe that's just me. I would probably get supremely depressed otherwise, all that space around me, waiting to be used, reminding me how empty it is. Everybody gets old. Everybody dies. Everybody follows each other in a grand parade to oblivion. These people won the game the mid-20th century told them was being played, but everybody ultimately loses the Big Game.

mensetmanusman 7y ago
Maybe someone could disrupt the ownership model here and invite a number of families to move in together?
- ethagknight 7y ago
  Not so much a disruption, but splitting these huge homes into duplexes is an easy ticket. HOAs and neighborhoods will fight it because "there goes the neighborhood"
  - malandrew 7y ago
    The design of many of these doesn't really lend themselves into being split into duplexes.
    - 2a96eb7d685a49c 7y ago

partiallypro 7y ago

I generally wonder what is going to happen to the real estate market once retirees are forced to sell their homes to stay in nursing homes, or just pass away, etc. The kids could inherit the homes, but that will still leave a flood of houses on the market. It will be interesting to see play out.

BeetleB 7y ago
>The kids could inherit the homes, but that will still leave a flood of houses on the market. It will be interesting to see play out. Investors will buy them, and get the city/county to rezone those properties for multiple houses. They will tear the house down, and build N houses on it and sell it. In the short term, there might be a local HOA that will fight it. But when the oversupply gets large enough to really impact everyone's prices, the existing owners will favor this solution, as it will raise the value of their own mansion.
- partiallypro 7y ago
  Or it could be like Japan, and the real estate market is flat for decades. In fact, Japanese median home prices are lower than they were in 1992. The stock market had flat phases for decades in US history...I don't see why housing as an asset class is immune to it.

thorwasdfasdf 7y ago

I'm not the least bit surprised that no one is buying it. It sounds like they got hugely ripped off "spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains" That's ridiculous: almost 500$/sq foot. That's almost bay area east bay pricing! Why do that when you can go to Houston and get the same thing at 100$/sq foot?

Theodores 7y ago

What gets me is the absence of ballrooms. Yes, ballrooms. In former times grand mansions would have a ballroom. There would be hundreds of people or even just modest gatherings of thirty people, which could be just a few families with a huge amount of kids each. But the McMansions never seem to have a ballroom. There may be vast swimming pools and all kinds of huge extra bedrooms but they lack the fantasy aspect that goes with a grand ball. The grand ball could be a wedding or a birthday or just a seasonal event. People would have to dress up for it in very impractical clothes. A certain level of class hierarchy goes with it though, not very American doing that. I can't remember which one, but years ago the English king would not really use the grand palaces but stay in a regular house in the grounds. He just preferred everything on a practical scale. I think I would be the same had I been born with parents with one of these McMansions, for them to pass the behemoth on to me. The place would have to be in some storage mode and I would live in some small one room caravan out the back, to only use the big house when guests arrive. How does the heating work out for these McMansions? I don't see a lot of doors. Do these people just have huge electricity and other bills to keep the lights and HVAC on the whole time?

taurath 7y ago
Because these are not estates (which might own a lot of land, have vassals, and have economic and social connections to the surrounding area), so there is nobody to use the ballrooms, even if they invited everyone they knew. Its cargoculting for the rich with no sense whatsoever.

adrianmonk 7y ago

Luxury items of any type are usually poor investments, for several reasons: 1. Price range. By definition, you're above the normal price range. This means fewer potential buyers, thus less liquidity. 2. Over-specialized. The upgrades or enhancements that made it into a luxury item, which were valuable to you, may not be valuable to someone else. You will take a loss on features that are included but others don't care about. 3. Experimental. People who make luxury items tend to include novel things that sound nice but don't pan out and turn out to be useless or even undesirable. 4. Status. Luxury and status are often linked. Luxury buyers aren't too excited about secondhand. A used sports car doesn't impress your friends like a new one. If you buy a luxury item (like a giant house), the most rational thing to do is just accept that you are buying it because you want that luxury for yourself, and don't expect to get the money out of it later.

santa_boy 7y ago

Deviating perhaps ... but I always wonder if having a big house makes a family happier or more efficient? Small house have their own problems but bigger houses instinctively don't seem to be the right solution to me.