Our Own Private Idahos

If happiness comes in supersizing a home, and if this doesn't interfere with somebody else's life, then should we be concerned about what it will mean to fuel consumption and the environment? Sriram Khé, Associate Professor of Geography at Western Oregon University, asks why we have a fascination with such large houses when we don't even use half the space.

 Sriram Khé"That house has 15 phones" remarked a friend about her neighbor's house. It has that many phones for a good reason: at more than 4,000 square feet it is less a house and more a mansion. Perhaps they even have a private switchboard to communicate from one room to another. Should we be concerned about such an approach to supersizing homes? I would argue that we should be concerned about this and even forget about the effects that we notice -- urban sprawl.

A year ago I wrote about my personal experience in buying a home in a high-density neighborhood. The home where we live now is about 1,983 sq.ft., which is less than the 2,150 sq.ft. of our previous home. Even in this 1,900 sq.ft. home, we barely use half the space on a regular basis. When our daughter visits us, or when we entertain guests, well, the space utilization rate is much higher than when it is only my wife and me at home. At most, we perhaps effectively use only about 1,200 sq.ft. on a regular basis; even our dog does not care to wander into the remaining 700+ sq.ft. unless we have visitors!

Interestingly, I rarely see more than three or four people in the huge homes like the 4,000 sq.ft. one that grabs our friend's attention. So, here is another calculation: if my wife and I use only about 1,200 sq.ft. on a regular basis, and if there are only four people in a 4,000 sq.ft. home, then it will not be unreasonable to assume that the unused space in this big house -- more than 1,800 sq.ft. -- could amount to the size of our entire home!

According to the National Association of Home Builders (NAHB), the average size of a new home is 2,340 sq.ft. (I am amazed that the size of our underutilized home is much smaller than the average!) But, what many may overlook is the consumption required to fill the rooms in such homes. The need to fill up space is the forgotten aspect in the story of the ever increasing average home size. Depending on the room's use, one can easily imagine the range of goods it would take to fill the space.

Before we bought this home, when we were looking around, we did pop in and out of much bigger houses -- one was as much as 2,500 sq.ft. That was a huge house and we wondered how much money, and how long, it would take for us to furnish the place.

To a large extent the house size generates all this additional need. It is understandable why a 4,000 sq.ft. home has 15 phones -- after all, we have five in our 1,900 sq.ft. home! If I were to use the same ratio, then it is possible that this 4,000 sq.ft. home has three times the "stuff" that we have. Could they possibly have three fireplaces? Quite possible; we noticed that one of the larger homes, which is "only" about 3,000 sq.ft., has a backyard fireplace!

If happiness comes in supersizing a home, and if this does not interfere with somebody else's life, then should we be concerned about such a consumer behavior?

Let us draw a parallel with the size of cars. As a general rule, fuel consumption increases with car size -- given the same technology, larger cars tend to consume more fuel than smaller ones. Because of concerns over consumption of the finite resource petroleum, we have discussions on whether or not governments can and should influence car size, or fuel consumption. We also have concerns about the effects of petroleum consumption, such as the exhaust from vehicles that adds to air pollution. We may not have done anything much in the U.S., but we at least have discussions on this topic every once in a while.

Similarly, compared to smaller homes, larger homes will need more resources -- telephones, gas, furniture, etc. Consumption of resources generates wastes: on the days when all our trash cans are by the curb waiting for the garbage truck, I notice that there is a correlation between the size of homes and the trash generated -- the trash cans by our curb are small, and are less than half-full, whereas most of the bigger homes have larger trash cans that seem to overflow.

But, even the little discussion that we have in the U.S. regarding vehicles and fuel consumption is entirely missing when it comes to homes and resources. On slow news days the media may relay the NAHB press release. But, that's it. I suppose a public-policy discussion on home sizes and resource consumption will be the easiest way for a politician to lose elections and, hence, it is not something that will happen anytime soon.

Of course, in a free country everyone has the right to pursue their own version of "life, liberty and happiness". But, I am not sure if 15 phones in a 4,000 sq.ft. home for two people is what the country's founders intended. On the other hand, Thomas Jefferson did live in a sprawling estate!

Sriram Khé is an Associate Professor of Geography at Western Oregon University. Prior to this, he taught at California State University-Bakersfield, and was an Associate Planner with the Kern Council of Governments.



Why do we have tax subsidies for McMansions?

One reason people buy oversized homes is that tax subsidies (such as deductions for mortgage interest) make your house such a good investment -- one of the best places to put your money. These tax subsidies were meant to increase middle-class homeownership, but they have the unintended side effect of increasing the size of homes and the environmental burden they cause.

We should allow tax subsidies for only, say, 2000 sq. ft. of housing. If you buy a home that is up to 2000 sq. ft., you could deduct all the mortgage interest. If you buy a home that is 4000 sq. ft., you could deduct only half the mortgage interest.

There is no reason for the average American to subsidize people who buy McMansions.

Charles Siegel

The Home Mortgage Deduction Myth

The Home Mortgage Deduction is -not- a subsidy. The HMID serves to remove the difference between business and private property treatment. Were the HMID to be reduced it would only serve to push the rich into complex tax avoidance schemes involving shell businesses holding title and the rich merely occupying the residence.

As long as the home mortgage interest deduction is viewed as a subsidy and not as the extra tax anti-investment burden it truly is there can be no rational housing policy debate.

The implication behind all this is that there exists outside of stated and revealed preference data a "correct size" for a residence. I'm as unwilling to presume such an arbitrary number as I am to presume the correct number of children. Face it, the two differ only in degree not kind. This is the steep part of the slippery slope that started with CAFE standards and gas guzzler vehicle taxes. People don't even blink at those anymore to the point that no doubt some will respond in anger.

McMansions are indeed a burden on neighborhoods and sometimes municipalities but they are burdens directly attributable to several new urbanist preferred outcome distortions and not some emotional gut response to any perceived excess. Tax policy isn't the problem or solution. West Germany used to tax propety based on the number of rooms, this led to homes with no closets which were classified rooms. The same avoidance schemes are the only predictable outcome of trying to control housing form.

Housing is a hybrid of both consumable product and investment and thus defies absolutist
claims of either characteristic. Any further attempt to seperate the two will also devolve into a game of tax avoidance. As much as the current no limits deduction is unfair it is also less unfair than any other possible alternative.

More on the Myth

I have heard many people, particularly planners, talk about the home mortgage “subsidy” and this idea that it promotes overinvestment in housing (overinvestment may mean too expensive to economists, while often it means too big to planners). I understand some of your argument, but I think this debate still comes across as he said, she said.

First, what evidence is there that the mortgage deduction prevents tax avoidance schemes? Furthermore, isn't this argument assuming that the rich don't seek out and use tax avoidance schemes with the deduction in effect? And is the mortgage deduction proven to be the best strategy?

Second, when talking of the deduction, I think most people are getting at the issue of middle and upper middle-income families overbuying because of this view that housing is a foolproof investment (and an important status symbol). People stretch their dollars thin buying McMansions they can’t afford, which puts them and the market at risk (and speculators with the same intentions only increase that risk). The long-term market effects of this trend may be housing value stagnation at worst, but in terms of land use, the effects are much more pronounced and long-lasting.

Nonetheless, I do agree that using tax policy to mold housing preferences is “big brother” creepy and could have profound, unforeseen effects (e.g. would a square footage maximum prioritize a particular family size and thus, composition?). Moreover, people always find a way around the rules. In the end, I think this is more of a value issue and we know what happens when politicians, architects and planners try to mold values (think of the “tower in the park” slum clearance proposals of the postwar era).

But still, most people would agree that resource consumptive development patterns is an issue that needs to be addressed, and the government has a history of promoting particular land use patterns (think FHA and GI loans, interstate construction and postwar military installations). Government funding policies have proven to affect land development in the past, so without trying to social engineer our communities, what’s the solution? Shouldn’t tax policy be considered? What about loose private sector lending practices? Or is overinvestment in housing more of an education issue?

One last note: I think the comment about housing being a consumable, as well as an investment is a key point, particularly considering the construction quality of these McMansions.

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