Reasons That the Home Building Biz is Still Busted

Witold Rybczynski writes the epitaph for the McMansion. With the housing market in the toilet, Rybczynski says new homebuyers are going to be seeking something smaller, more affordable and possibly not a single-family home.

Rybczynski cites figures from 2006, just before the slump, when 2 million homes were being built in that year. For 2010, only 400,000 houses were erected. He attributes the crash to buyer skittishness, a sense that the market hasn't bottomed out and a lack of confidence that real estate will hold its value.

Interestingly, Rybczynski sees another, demographic cause for the homebuying slump:

"The other chief cause for weak demand is a slowdown in household formation-the U.S. Census reports that the rate of household formation is currently lower than at any time since 1947, as people put off getting married and starting a family. According to my colleague, real estate economist Peter Linneman, the marginal household size, which has historically hovered around two or three, shot up to more than six in 2009 and 2010, the result of doubling-up and moving in with relatives."

Full Story: The Death of the McMansion




The funny thing is if you read the whole article you see there's hardly overwhelming evidence supporting the headline. Its very much overstated. I think the author may be on to something, and the trend may emerge, I'd hardly say the McMansion is dead...

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