Like any group of would be homebuyers, Millennials— the fasted growing segment of the real estate market— has a wish-list. One thing certainly not on that list is a McMansion. 79% of Millennials still consider owning a home part of the American Dream, but the homes they want are far different from the ones their parents have created. Their indifference to sprawling, opulent houses and preference for rentals has created a glut of pricy McMansions in the marketplace.
At Rental Beast, we want you to have 20/20 vision on the most recent real estate trends. Learn why Millennials turning their noses up at the Tuscan style homes their parents painstakingly built, and are opting to rent apartments. We’ll also take a shot at guessing at what changes might take place because of McMansions’ decline.
Why McMansions are Falling Out of Favor:
They’re too expensive
For many Millennials, buying is a no-go. The restrictive amount of student debt and the unfavorable lending conditions make it difficult to scrape enough money together for a down-payment.
Even the segment of millennials that manage to become homebuyers can find themselves facing buyer’s remorse over their pricy purchases. Hidden expenses and maintenance costs add unexpected thousands to the bottom line.
McMansions— due to their size and the work their original owners put into them— aren’t selling for cheap. Millennials already struggling to purchase a starter home can’t afford a huge manor, and older would-be buyers also struggle to get the funds to move to a bigger home.
Rentals are more popular
While some may be shut out of homeownership, for others, buying is not the preferred way to make a home. Instead, many Americans are choosing to live in a rental. Renting allows younger generations to enjoy homes with top-notch amenities until they need to relocate for work or crave a change of scenery. While they might sacrifice some degree of control over exactly what renovation projects they can undertake, it’s well worth it for a generation that likes to rent everything from their cars to their clothing. Flexible rentals are perfect fits for commitment wary-millennials on tight budget.
They Don’t Have a Place in an Environmentally Conscious Lifestyle
Younger generations are likely to prioritize an environmentally conscious life-style. They want to make informed consumer decisions centered around decreasing their carbon footprints. Look at the surging popularity of ride-share apps, or the growth of sustainable package and clothing. Carbon is out and so are homes with sky-high electricity bills. Living in rentals fits much better into an environmentally conscious lifestyle.
No Space? No Problem
Renters are getting crafty to make everything fit into small apartments. No longer are walk in closets and huge rooms needed to make rentals feel comfortable and organized. Now there’s popular DIY solutions like under-bed storage or organizing clothing in tightly folded bundles, à la Marie Kondo. All of these make it easier for people—young and old— to make the most of limited square footage.
Geographical changes
Many big houses are in sun-belt states like Florida, Georgia, South Carolina. What might have been a desirable place of retirement now boasts low levels of millennial movement or relocation.
Changing design trends
Heavily detailed exteriors, mediterranean facades, and stately roman column are feeling a little dated, and end up being a major deterrent. Opulent interior design can feel dated and put off young would-be homeowners who enjoy the modern look of clean lines and bright, light designs.
But, why are there so many McMansions on the market anyways?
Why build (or renovate) a massive house to retire in only to move away from it? Ironically, baby-boomers are fleeing these homes for some of the same reasons Millennials are avoiding them. Maybe it’s not a question of design (they can still be into Tuscan exteriors and faux-marble roman columns!). The bigger problem is that these homes are just too big. A couple in their late-sixties living in a four bedroom house might feel swamped by the space. Or, an older widower be plain exhausted by a the ten minute walk from the front door to the end of the drive-way.
So, just like the younger generations, many are moving to spaces that feel more appropriately sized, and are able to have everything they need on one floor.
Or, they’re ditching the concept of homeownership all together and moving into (or back into) a rental. Despite “generation rent’s” dominance of the renting marketplace, individuals over 54 years old make up the fastest growing segment of renters. And, by 2035, they are forecasted to make up the lion’s share of the rental market. Read more about why here. (In case you’re pressed for time, we’ll summarize: rightsizing, increased flexibility, and shiny new amenities.)
What’s going to happen to all the doomed McMansions?
Homeowners saddled with a McMansion that is not attracting any interest might have to reconsider their design choices to attract a young crowd. This can take the form of a major gut renovation, big changes to the home’s exterior, or hiring a skilled decorator to rethink the interior.
Or, the large amount of foreign homebuyers looking to invest in a large houses state-side might find new homes in McMansions.
Their owners might try their luck at being landlords. Another creative solution comes in the form of renting out a McMansions or turning unused rooms into rentals. Dicing up these huge houses and letting potential renters live in them might be a solution to the tight supply of places to rent and abundance of McMansions.
It’s clear that while McMansions are losing fans, rentals are here to stay. Rental Beast is a platform dedicating to simplifying the leasing process and helping agents get in front of clients and close more deals. With a database of 7 million off-MLS listings of rentals, and a powerful CRM build to help real estate agents generate, and manage leads, Rental Beast is the platform you need to get on the path to success with rentals.
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