(TNS)—When Dr. Kishin Ramani decided to sell his six-bedroom, Georgian-style home on a half-acre lot in an affluent Chicago suburb three years ago, it never occurred to him that he’d be resigned to accepting far less than he paid when he bought the home in 2005.
Ramani was immediately drawn to the home, built in 2003, because “it was gorgeous and airy, with the highest ceilings I’d seen.” A recent appraisal said it is worth $2.5 million. But after years on the market, and dropping the price three times to $1.99 million, he says he is ready to take a $600,000 loss on the home because he has little choice.
He needs to move soon into a new home he had built for his wife, Dr. Suman Kaur, his two children and his parents, and he has no interest in keeping two homes.
Now, as he digests the loss he must take, he notices other homeowners nearby going through the same shock with homes known as McMansions. One neighbor recently marked his home down $750,000 to $1.95 million.
“There is nothing in the overall housing data that says the housing market is this bad,” says Ramani’s real estate agent, Linda Feinstein. But while smaller, lower-priced homes have often recovered significantly from the housing crash that started in 2007, McMansions are slower to come back, she says.
The McMansion style, built between 2001 and 2007 and averaging 3,000 to 5,000 square feet, lacks the appeal with today’s buyers compared to old vintage homes or large freshly built homes.
The realization is especially hard on homeowners trying to sell because when they bought the giant homes in the early 2000s, they thought of them as great investments, Feinstein says. Then, the idea was that bigger was better because prices presumably would keep going up.
Now, housing analysts say the day of the McMansion has come and gone. An analysis recently completed by Trulia shows that the amount buyers are willing to pay for McMansions over other homes has fallen 26 percent in just four years. As homes in general have been regaining value, McMansions have been losing appeal in comparison to others as the giants of the pre-crash years have aged.
Trulia economist Ralph McLaughlin notes that just four years ago, when most McMansions weren’t yet 10 years old, people were willing to pay a higher premium to get the large houses than they are willing to pay now.
Nationally, the premiums buyers are willing to pay for a McMansion have dropped from 138 percent in 2012 to 117 percent recently. The declines have been extreme in some Florida markets, where premiums have plunged more than 80 percent in areas such as Fort Lauderdale.
As McMansions were being built in the early 2000s, some observers questioned whether the homes — named after the generic, mass-produced approach of fast food — would remain desirable. They were criticized for being ostentatious and cheaply built. They were often stuffed onto suburban lots that seemed too small, where the main structure appeared to be dominated by …read more
From:: Real Estate News