The Financials Behind Owning a McMansion

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This Martin Luther King Monday is our official, guilt-free, lay around the house like a lazy cat day. For the few golden hours of waiting for our laundry to finish, my husband and I sat on our used sofa aimlessly browsing our smartphones and news feeds. I was reading the new posts of a popular blogger that goes by Kate Wagner over at the humorous and snarky, McMansion Hell. She critiques drunk architecture and design. Either field in which I have experience in yet it has never prevented me from giggling non-stop at her commentary.

After the laughter stopped, it got me thinking about the finances of owning a McMansion…

ALL photos (and its respective rights) were taken from Kate via McMansion Hell

mcmansion-funny-interior
Will not end well.

What is a ‘McMansion?’

It is the supersized McDonald meal equivalent of a traditional house. A McMansion is an emblem for Americans who like everything supersized, like a certain fast food giant that we all know. McMansions show no concern for build quality and they’re often finished quickly for as cheap as possible.

McMansion usually have 4 or more bedrooms, multiple baths, high ceilings and several garages. The usual McMansions are ostentatious in size, ranging from at least 2,500 square feet and beyond depending on the mass builder’s budget. Given how many MLS listings I’ve browsed and stalked through over the years, I can say they average McMansion hovers around 3,300 square foot.

McMansions ignores the fundamentals of sound build & design. McMansions & McModerns are the fast fashion of the real estate world. Most famously McMansions feature mismatched windows, cheap foam details, sticky tacky designs, stucco sidings, fake balconies that lead to nowhere…and columns for pretentious aesthetics rather than…holding up proper weight.

The McMansion History

‘It’ came from California. Mystery solved. It was built for the stuff obsessed Baby Boomers during the 90s leading all the way up to until the housing market fell out in 2008.

Related: What I Learned From a Fear of ‘Stuff’ This Christmas

The most famous McMansion in America is called ‘The Versailles House‘. It is a 90,000 square foot “single family home” in Orlando, Florida. The Queen of Versailles (trailer)” is one of my favorite documentaries and it’s on Netflix, it’s excellent, watch it and thank me later everybody! Now despite the name, it has very little to do with French history. But it was entertaining to peep into a realm of thought so different from the rest of us that read personal finance.

‘Queen of Versailles’ was a big hit at Sundance due to the timing of filming that began in the mid-2000s and ended at the start of the 2008 housing crisis. I’ll write a more in-depth review of the documentary someday but if you have a few hours to spare, I highly recommend everyone to watch it for amusement. The film and interviews really do grow on you. The wife was a former beauty queen and the man made his fortunes selling timeshares in Vegas to…people who thinks it’s a good idea to buy timeshares in Vegas.

Safe to say nobody in personal finance should be interested in timeshares or McMansions so let’s move on.

Financial Breakdown

mcmansion-funny2

“Foreclosed McMansions are the eeriest reminders of how fleeting paper wealth can be.”1 I couldn’t have said that better myself. Here is my financial breakdown of living and owning a McMansion using statistics of these giant structures of gaudy facade.

List Price

Builders love to build McMansions because they fetch a higher price and give them a bigger return on investments. There are molds builders can generate that will produce several McMansions with similar aesthetics for greater returns. But the savings are rarely passed onto the consumer. Due to the McMansion size, they tend to be on the higher end of any market despite the lack of quality. Due to the sheer size, unknowing home shoppers step into the “this is a great price per square footage” excuse.

Next thing you know, hello jumbo mortgage loan with a side order of PMI.

Investment Potential

McMansions are too young to know their future as investments but spidey senses tell me this will not end well. McMansion values dropped considerably during the 2008 housing crisis in comparison to traditional single-family homes that were taking similar (but less steep) stumbles. McMansions are not made to endure inevitable economic downturns and they are the farthest thing from liquidity.

A McMansion owner is limiting themselves to a certain demographic that is very narrow in the first place with the sheer size of the structure. McMansions are also often built away from prized land and popular zones because of their size.

Maintenance

McMansions are huge. They were built in the 90s during the era of looser building codes. There was not much homage to basic design or material. This will eventually cause pricey problems down the road. Once again, McMansions are too young to know their own futures as things get inevitably older but I’m betting my money the foam and sticky toppers glued onto the house won’t last past a decade.

mcmansion-roof-bad
What’s even up there? Secrets?

OH, and the roofs – the roofs are massive. You need to replace those one day – unless you move – but you might have trouble dumping it on the next guy.

mcmansion-pro-con
Symmetry, detail, timeless.

A good house has strong bones to survive a century if you so cared to pass it down to the next generation. They are uniform and adhere to the principles of design which are timeless in beauty.

Taxes

Unless you have 8 children and both sets of grandparents, most people with families will not find 100% efficient use for a home that sizes in at over 3,000 square feet. That’s too bad but the add-on value and land lots are still taxed the same by local and state government. Whip out those wallets, it’s the house that keeps on taking.

Law of Averages

The great real estate advice that I’ve ever heard (and regrettably didn’t take myself) was to “buy the worst house in the best neighborhood you can afford.” Besides the location, location, location mantra – that is probably the best real estate advice one can give. Time and time again, I’ve observed this to be true. Logically, every neighborhood has a price average – like a spectrum within a band that it lands in. The biggest home on the block (the McMansion) will be weighed down by the law of the price average since the most of the other older, smaller properties will be pulled up by the average in a given neighborhood.

Utilities

Utility costs vary depending on location but on average, a 4,000 square foot house for a family will be hit with a $400+ monthly bill for gas & electricity only. Water, heater, etc. data not included. Those massive window holes, in case the mortgage interest wasn’t enough, you can also try to heat & cool one of those house bloodsuckers. Try not to go bankrupt.

Giant windows.

Non-Finance

Let’s pretend money was no object. Would someone who is financially secure benefit from owning a McMansion?

Perhaps, if they like to be half a Siberia away from their family and having to walk 10 minutes to the other end of their house to ask a question, then yes they will do just fine.

Let’s not forget the utter wastefulness of materials and wealth to build that monster just for a family of 4 to live in pseudo, overproduced luxury.

Summary

hate-people-so-much
Windows that never match and fake glued on brick paired with cheap stucco.

The McMansion does not make financial sense. It doesn’t even make architectural sense. Many Americans are pretty terrible with their finances and this is another hallmark representation of that. We like the hamburger but we don’t want to see how it’s made. My biggest issue is the actual square footage issue. The square footage issue launches a bunch of other issues related to the hefty ongoing cost of owning a McMansion in the first place. McMansions are pricey, hard to sell, harder to heat, harder to maintain and create a bigger tax bill for less efficiency.

Plus, your direct neighbors will hate your ostentatious snobbery. Chances are you have blocked their natural light and views with that monster structure of yours. I believe this McMansion & McModern epidemic is happening because not everyone is aware of the massive downsides associated with the thoughtless monster wallet eater.

😏

Is anyone feelin’ me? Is the boastful size of a McMansion the future of real estate? Any financial downsides I should add to the list? Anyone with a McMansion care to share a cost breakdown (genuinely curious.)

 

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  1. https://www.washingtonpost.com/lifestyle/magazine/why-we-love-to-hate-mcmansions-but-still-buy-them/2017/01/18/434462ae-c622-11e6-8bee-54e800ef2a63_story.html?utm_term=.35adfda00e13


37 thoughts on “The Financials Behind Owning a McMansion”

  • I’ve seen a lot of these McMansions in DC. Every we pass by those houses, we tell each other we will buy one of them one day. But then we also think about the maintenance, taxes and such that all add up to the cost of the house. I guess it might be suitable only for the super rich.

  • Entertaining article! I don’t think I needed any convincing to steer clear of over indulgent, ostentatious houses — but if I needed to be set straight your post would’ve done the trick! Talk about a waste of space, materials, money, etc. just the thought of maintaining something that size alone is enough to give me nightmares 🙂
    Cato recently posted…Why You Don’t “Need” to Invest in Bitcoin

    • I thought so too. The highest national average was 2470 sq for a regular family home so 2500 and above became classified as McMansion size. Houses around here tend to be small so it also depends on location. Anything above 3000/3500 is a McMansion to me though.

  • Whoa there, 2,500 square feet can get you in the McMansion club? Must be a west coast thing because around here 2500 sf houses aren’t that expensive (like $225k+) and it’s hard to do ostentatious opulence properly with *only* 2500 sf of floor space. I suppose if you vault the ceilings enough and add on a tacky 4 car garage you could maybe make it work! 😉

  • Looks like these McMansions are perfect for people who all of a sudden have a lot of money and did not know what to do with it. Maybe someone who’s sold a tech startup and started looking at buying the things they always wanted to own. Maybe, a Ferrari, a Mansion etc. All about how our brain operatesIMHO. Many wealthy people also buy mansions because it makes them feel really good.

    • Bingo, especially young millennial tech money. They go for the McModerns the same way Boomers go for the McMansions. Same thing, different design. For some reason the size of those things doesn’t scare people away like it scares me away.

  • We live in a 3,500 square foot house (2,500 square feet + finished basement downstairs) and boy is it a waste of space for 4. My parents, on the other hand, live in 7,500+ square feet of space for them and my brother. There are more than 2 bathrooms per person (7 total). Wow. I wonder why they’re so against us moving into a smaller space? 🙂 (Their home does adhere to timeless principles of good design, though…).
    Laurie@ThreeYear recently posted…The Average Joe’s Ultimate Guide to Getting Out of Debt

  • “It’ came from California. Mystery solved.” = LOL 🙂

    We sold our 4,000 sq ft waterfront house when I daughter went off to college. We were able to use the equity to pay cash for a 2100 sq ft townhouse and join the 100% debt-free crowd. Way too many people waste space and money on extravagant homes that really don’t make sense. This is a great call-out on that situation.
    Brad – MaximizeYourMoney.com recently posted…How To Pay Off Your Student Loans Faster

  • Such a timely article, Mr. NA and I are in the process of looking to buy a house and have stumbled across a few mini McMansions [they’re closer to 2,500-2,900 sq feet]. Most of them have been in our price range but are further away than we would like. It’s definitely tempting but a) I don’t want to clean it b) we would have to buy unnecessary furniture to fill the space and c) just not practical. I have also learned we are NOT fancy people because there is no way we would ever use a “formal living room.”

    • Omg congrats Ying!!! Lol that’s hilarious! We never used our “dining room” and we’ve been here over 2 years. It’s totally not necessary. Location > size/per dollar.

  • I never even equated mansions in the U.S. to everything else we like supersized. You are totally right! I believe as a society we are slowly getting away from that mantra , but it is still alive and well! Shoot, one of our own states prides themselves on having “everything is bigger.” In the U.S. generally our biggest celebrity figures are sports figures or musicians. Old MTV shows like MTV Cribs would market to us all of these massive mansions that these celebrities own, making us believe that that was the end goal. Then we later read that most of these houses were foreclosed on.

    Thanks for pointing this out!
    Sean @ Frugal Money Man recently posted…Don’t Laugh at Marcus Williams…You Have Been Making the Same Mistake for Years

  • I loved your article and got a real kick out of it. I live in Florida and I must have a little mini McMansion with 2300 sf for just myself and hubby but price way less than you think. It’s location location location I think. For $200K you can sport pretty nice house low cost of living area and big beach cities and gulf nearby. Only two car garage so maybe it’s not that up there There aren’t basements around here either. I’m from IL and trust me they have some of those really big McMansions you describe but also a house like mine in e in Chicago area would be more than double the price and taxes triple. As I said the main point is always going to be location from how I see it!!!!

  • Fun post!

    I came across that site a while ago, and it’s such a gem. Am I the only one who wonders how they’d spend their money if they got rich/became a celebrity? I decided that I’d never buy a house/apartment that cost more than $2 million (and even in NYC). That’s because I’ve heard too many stories of ppl buying insanely expensive places and not being able to sell it at all/or sell at a huge loss. Anyway, that’s my ‘Fantasy Fiscally-Responsible Celeb’ moment.
    The Luxe Strategist recently posted…Two Weeks in New Zealand: Extremely Far, Cheaper Than You Think

    • There are jumbo homes and they’re on the market for much longer. I’ve seen 398 days or 800 days on the market. They’re 8,000 sq, I wonder if the family lives in it while it sells. Because if no one buys it for 1 year, who would rent 8000 sq?? It doesn’t make sense.

  • Ahahahaha, oh my gosh, the captions on the pictures was cracked me up! Thanks for starting my day off on the right foot.

    As an aside, I actually had no idea that McMansions were built like crap. I mean, it makes sense, but I had never actually thought about it. So glad that trend does not seem to have caught on quite as fiercely in Norway.

    • When we looked at the construction quality of our home, we got +1 pt above typical McMansion quality. I don’t consider our house super sturdy strong so I can’t imagine one notch worst. You can find the construction quality score on Zillow if the details 🙂

  • You know what’s funny to me?

    I live in a McMansion. We built one. But I don’t see it that way…

    You see, I could have spent $400k on a brand new house that fits our needs, has exactly the finishes we want, and was hassle free. It’s a bit larger than needed at about 2500 sqft, but it is pretty efficient ($200/mo for all utilities so far) and was in a great neighborhood. It’s borderline McMansion, but by common definitions, we hit it.

    OR

    We could have spent $300k-$310k on an old house that needs $100k+ of renovations to make it what we want. It’d not be efficient. It would be a bit smaller which wouldn’t be a big deal for us I suppose. It’d have been a nightmare to deal with my wife and the renos.

    So yeah I guess we got a McMansion, but honestly it was better than buying an older home and fixing it up. We looked and looked, but didn’t find anything we liked in the areas we liked.

    One thing I do wish we’d considered, however, is house hacking with a duplex and living in it for two years, and THEN building our home. But the timing didn’t work out, and duplexes rarely go up for sale here.

    On a side note I think I might write a post about how as a community, personal finance bloggers tend to shun nice things frequently. I don’t get it. So we wanted a McMansion – who cares? We can still retire when we want. We can still spend the money we do have how we want. We aren’t blindly sacrificing our real goals for the sake of ‘showing off’ a big home. some may think it’s ostentatious but the reality is 2 people know our financial situation – my wife and me.

    It was a conscious decision we made that aligned with our values. I don’t get why we’re so quick to judge how people choose to spend their money. Nothing against anyone personally who comments on this stuff – by and large I’d say the majority of people who live in McMansions are probably house poor or not saving enough. But that’s not the case across the board, and I think without knowing specifics it’s not really fair to say that everyone who buys a McMansion is an idiot or making silly financially choices.

    Just because one’s decisions don’t align with yours doesn’t mean it doesn’t align with THEIRS. If it does, good for them. If not, that’s where I think people are making bad choices.
    Dave @ Married with Money recently posted…Why I Walked Away From $25k In Company Stock

  • Oh, man, Lily. As I was reading this, I was laughing and recoiling in horror at the same time–if that’s even possible. I never liked McMansions. They’re ugly and an affront to efficiency and good manners. And, in all honestly, I have nothing against large homes. When I was in college back in the early 80s, I had a summer job working for a construction company that did maintenance work on large estates on the Gold Coast of Long Island. So I’ve seen real mansions up close. And they’re freakin’ beautiful. And they’re were built solidly, with exquisite materials and finishes. But McManions from the 90s and early 2000s? Talk about schlock! Talk about the Housewives from New Jersey! Thank you for another great post, Lily. And thank you for turning me onto to Kate Wagner. I just bookmarked her site now.
    Mr. Groovy recently posted…Building Groovy Ranch: Update 4

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