The big question is when, not if, to buy.

The pain for the sellers has not even started yet.

I'd wait until the prices drop by 50% from the peak.

In the Region - New Jersey
Scaling Back on McMansions in New Jersey

Scaling Back in Suburbia



September 26, 2008
Aaron Houston
The New York Times

FINALLY, the McMansion may have reached the limits of its popularity in New Jersey, where it has seemed to rule the residential market with unshakable authority for many years. Whether that setback is temporary or permanent remains to be seen.

BIG BONES A new brick house in North Caldwell, much like Tony Soprano?s, is still on the market after 214 days and a $200,000 cut, to $1.49 million.

Some signs of the current times:

? A new brick colonial with roughly the same big bones and indulgent amenities as the one that Tony Soprano inhabited on-screen ? and in the same North Caldwell locale ? has been languishing on the market for 214 days, despite a price reduction of $200,000, to $1.49 million.

? In Livingston, a six-bedroom behemoth built in 2000 and outfitted with a chef?s kitchen, family-room fireplace, whirlpool baths, and so on ? and so on ? has spent 168 days on the market, and is still there after a price cut of $150,000, to $1.649 million.

? In Llewellyn Park, a gated community in West Orange, a developer?s plan for a sprawling six-bedroom colonial with six peaks and gables across the facade has not garnered a purchaser in 476 days on the market ? although the price for the custom-built abode, to be set on five acres, has been reduced to $4.25 million from $4.5 million.

?McMansions?? said Joanne Harkins of the New Jersey Builders Association. ?In a nutshell, people aren?t buying them ? certainly not the way they did before. And our members are going to have to evaluate whether there is still a market for this type of product.?

The residential market is hurting at all levels, all around the state, of course. But market experts say the supersize single-family house in the suburbs is taking a harder hit than other housing types.

For one thing, higher-priced houses inevitably take longer to sell, said Jeffrey Otteau of the Otteau Valuation Group, which monitors contract sales figures in the state. And when the market is slow, the effect is exaggerated.

The total inventory of houses now on the market would take 10.9 months to sell at the current level of demand, if no other houses were put on the market in that time, Mr. Otteau said. For houses priced at $1 million to $2.5 million, the inventory would take 16.9 months to sell; for homes over $2.5 million, the wait would be 29.2 months.

?But actually,? Mr. Otteau said, ?many conditions have converged to affect the market for so-called luxury homes, particularly in those areas not along major mass-transit corridors.? He mentioned the rapid escalation in the cost of energy and gasoline, as well as increasingly restrictive zoning ? for instance, some local ?anti-McMansion? ordinances, which limit the footprint and height of new homes.

Perhaps the most important factor, Mr. Otteau said, is the shrinking pool of likely buyers.

Since 2000, the state has lost 130,000 jobs in the highest-paying categories and added roughly the same number in the lowest-paying categories ? service positions. In addition, widespread layoffs on Wall Street have greatly affected the residential market in many upscale commuter communities in New Jersey.

?Last, but not least,? he said, ?we have a growing fiscal conservatism amongst baby boomers as they get closer to retirement. Historically, this generation of consumers created the greatest demand for luxury-priced homes.

?When you are 45 and you feel certain your income will continue to rise, you are more willing to take the plunge than when you?re 55 and expect your income to decline in the near future.?

A number of architects in the state said they, too, were seeing a significant decline in demand for the McMansion, which most defined as a house with 4,000 or more square feet of living space, occupying a disproportionate share of a lot and featuring formulaic elements like two-story foyers, Palladian windows, granite counters, and ?great rooms? with fireplaces.

Philip S. Kennedy-Grant, who runs his own firm in Bernardsville, said he had recently worked on a project designing houses, ?the first of which was small, really, by McMansion scale, at 4,500 square feet, in a small subdivision in Somerset Hills.? He added: ?The homes are more handsome, and better built than most, and still the market is nonexistent. One house sold after a long time, and then the project went on hold.?

Yet though he and other architects, like Jim O?Brien, who has his own firm in Morristown, said they applauded the demise of ?overblown? designs, they were not quite prepared to call that demise permanent.

?I think we?re probably just seeing a temporary decrease in the flow,? said Mr. O?Brien, who conceded that he had done good business serving homeowners who wanted to ?bloat up? the size and style of their homes during the years of rapidly escalating home values and easy-come equity loans.

?I think the credit crisis broke a certain type of fever that was still running high in some towns, like Wayne,? he added, ?although that community did pass an ordinance several years ago on the size of house-to-lot ratio. Everybody wanted the biggest house possible, with an indoor pool, and in-law suites, and whatever they could think of to spend their equity.?

In Westfield, one small developer is currently marketing what it calls a ?McMansion alternative.? The house at 1221 Prospect Street, near downtown, is still huge ? more than 5,000 square feet ? but it consumes energy in a small way, according to its creators, two first-time builders who call their company e-Solar Properties.

Paula Golbin, a partner in the project with David Goodman, says the house is made of recycled, allergen-free and energy-conserving materials, and equipped with solar panels that generate enough power to heat and cool the space, and keep all its ?smart? systems operating for a monthly net utility cost of less than $90.

?It doesn?t look like people are going to stop desiring these large houses and all the modern luxuries,? Ms. Golbin said, ?but at least this is a sensible way to do it and respect the environment.?

Mr. Kennedy-Grant said he did not think devotion to the McMansion paradigm would ever diminish in the Garden State. ?It would take a cultural revolution, involving art, and philosophy and the way we think about community,? he said. ?No matter how bad things look now for McMansions, I somehow doubt such a revolution is in the offing.?