Todd Huttunen began appraising more than 20 years ago with a few years off in between to pursue a career in cabinet making. He relegated that to hobby status and is currently an appraiser in an assessor’s office. His best friend dubbed him The Hall Monitor because of his rigidity and respect for rules. He offers Soapbox readers tongue-in-groove insight on appraisal issues. This week Todd argues that we bought the ranch when we learned that smaller size does matter. …Jonathan Miller

McMansion, Starter Castle, Hummer House these are just a few of the nicknames that have been given to big new houses (by their critics) in existing neighborhoods of smaller houses. No one can argue that the “teardown” followed by the super-sized new house has not altered the suburban landscape in recent years. But the principle of highest and best use, which made the 1950’s Split Level an endangered species in many affluent communities, lives on. And the brand new Starter Castle next door is no more immune to the passage of time than was the Split Level it replaced.

In fact, if recent history is a harbinger of things to come then the economic lifespan of all our buildings, both residential and commercial, will be shorter in the future than it was in the past. Look at the ages of the buildings being demolished. With houses it’s nearly anything built after 1950. Many municipal buildings, sports stadiums, and the like have had, or will have, shorter lives than did Mozart (who died at 35 years of age).

Might Peak Oil and $4 plus gasoline do for outsized houses in outlying suburbs what PETA did for the fur industry? This is not to say that there won’t be big houses anymore inasmuch as there are still lots of people who like wearing fur coats and eating meat. Unfortunately, the newer McMansions are not usually located in the most desirable areas, within walking distance of shopping, train stations, etc. That’s where the “real” mansions are, and have been for 75 years. The newer big houses are mostly located in the outer ring suburbs, where they’re much more automobile dependent.

A story in the May 18, 2008 New York Times entitled Imagine No Possessions addresses ‘voluntary simplicity’, a movement which is the antithesis of the culture of the McMansion. A less affirmative “movement” based on the more mundane and difficult economic reality heading our way might be called ‘involuntary simplicity’. We may not be able to afford to maintain the McMansions, once they are no longer new. Big houses cost more to acquire and more to maintain. They have higher taxes due to their higher values (at least for the time being). But bigger houses are not always worth more than smaller houses.

There is a neighborhood in the Village of Bronxville known as Lawrence Park. Bronxville is a wealthy suburb just north of New York City and “The Hilltop”, as Lawrence Park is also known, was developed by William Van Duzer Lawrence in the late 1800’s as an artist’s colony. The houses are quite large, uniquely styled and sited on steep slopes along very narrow cobblestone roads. In recent years these houses have been renovated and they are today, some of the most valuable houses in Bronxville. But for decades following WWII this was a neighborhood in physical decline, based on historical assessment records. A longtime Hilltop resident once described it to me as a “slum” when she built her house there in the 1950’s.

If you walk through that neighborhood now it seems hard to believe but you have to consider how the world was looking in the 1950’s. As we all know, the 1950’s was a boom period for suburban construction and if you were buying a house you had the choice of a brand spanking new Ranch or Split Level with all the latest amenities, or one of these “old fashioned”, drafty dowagers then approaching 60 years old. Modern was “In” and late 19th century was definitely “Out”. The assessment records from that era reflect the fact that the newer, albeit smaller houses had higher values than the older ones.

There may come a time in the not so distant future when the adjustments appraisers make for differences in living area reverse themselves and the larger house is adjusted downward. It won’t be the first time that smaller houses will have been in greater demand, and more valuable, than larger ones.


  1. Ben Kolkman May 21, 2008 at 3:00 pm

    Great observation! I am a Realtor in Minneapolis, working in older urban neighborhoods. We are experiencing the replacement of old homes with new on a VERY routine basis.

    Your point that, “bigger houses are not always worth more than smaller houses” is absolutely true. I’ve watched many builders make the mistake of over building in these neighborhoods resulting in both lost profits, and in some cases the scorn of residents.

    In the replacement housing market, in southwest Minneapolis, larger homes do not necessarily fetch a higher sale price. Smaller, higher quality, homes with truly classic design are most attractive to buyers and cost less to build.

    I ust found the Soapbox and I’ve saved it to my feed reader, thanks for the great content.

    Regards – Ben

    Ben Kokman, Realtor
    SKY|Sotheby’s Realty
    Minneapolis, MN
    (612) 599-4161

  2. Todd Huttunen May 21, 2008 at 7:01 pm

    I think you hit the nail on the head when you refer to “higher quality” homes. I think that the next boom (whenever that might be) will feature homes built on a more human scale and with more attention paid to design details and construction quality over quantity. I believe the “big box” houses may very quickly become white elephants and not just for reasons of energy and maintenance costs. I really think that people are going to discover that they just don’t function very well.

  3. Dave Patter June 10, 2008 at 8:57 pm

    I wonder if proximity to transport and job centers might also become even more important if gas continues to be expensive and some sort of carbon tax or trading system boosts the cost of car commuting further.

    Might an appraiser reduce the value of a home because it’s in a currently desirable suburban neighborhood that has become too far out?

    All best.

  4. Todd Huttunen June 10, 2008 at 9:21 pm

    It will be the market, of course, that makes the determination as to those “far out” suburbs. If and when buyers indicate a preference on that basis, it will be up to appraisers to identify the trend and make the appropriate adjustments.

  5. Will Donaldson June 19, 2008 at 6:09 pm

    While I agree and hope that your prophecy comes true, I think it’s important to note that comparing the value of a McMansion to a smaller city home is really like apples to oranges. Yes, suburb value is falling, but space is space. A larger home in the suburbs is worth more than a smaller home of equal distance from civilization. In the same way, a larger home close to shopping and public transport is worth more than a smaller home in the same location. Suburb land/homes should be valued considering the cheaper nature of the land and the longer commutes. You’re trading one expense for another.

    Commerical real-estate is used to this type of thinking. You are valued primarily by your proximity to something else. You use space efficiently as it’s an indirect cost of doing business.

    Either way, in the end you are right, the problem is cultural. Is it due to a lack of financial education or the fact that your grocer likes it when you live far away, because you’ll be more inclined to splurge at your local megacenter rather than revisit for no more than you need?

  6. Todd Huttunen June 20, 2008 at 9:40 am

    What has happened to the marketability/value of different types of automobiles in response to rising gas prices? Fewer people are buying gas-guzzling SUV’s and more are buying smaller cars and Hybrids. I don’t think it’s because people have all of a sudden expressed a preference for a more cramped, less luxurious driving experience with fewer amenities. We didn’t have a cultural epiphany and decide to eschew our wasteful ways.

    No, it just got too expensive to drive a Hummer! And in the same way perhaps, it is getting too expensive to maintain a McMansion. It’s not because we’re becoming “better people”.

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