My house is too big is an uncomfortably common realization. The Wall Street Journal reports an oversupply of high-priced custom estate homes and mansions. An oversupply of the too big house is driving down sales prices in many popular retirement markets. A Growing Problem in Real Estate: Too Many Too Big HousesBaby boomers and retirees built large, elaborate dream homes across the Sunbelt—only to find that few people want to buy them

Sellers forced to downsize mean a fire sales on the too big house

The problem? Aging sellers are facing high maintenance, declining energy, health challenges, and isolation. Literally, their dream house is now too big for them. In other words, the pressure to downsize is real and urgent. The dream becomes a nightmare. My house is too big!

“You had this wave of homes built that now just don’t make sense for a lot of the people who bought them,” said Rick Palacios, Jr. of John Burns Real Estate Consulting.

One of several examples from the article? According to the WSJ, the Hambletons are selling their roughly 4,200-square-foot country creekside estate home on three acres because they want “somewhere smaller where someone’s taking care of everything.” Why? When it comes to aging “I don’t know that you face these things until you have to.”

An Aging With Freedom maxim, aging-in-place in a Peter Pan Home works until it doesn’t. And then you’re stuck.

Buyers prefer smaller, simpler, sustainable homes

Compounding the pressure to downsize, buyers tastes have changed. Buyers want smaller, simpler modern homes. They want to live in walkable neighborhoods with less debt (or even no debt).

Everyone is downsizing. Boomers and Millennials alike. Boomers are concluding, my house is too big. Millennials agree. Your Boomer big house is too big to buy.

Right now the expensive big home resale problem is most obvious in retirement hotspots like Scottsdale, the Carolinas, and Florida. But it won’t stop there.

Suburban McMansions next to fall

Aging With Freedom thinks the resale challenge will extend downmarket to large suburban McMansions for many of the same reasons.

We’re not alone. Here’s the definition of a McMansion from The Business Insider and an explanation of their essential value challenge.

One of our favorite websites of all time, McMansion Hell, pokes fun at the architectural sins of the genre.

The Boomer McMansion defines my house is too big. And the McMansion is the opposite of the modern trend to the “Not So Big House” coined by architect and trendsetter Sarah Susanka to describe the way we really want to live.

Don’t count on the McMansion as a retirement asset, it may be a liability

Boomers are planning to age-in-place in their two-story 4,000 square foot suburban McMansion albatrosses. But when they realize my house is too big to maintain? To afford? When boomers ultimately go to sell? Generation X and Millennial wealth and income may not stretch to current prices. And changing tastes and preferences mean they may not want to. The too big house is too much.

Great Recession + Student Debt = Cautious Buyers

The Great Recession and an increasingly impermanent job market combined with high student debt are all dampening Millennial home-buying capacity.

Housing trends — the too big house is out

Minimalism, authenticity, and sustainability are “in” trends. These are the opposite of the high maintenance McMansion’s faux facade and maximum square footage aesthetic. Then toss in the debt-free movement and mortgages the size of a small country’s national debt are out of style.

We’ve been here before

History doesn’t exactly repeat but it rhymes. The large homes built from 1870 through the early 1900s fell out of favor. First tastes changed. Post-WWI? The smaller Craftsman bungalow was all the rage. Then demographics and the economics of the Great Depression decimated demand. Way too many people realized my house is too big. Many grand homes ended up as subdivided apartments. Or decayed away. Does a similar fate await the McMansions and estate homes of the Baby Boom housing wave?

You can’t eat the house, especially the McMansion

What’s that mean for aging Baby Boomers? Don’t count on your expensive home, especially the too big house, as a retirement asset. Another Aging With Freedom maxim? “You can’t eat the house.” It’s not cash until it’s sold. And real estate can be very illiquid.

Action Steps when you know my house is too big

Some of these lessons we personally learned by living. We owned a McMansion. With a pool. In Arizona. It was beautiful and our dream home. But the utilities were crazy, even for, or especially for, a new house. We had two bedrooms, a dining room and a formal living room we never used.

A couple of our Aging With Freedom high wealth rules are:

  • Limit your residential real estate to no more than 25% of your total assets to avoid over-weighting.
  • A median or average home is easier to sell in every market.

We sold our McMansion, locked in the gain, and don’t regret it. We downsized once into a 1,800 sq ft. home. A home purchased at the local market average price.

Our personal current weight of residential real estate remains under 20%.

We’re reminded that Warren Buffett does not live in a mansion. The not so big house is a smart choice.

And we still plan another round of downsizing to an even smaller condo.

The risk of falling prices for the too big house is another argument for planning to downsize now. Downsize before you are forced to do so.

Get ahead of the curve. And be proactive. If you think my house is too big? Then, sell now and downsize. Before everyone is trying to do the same thing. All at once.


4/13/2021 CNBC: More Boomers are choosing to upsize their retirement homes