McMansions Remain a Hot Buy

February 26, 2015

Existing-home sales mostly fell flat in January, but a closer look at the data shows one segment of the market is seeing a lot of activity. McMansions – those traditionally large homes in the $750,000 to $1 million range – saw a sales growth rate of 13 percent in January, according to the National Association of REALTORS®. That is the fastest growth rate of any other home price range.

“It’s a reflection of the U.S. economy where the upper end has done much better in this recovery in terms of income,” Lawrence Yun, NAR’s chief economist, told MarketWatch.

As the stock market hits new highs, the luxury buyer is continuing to be a strong player in the housing market this year. Last year, the million-dollar plus segment had the strongest growth. “Now, it’s the next level that is beginning to pick up,” Yun says.

As for more traditional buyers, they may be locked in to their current home. Home owners who snagged low interest rates may be reluctant to trade up or move on unless job or family changes press them to, Yun notes. That’s how he explains why the strengthening job market as well as rent growth is not currently leading to a stronger housing market than expected.

“People may be delaying two years, four years before returning to normal moving patterns,” Yun says.

Source: “Used McMansions Are Selling Briskly,” MarketWatch (Feb. 23, 2015)