McMansion

What is 'McMansion'

McMansion is a slang term that describes a large, sometimes opulent or ostentatious mass-produced house. The term carries a slightly critical connotation, and McMansions are often thought to lack architectural integrity.

BREAKING DOWN 'McMansion'

A McMansion is a type of home often associated with upper-middle class homeowners. Built to provide a luxurious housing experience that was previously only available to high-net-worth individuals, a McMansion is often considered a status symbol. Notorious for their size and suburban locales, the cost of maintaining such a home is significant. Buyers are often faced with high utility and maintenance fees, as well as the added cost of commuting from the distant suburban settings in which these homes are often located.

Generally between 3,000 and 5,000 square feet, the size of the McMansion is meant to signify the owners' high social and economic standing. Though the term is a play on McDonald's fast food restaurants, it is equally associated with a generic, cookie cutter suburban aesthetic as social status. The McMansion was most popular from the 1980s through the early 2000s, before the crash of the housing market in 2008.

McMansions and the Great Recession

Many of the negative connotations associated with McMansions result from the Great Recession. The Great Recession refers to the sharp decline in economic activity during the late 2000s, generally considered the largest downturn since the Great Depression. The combination of rising home prices, loose lending practices and an increase in subprime mortgages alongside a growing supply of large tract homes caused the US housing market to bust, causing large amounts of mortgage-backed securities and derivatives to lose significant value.

Because of the 2008 housing crisis, the McMansion is connected to living beyond one’s means and the proliferation of subprime mortgages, which are considered an underlying cause for the recession. A subprime mortgage is a type of mortgage that is normally granted to borrowers with low credit ratings or those considered to be at larger-than-average risk of defaulting on the loan. Subprime mortgages often have higher interest rates than a conventional mortgage, but require little to no down payment.

The McMansion, because it is easily built and attractive to consumers, was the perfect vehicle for subprime loans. Many people lost their homes and others saw the value of their homes drop below the original loan amount because of the subprime mortgage. In some cases, borrowers were actually better defaulting on their mortgage loans rather than paying more for a home that had dropped precipitously in value.