McMansions – Have They Simply Moved to Farms?
“The real beauty of a house is always the happiness inside that house!” ― Mehmet Murat ildan
(photo credit- Globe & Mail)
A few short years ago, it seemed that the average size of a North American house was increasing to almost supersized proportions. Aptly, these new gigantic spec homes were dubbed “McMansions” or mega-mansions and averaged 5,000 or more square feet. As we watched the US foreclosure crisis, these McMansions saw prices plummet at a rate that was simply jaw-dropping.
Recently, I was shocked to see palatial “shopping mall-sized” homes on blueberry farms and agriculturally zoned properties in Surrey and Richmond (many still under construction). Some of these residences were in excess of 20,000 square feet! The Globe and Mail investigated mega-mansions on farm land in January and discovered the lucrative tax breaks that were being taken advantage of which had been intended to assist those who actually farmed on their property. Metro Vancouver now estimates that 50% of its agricultural land is no longer being farmed. Some of these residences were in excess of 20,000 square feet! Agricultural land in Vancouver has become more desirable for overseas investors as it is not subject to the 15% real estate foreign buyer tax.
Another tax benefit of these farm properties is the opportunity to avoid property transfer taxes. Some realtors in Vancouver proudly advertise that the farm parcel is owned by a numbered company who will simply sell the shares in the numbered company, and since the name of the company owning the property would not change, no sale would be registered and no taxes collected. This way, a buyer could easily avoid $100,000 or more in property transfer taxes. The BC government advises that they may disallow tax-free property transfers through numbered companies, but no steps have yet been taken.
Even working farms are supposed to be assessed based on market value if they are in a municipality. However, one 23,000 square foot just south of Vancouver was valued at just 2.9 million – less than 1/2 the cost to build it. Mega-mansions in Nanaimo on farm land are not as common as on the Mainland, although larger homes are under construction on acreages on the outskirts of the city. Although we saw the average house size increase in Nanaimo during the past 10 years, our larger executive family homes grew to 3,200 – 4,000 sq ft typically. However, it is important to note that these larger homes usually included a legal in-law suite in the basement which would offset the carrying costs of a larger home.
Some “colorful” descriptions of a McMansion include: “Starter Castle”, “Garage Mahals”, and “Faux Chateaus”. According to Wikipedia, a McMansion is defined as “tacky, they lack a definitive style and they have a displeasing jumbled appearance”.
Have we seen the shift to new homes being built to more moderate sizing or are we seeing a start to supersizing again as the economy picks up? An interesting study conducted by Trulia (an online real estate marketing company) showed that only 9% of respondents said that their ideal home was over 3,200 square feet (much smaller than a McMansion).
The shift to greener living has also changed how people view their homes. It is interesting to note that even a “green built” McMansion often still have a larger carbon footprint than that of a standard Nanaimo “box style” home from the 1980’s. As well, the cost to heat and cool these large homes made this American dream unrealistic for the average buyer. According to the Wall Street Journal, a 5000 sq ft McMansion in Connecticut could cost about $5,000 a year to heat/cool!
I know one fact to be true. Nanaimo truly is the most wonderful place to call home. If you are considering selling your home, or purchasing another property, please get the experience and expertise you need to guide you through the steps of real estate. Whether you are interested in buying a farm, mega-mansion, family home, condo or townhome, let our McCullough Team help you get moving…in the right direction!
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Brian & Myles McCullough
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