McMansions migrate from 'burb to city

From her home in the Ponderosa development of Atlanta, Jo Hutto heard the growl of bulldozers, and dreaded the changes they were bringing to her neighborhood.

Around the outskirts of her Atlanta subdivision, split-level ranches were being plowed under to make room for grandiose homes that made the dream house of the 1960s appear shabby. The new homes skewed architectural scale and perspective and spun local property values into uncertainty.

"The overwhelming feeling was, I don't want to live in the shadow of these great houses," says Ms. Hutto, an organizer who led the effort to adopt new height restrictions in The Ponderosa to keep the big homes at bay.

While megahouses have been sprouting on converted farmland in the outer, leafy suburbs for more than a decade, the spread of McMansions to the fixed-supply property market of established and often working-class city neighborhoods such as Denver's Platt Park, Nashville's Belmont-Waverly, or Atlanta's Kirkwood is an emerging phenomenon, changing the look and feel of America's cities.

Tearing down older homes and building bigger ones is a natural and necessary evolution of the country's grizzled urban core, proponents say. But critics point to widespread revolt in neighborhoods like The Ponderosa as a sign that many homeowners are wary of the effect of grandiosity on their own piece of the American pie. At the heart of the urban McMansion movement lies a shift in how the value of city land is perceived, experts say.

"What's happening across cities is that land prices have increased really fast, so that the land becomes so expensive relative to structure that it makes sense to tear down the house and build bigger," says Morris Davis, an economist at the University of Wisconsin, who documented the trend in a paper for the federal reserve this summer. "If you pay $320,000 for a lot, you're not going to be happy with a 1,500-square-foot rambler built in 1950."

This shift in perception is based on a fairly rational confidence in the value of land, as the population grows and more people decide to move to the city, says Robert Lang, director of the Metropolitan Institute, an urban policy think tank in Alexandria, Va. The tear-down trend is being driven by families' desires for more space and shorter commutes to work, he says.

"It seems natural that we are in this position now with interest rates favorable and huge amounts of liquidity that we would be improving our infrastructure – it just seems an ideal time to do a do-over," says Brian Hickey, a tear-down developer in Chicago.

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