'McMansion' Owners Caught in a Housing Bubble

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Doctors Patricia Sheiner and Michael Silver and their three young children loved their $2½ million dream house in New York's suburban Westchester County.

But they're not living the dream anymore. The family put the 7,000-square-foot home up for sale and moved to a smaller house in December to save on their mortgage payment, utilities and taxes. Now, it's an albatross they can't sell despite dropping the price.

"We bought our other house feeling our other house would sell quickly," Patricia Sheiner said. "And then the market suddenly died. It died."

"It's tough on a daily basis," Michael Sheiner said.

"It's a hardship for anybody to pay two mortgages," Patricia added.

They didn't believe one of the hottest real estate markets in the country would cool off so quickly.

"I'm completely blown away," he said.

"We're totally surprised," she added. "It's a really beautiful house."

Drive around almost any wealthy suburb these days and you'll see a lot of very big houses, so-called "McMansions," under construction everywhere. In fact, in the last 50 years, the average size of new American homes has more than doubled from 983 square feet to 2,434 square feet, according to the National Association of Home Builders.

But the once red-hot housing market has cooled off and the big homes are starting to give a lot of people some serious headaches.

In almost every region of the country, rising interest rates have made big houses hard to sell. Over the last year, interest rates on 30-year fixed mortgages have risen more than a full percent. So for every $100,000 borrowed, that's an extra $80 a month.

It's the worst market in a decade.

"A year and a half ago I could list it, hit enter and I'd have three showings within ten to fifteen minutes," said J.P. Endres, president of the Westchester Board of Realtors. "Now I hit enter and I wait."

There is one bright spot in the real estate market. With big houses now out of the reach of many buyers, there is a growing demand for small homes.

Patrick and Barbara Connolly, with a floating rate mortgage, were looking for a smaller house. They want one half the size of their 6,000-square-foot home.

Patrick Connolly looks forward to "lower operating costs, lower maintenance … lower taxes, lower price."

There are now more people trying to sell houses 5,000 square feet or bigger than there are buyers.

"Reality is coming back," Endres said, "and they are looking for smaller homes. And that's what they're focusing on. … I certainly see more of an increase in inventory, and that might continue."

As for doctors Sheiner and Silver, realtors say their empty house may be on the market for months more, even if they drop the price again.

This story originally aired July 29, 2006 on "World News."

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