A story in the New York Times, which you can find here,  gives me hope that McMansion mania is finally petering out. According to the Times, the demand for ultra-large homes in New Jersey — where such homes have long ruled the market — seems to be waning. The Times isn’t sure if this is a longterm or a shortterm thing. But it does give me hope.

The Times cites a brick colonial house with show-offy columns that has been sitting on the market for more than 200 days. The house’s price has been reduced $200,000 to $1.49 million. (The amount of that price reduction is more than many people pay for their entire houses!)

In the New Jersey town of Livingston, a six-bedroom monster built in 2000 with a chef’s kitchen, whirlpool tubs and more has spent more than 150 days on the market. That home has seen its own price reduction, of $150,000, to get to its present price tag of $1.6 million.

So all you fans of small homes, rejoice. Maybe the housing slump will convince homebuilders to scale things back a bit. That’d be good news to me.

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BusinessWeek recently ran an interesting story about homeowners who are paying a whopping 50 percent — or more — of their monthly incomes on mortgage and other housing payments. You can read the story here.

The BusinessWeek writers interview a homeowner who only eats out on certain days of the week, days of the week when McDonald’s offers 49-cent hamburgers. You might argue that such a homeowner — who is facing near certain foreclosure of his residence — shouldn’t be eating out at all. But when life’s such a struggle, why begrudge someone a 49-cent hamburger?

To see so much of your income gobbled up automatically each month must be extremely painful. I don’t know who’s at fault when a homeowner is saddled with mortgage payments that are far too high for them. I suspect it’s a bit of everybody involved in the real estate transaction: the borrower, the mortgage lender and the real estate agent.

There was a time when people relied on their home’s appreciation to get them out of such dilemmas. They figure their home’s value would rise fast enough to allow them to make a quick refinance of their mortgage loan. I remember back during the housing boom seeing homeowners refinance their mortgage loans less than three months after they moved into their new residences.

That’s not happening today. Today, if you’re buying a house you have to be fiscally responsible. In fact, as you look at the financial mess sweeping the country, it looks like we’re all going to have to learn to leave within our means again. The days of the housing industry providing everyone with artificial wealth are over.

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According to a Sept. 29 story by Bloomberg News, which you can read here,  officials with the National Association of Home Builders are asking members of Congress to pass a $15,000 tax credit for all homebuyers. This, officials with the trade association hope, will entice consumers to purchase homes.

The builders association says that homebuilders have seen at least $19 billion in losses since 2006.

Now, that is a lot of losses. But I don’t remember the homebuilders association proposing that their members give any of their profits back during the housing boom that ran from about 2001 through 2006.  And last time I checked, most homebuilders were advocates of the free market when their profits were soaring as home prices skyrocketed during the boom times. But now that their profits have fallen, they want the government to step in.

I feel the same way about the proposed federal bailout. Where have the rabid free-market fans gone?

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But no one has been hurt more than have been homebuilders. And things aren’t getting any better for them. The National Association of  Home Builders recently reported — citing statistics from the Commerce Department — that the sales of newly built single-family homes fell 11.5 percent in August. Officials with the department are now predicting that the country will see the sale of about 460,000 new homes this year.

That sales rate is a whopping 34.5 percent drop from the rate of August one year ago, and represents the lowest level of new-home sales activity since the first month of 1991.

The federal government’s huge proposed financial bailout is at least some good news for those suffering through the housing industry’s slump. But it’s hard to believe that the government will be able to pull us out of the housing slump. The only thing that will do that is time, lots of it, apparently. And while most economists are predicting that the housing market won’t begin its recovery until late 2009 or early 2010, the nation’s homebuilders are struggling to stay in business.

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The latest bit of creative genius that I’ve discovered comes by way of The New York Times, which details the story of a couple who, unable to sell a home that was nearing foreclosure, held a raffle to get the home off their hands. Yes, a raffle.

You can read the story here.

The couple solf raffle tickets for $100 apiece, with the lucky lottery winner guaranteed their old farmhouse — which the couple had been unable to sell. The hope was that the couple, with the marketing help of a local real estate agent, would be able to sell enough raffle tickets to cover the cost of the house.

Strange thing is, the plan worked beautifully. The couple sold almost 6,500 tickets. The proceeds from the sale not only covered the cost of the couple’s mortgage, but left them with $200,000 extra, that they promptly donated to charity.

Amazing stuff. I don’t know if this exactly qualifies as “good news.” But in today’s troubled real estate market, you take what you can get.

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Earlier this week, of course, WaMu became the latest large financial institution to fail. Nothing would have happened to our money had we kept it with Washington Mutual, of course. But, still, I prefer my bank to be on solid ground. (Besides, there were certain things about the bank that bugged me. I’ll get to those later.)

The big reason behind WaMu’s failure is no surprise: Its home-loan business sunk the bank. WaMu had way too much in mortgage-related losses, and it overwhelmed the bank.

It’s getting scary to open the newspaper these days. It seems as if there’s always at least one more bank or financial institution going under thanks, in large part, to the housing slump. And personally, I don’t place much faith in the government — even if legislators do pass their big bailout plan — to be able to solve the problems.

The time to solve the mortgage crisis has long since passed. The reasons behind the mortgage mess are simple: Mortgage professionals gave out too many home loans to people who had no realistic ability to make their mortgage payments. Loan officers were passing out loans to borrowers with bad credit, high debt and low or unverifiable monthly incomes.

There’s a mistaken belief in this country that everyone should own a home. The truth is, some people are far better off renting. There should be no shame in renting. Heck, renting probably sounds good to many homeowners who have discovered that their homes today aren’t worth what they paid for them. This notion that homeownership is a right, has directly led to relaxed lending standards, which, of course, led to the high number of loan mortgage loan defaults and foreclosures that are now sweeping the country.

On a side note, there was one thing about our Washington Mutual branch that drove me crazy. The tellers were so incredibly chipper and happy every day. (I have a feeling this sheer joy at being a teller was mandated as part of WaMu’s “cool” image, just like the polo shirts they wore instead of shirts and ties.) I swear, I could have told my teller that I’d just lost my job and my dog had just died and she would have spit out, “Hey, that’s great! Have an awesome day!”

And those woo-hoo commercials? Obnoxious. In fact, there’s something about bank commercials that annoys me: At heart, there’s really no difference between one bank and the next. They all do the same thing. They can all scream about “truly free checking” all they want, but does anyone really care so much about, say, Chase, that they’d never bank anywhere else?

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You can read the story here.  It’s yet another example of how the housing mess has impacted so much of life in the United States.

Basically, a large number of foreclosure victims failed to tell their election board of their new address.  This is understandable: When you’re losing your home, your thoughts tend to focus first on your family’s wellbeing and your overall financial health.

Here’s my hope: Democrats and Republicans work together to make sure everyone — even those who’ve gotten lost in the shuffle as they’ve battled foreclosure — gets the right to work. What I fear will happen is that this, as everything seems to do in this country lately, will turn into a Democrats vs. Republicans issue. Let’s be honest, a majority of the people who’ve lost their homes are probably leaning toward voting Democratic. (Notice I said “majority.” I’m sure there are many, many exceptions.) Let’s hope there isn’t an effort to keep these voters silent in an extremely close presidential race.

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The staff at Motley Fool — the famous financial self-help Web site — agree with me. You can read their thoughts on big houses here.

The Fools point out several disadvantages to big houses. The first is the one I’ve long been harping on: Larger homes are not environmentally friendly.  They use more supplies to build and consume more energy and heat.

The other reasons are also interesting. For instance, the writers at the Fool say that homes that are too big have a negative impact on family togetherness. It’s too easy for family members to disappear into their own individual spaces. Another problem? Homes that are too big cost too much. This has led many families into financial hardship when those mortgage payments become too large to handle.

My family and I live in a small home. Sure, sometimes I feel as if the four of us — plus one dog — are climbing all over each other. But a small house is easy to clean and maintain, and does foster a sense of togetherness. I also know that I’ve not trampled upon the environment by ripping our small house down to replace it with one three times its size.

So remember, bigger is definitely not always better when it comes to  homes.

But what do you think? Are there hidden advantages to living in a McMansion that I’m ignoring? Or are you, too, a fan of the small home? Let me know.

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Associated Press writers Adrian Sainz and Alan Zibel recently wrote a story highlighting the areas of the country where residents spend the largest chunk of their yearly incomes on their monthly mortgage payments. The writers relied on Harvard University’s Joint Center for Housing Studies and its analysis of U.S. Census data.

Homeowners in the Miami-Fort Lauderdale-Miami Beach area spent a whopping 58 percent of their income on mortgage payments. That’s an amazing figure. Ideally, a home should not suck up more than 30 percent of its owner’s income. I can’t imagine spending more than half of my income on mortgage payments.

Homeowners in Stockton, Calif., fared little better, paying 57 percent of their income on housing. In Riverside-San Bernardino-Ontario, Calif., homeowners threw away 55 percent of their income on housing. That percentage was identical in the Cape Coral-Fort Myers region of Florida. The Los Angeles-Long Beach-Santa Ana region of California rounded out the top five. Homeowners here spent 54 percent of their income on housing.

Looking at these figures, it’s little wonder the housing slump has hit these regions hard. Home prices in much of Florida and California shot up too high too quickly during the residential slump. They were unsustainable. No one should have to pay so much of their monthly income on mortgage payments.

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Anyway, I’ve been talking to several real estate agents for a story I’m working on for the Washington Post. One of the topics centers around what these agents would like to see from the real estate shows on cable T.V. I’ve always wondered if agents consider the shows allies — educating potential buyers and sellers about the housing market — or enemies, filling the heads of buyers and sellers with housing myths.

Turns out, it’s a little of both. Agents are thrilled that shows such as Sell this House and Hope for your Home have educated buyers and sellers on the steps involved in renovating and selling homes. The shows have particularly helped agents as they try to convince sellers that their homes have to be in pristine shape before they go on the market.

But agents do wish the home shows would provide some important lessons for buyers and sellers, lessons that the shows either ignore or gloss over.

One agent told me that she’d love to see the home shows focus more on the steps potential buyers have to take to get the right mortgage loans. She’d also like to see the shows focus more on how important it is for buyers to set a realistic budget when buying a home.

Another complaint? The shows don’t demonstrate just how long and time-consuming the house-shopping and -buying process can be. Granted, this might not make for the best television, but the agents I spoke with would like the home shows to accurately reflect how much time and effort goes into turning an initial offer into signed sales documents.

Another agent wondered why the home shows rarely focus on the importance of the negotiating process. After all, rarely do sellers and buyers agree on everything. Compromises have to be hammered out, and that takes serious negotiations.

The consensus among the agents I spoke with is that the home shows have helped create savvier home buyers and sellers. But they’ve also given these same consumers some unreasonable expectations concerning the house-buying and -selling processes.

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