In 2008, with the economy in free fall, the number of homes that sold for $750,000 to $1 million dropped by about 40%. Then, in 2009, the median size of new homes dropped to 2152 square feet, 150 square feet from the 2007 peak. Pundits predicted new homes would continue to shrink for a protracted period.

Well, they were wrong.

In 2013 year-over-year sales of homes costing more than $1 million were up close to 50%. At the same time, applications for home loans of more than $600,000 were up 40% or so. And, at the same time, the median size of new homes reached a about 2400 square feet, a new record.

It's easy to explain the McMansion's comeback. Affluent Americans better weathered the economic storm and were the first buyers to jump back into the housing market. Builders, many of whom were burdened with previously purchased but now overpriced land, were only too happy to give those buyers what they wanted. And even risk-averse mortgage lenders felt more or less comfortable jumping on the big house bandwagon.

Which is all understandable and all well and good...for now. But sooner or later--and the sooner the better--more builders need to get back to basics, which means building much smaller, lower-cost homes for price-sensitive first-time buyers. Ignore first-time buyers for too long, and we'll eventually--and sooner than you think--run out of move-up buyers and the McMansion really will die.