The era of the McMansion is over.

From the foreclosure crisis to increasing energy demands to cheap Chinese drywall, our national obsession with ever-bigger homes seems has wrecked our economic, environmental and personal health. Like a hardcore drunk we’ve hit rock-bottom and are changing our habits to clear our heads from this wicked housing hangover. We’re finally willing to accept that when it comes to a house, smaller can be just as good.

A recent CNN poll found  that 69% of us believe that houses are now too big.  And in October, the American Institute of Architects reported that special-function rooms such as home theaters, exercise rooms, guest wings and three-car garages have become less popular despite the fact that more people are self-employed and telecommuting, thereby spending more time at home.

Due to the recession, the average U.S. home is shrinking for the first time in a decade .

I couldn’t believe the news when I first heard it, but it’s true that Americans no longer have the biggest homes in the world. That title now goes to the Australians. The average Australian house is now 2,310 square feet compared to 2,169 square feet here in the States. I haven’t felt this bad about a national loss since USA Basketball lost Olympic gold.

Smaller homes cost less and require less energy to heat, cool and light. They are also found closer to urban centers meaning shorter commutes and less gas burned. Sounds like a good combination for people looking to get out of debt. However, for many, the American dream is not fully realized unless it includes multiple car garages, land on all four sides and more bathrooms than Grand Central Station.

I once heard a comedian say that the reason we buy houses is really to put a cover over all our “stuff.” Then we go out and buy more stuff, so we end up needing a bigger house. Seems pretty accurate for how we’ve been living over the last couple decades. But now we can’t afford to buy as much stuff, and we can’t even keep up with payments on the “cover.” So houses will get a bit smaller.

The real question is what happens during the next boom? I think we all know the answer.