The Fascination With Tiny Houses

In the last couple of months I have begun to learn about and blog about Tiny Houses. Below is an excerpt from this week’s AdvisorShares Market Update, the “Interesting Reads” section, on the subject;

A few weeks ago in this space we looked at a concept known as Tiny Houses. The big idea is that these very small homes have a smaller ecological and financial footprint in an era of greater ecological awareness and post housing crisis.

 

Tiny Houses range in size from 70 square feet to 200 square feet, about the the size a trailer or fifth wheel which many of them are. Part of the equation is that Tiny Houses are on wheels which means there is no property tax on the Tiny House as a structure (there will be property tax on the land). Another dynamic at work in the layout of Tiny Houses is the need for maximum efficiency of how space is used.

 

There are two personal finance dynamics here. One is that Tiny Houses offer an inexpensive concept for people who believe a traditional home purchase is beyond their means with many Tiny Houses ranging in price from $20,000-$40,000. Tiny Houses also offer a cost effective form of downsizing for people in the early stages of retirement.
It’s not that Tiny Houses will hold universal appeal but will be a practical solution for some folks. Next month the Biography Channel will be rebranded into the FYI Channel and one of their new featured shows will be Tiny House Nation which if nothing else will be a fun look at some interesting homes. In the mean time you can learn more here and here.

 

I admit to being fascinated with this idea but am still trying to figure out how to articulate why but I think I am getting there. For many years here we’ve looked at the need to cut expenses and ways to do in pursuit of a comfortable retirement. Tiny Houses are essentially trailers with very high end finishes inside and out.

tiny

 

The above picture is an example of what I mean about high end finishes. There was no info about square footage but I would guess 130-150 square feet. Personally I do not aspire to live in a tiny house but this can be a legitimate solution for some segment of the population on a couple of different levels.

One byproduct of the Great Recession is people questioning all sorts of social institutions like home ownership, going to college and the manner in which they engage in the work force. It turns out home prices can go down, college may require too much debt and maybe busting your hump for 40 years without the benefit of retirement security doesn’t make sense (those are not my opinions but what I believe are some issues that people are trying to figure out for themselves).

A $30,000 tiny house can help someone address those issues financially. Obviously living in one means buying/owning less stuff which can make for financial simplicity as well.

In the above excerpt I allude to the downsizing potential of moving into a Tiny House. A couple with $200,000 in retirement savings (low in terms of what would be needed but high versus the average balances reported in various studies and articles) who downsizes from a $200,000 house, that is paid for, in their mid-50’s or early 60’s into a $30,000 Tiny House as opposed to a $100,000 condo with a $300 monthly condo fee will clearly be in a much different place financially.

A different approach would be a Tiny House as a rental or in the case of where I live, a vacation rental. One or two of these generating $150/night 30-40 nights a year would go a long way for a modest lifestyle. The picture above is actually some sort of rental unit.

tiny kitchen

 

The second picture is a pretty big kitchen in a 207 square foot Tiny House that only cost $22,000.

As I mention in the excerpt, this is not a solution for everyone, maybe only a very small portion of society, but this is already the answer for some people and will be for some others which is why I think I am so intrigued by the idea plus, most of the houses are pretty neat to look at.

2 Comments

  1. And I thought our 900 sq ft house was tiny! It sort of is, compared to the huge places some of our friends have. A great advantage of a smaller home was that we paid off the mortgage in 2004 while we both were working. This made a huge difference in our monthly budget and let us max out our 401(k) and 457(b) savings at our jobs for almost a decade before retirement.

    Reply
  2. Probably the same theme though; success living within/below ones means

    Reply

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