I’ve talked about the benefits of tiny home living a number of times in the past, and for good reason: the median US home size (new builds) is at an all-time high of 2,426 square feet and it’s killing us – financially and environmentally.
My home is comparatively tiny at just under 1,000 square feet, but it’s still not the 100-400 square feet typically associated with the term “tiny home”. However, I’d like to think I can recognize a good thing when I see it, and given the right opportunity, I will be living in a tiny home before long.
Big homes are a disease – leaving us broke, disconnected, and unhappy. I’ve been there, done that, and here’s what I learned and shared with readers previously:
Rent or buy the smallest space you (not your stuff – that can always be sold) can comfortably live in at the present time.
That may be the most impactful piece of personal finance advice I can offer anyone.
The thing is, you never know what you’ll encounter in life. Relationships end, your desire or ability to raise children might disappear, you may move multiple times, especially early on in your career. Life happens. And if you absolutely NEED more space later on, it can always be had. Or you can rent storage for much cheaper.
And please don’t start getting delusional and rationalize that your home is an investment. A home is not an investment.
The amount of synergy between what a tiny home can offer and personal financial gain is striking:
- Tiny homes consume much less material, which lowers their environmental impact and financial costs versus a typical sized home.
- Tiny homes require significantly less energy to heat and cool. And there is little to no waste (i.e. energy to heat/cool 5 empty rooms).
- Tiny homes require much less financial investment – so much less that you can completely build/buy a very high quality one for less than the typical 20% down payment on an average sized home.
- Tiny homes require significantly less ongoing maintenance, tax, renovation, cleaning, and insurance costs than typical homes.
- You end up buying less stuff because you don’t feel a need to fill rooms (and you have very little space to store stuff).
- You have much more time as you are freed up from time-exhaustive maintenance and cleaning.
- Without constrictive mortgage debt or housing costs (the average American household spent 33.1%, or $19,884 on housing in 2013) you have more resources to shape your life the way that you’d like, including your career.
On that last point, the median household income is just over $60,000 (before tax). When you factor in maintenance, insurance, tax, and other costs, more than 1 of every 3 days is spent earning income to pay for housing. Without that cost burden: part-time work, anyone? Or maybe full-time with early retirement?
The impact reduction and wealth maximization of a tiny home is perfectly aligned with the values that I write about. So I was really excited to see a great TEDx talk from someone who built and lives in a tiny home, Andrew Morrison. Here it is, in full:
Andrew, along with his wife and dog very comfortably live in a 317 square foot tiny home (207 square feet lower level with 110 square foot upper lofts) with a bathroom and full kitchen that they built. The cost of materials to build their home in southern Oregon was $22,744.06 not including cabinetry, composting toilet, fixtures, appliances and furniture. The cost including everything was $33,089.72.
This compares to a $62,280 (20%) down payment on the average $311,400 home price. In other words, their ENTIRE HOME and its contents cost just over half of what the 20% DOWN PAYMENT is on an average (and empty) home. Mmm… you can virtually taste the financial freedom, can’t you?
Tiny homes are often associated with sacrifice, but does this look like sacrifice? (photos from the Morrison’s tiny home, from their website tinyhousebuild.com)
You have a choice. Go big at your own expense.
I hope to be going this housing route also in the future. The hookups that Morrison discusses in his FAQ’s were my main concern. Thanks for posting this.
A few quick thoughts: you must be thinking only of your personal needs. A family of 5 or more can not exist in that environment. And to set the record straight, I don’t have any children. But I do think about the overall needs of families. In some areas they do live in small spaces, Santa Ana, CA for example has as many at 15 family members in a single 1200 sqft. home. The down side may not be apparent but when a fire starts or an emergency happens, well you can imagine the issues.
When you think about tiny homes, a condo or apt building is fairly efficient at delivering the experience and is a more efficient use of land, I suspect.
To each his own. If you want a tiny house, 1 pet, no place to entertain etc. I’m one who would not stop you. Please don’t attempt to ask me to join you. We live in 900 sqft and it is miserable. Many times we have to turn sideways to get through a tight space, only entertain in the warm weather and feel like we cannot put in some of the emenities that would make our lives more comfortable.
And yes we do care for the environment. Ken
Agreed, this is not for a family of 5, and even 3 is stretching it, in my opinion.
I’m not saying this is for everyone and you’re bad if you don’t subscribe (I don’t live in a tiny home either). But, hopefully it is eye opening for a certain segment of the population.
This seems like a great way for retiring with financial security, though I would only make a move to a tiny house in my golden years if I was in a warmer climate. Tiny homes could also be quite a benefit for the public housing system giving a mobile option as opposed to restoring shoddy row homes in the bad end of town which is costly.
Wow, seems like an extreme solution to me. The average home, being 2500sqft, $311,000, etc seems like too much. People way too often borrow what the bank will allow them and become house-poor.
But I doubt most people will sign up for living in a shack. There’s a happy medium to be had. You know, advice like ‘buy as though you’ll only have one income’ or a lower price-to-income ratio.
If “Financial Freedom” entails living in a shack most of my adult life, no thanks. Pass.
Granted, living in a 200-300 square foot home is not for everyone, but even if some people walk away thinking “Hmm… you know, I really don’t use 3 rooms in my 4 bedroom house, I can definitely downsize and save some money”, then this post will have been worth it. Also – “shack”? Does his house look like a “shack”. It looks pretty damn high end to me.
Or rent out those spare bedrooms for cash! That is what we did and it is getting tight because we had a kid, but the extra cash is worth it. We got $15,000 in cash from renting out just one room over the last 5 years. That is more than our downpayment was.
Everyone is skewering the idea when we could all benefit from a little introspection in the housing realm.
Loved the article and love the concept. I agree that if you have more than 2 people I wouldn’t try this but for a single person or a couple there ain’t no shame in this game!
Even if you go for a bigger 500-1000 sq ft home you’d be doing better than having way too much house for your needs!
Also if anyone ever goes into an IKEA they can see some AWESOME small sq footage layouts!
Pretty cool. A bit impractical with plans for any children, but the message is solid. I could totally see myself living in a home like this, if only for a few years.
I’ve watched a few documentaries on tiny home, and one of them followed several people who have built them. One that applies to your comment was a man and woman who built one for themselves to live in for several years. When they started their family, they bought a very small two bedroom (two kids sharing a room, how novel…) and kept the tiny home in the back yard as a play room and guest area when family visits. It seemed to be a fantastic set-up.
The haters are missing the point.
1. Smaller house means you go outside more. Build a beautiful patio. Get some fresh air.
2. If you have kids maybe cut the mobile aspect and add a few rooms. If 2 can live in 300sqft, 5 can live in 650.
3. Spending less on your house means you can have experiences others save for retirement right now.
4. Working part time sounds pretty nice.
I didn’t read any haters, just different views. If you are tight financially, and you have no maintenance cost, which might be for the first 3-5 years, and you don’t mind tripping over everything, then it is a perfect option for you as is an apartment. To build a tiny house may cost $10,000 not to mention land.
Is it novel? Sure. Is it practical, I’d have to run the numbers. Some people like to live in tents and hike, some a penthouse in Manhattan.
We all have different opinions. Respect others and their opinions.
As for density of population, maybe this is the perfect college dorm…at least for the Jr/Sr’s.
I love the logic behind the argument. Whether you are persuaded to find a tiny home or slide towards that end of the spectrum (downsize), the idea is brilliant!
It would be nice if the TEDx speaker addressed some of the cons (kids, hosting, etc.) as I’m honestly curious about that.
I’m a bit more gung ho about this idea than my wife and I subscribe to the “happy wife, happy life” mantra, so I don’t see myself getting a tiny home in the near future. Still, I think it would be great to get those savings. Maybe there is a niche market for extended stay tiny homes to give people a trial experience…
Thanks for the post, I haven’t been able to stop thinking about this for the past 24 hours!
I’ve seen a few on Airbnb, so you could try it out if you really looked.
This is such a great idea, I wish I could sell it to my partner. Living in a smaller home would transform our finances. Hope the small homes movement gains momentum and it becomes trendy to live in a small house. Nice post, thanks for sharing.
This is a romantic idea to me. My wife and I sold our 2200+ sqft home for the same reason the author quotes – such a waste for us at the time. We (and our lab pup) moved into an 800 sqft apt, and with a little one on the way it’s starting to feel cramped. We have no plans to move, however, until at least number 2. Even at that point two things stick out to us: we don’t want a 300 sqft home, and we don’t want a 2,000 sqft home. We love having family and friends over, and we have lots of them, so as long as we have a large dining/living area we can easily live well below 2000 sqft. We can practically do that in our current place, so we’d really just be looking to add bedrooms. Even at that, there’s no reason for each kid to have their own room. It has certainly been a nice way to witness to some of our friends about our continued evolution in how we deal with money.
Thanks for not being judgmental of people who don’t exactly subscribe to the “tiny house” movement gung-ho, but definitely share some of its sympathies.
I like applying the Tiny House mentality to our other big decisions in life, like right now we are a family of three in a 4/3 2500 SF home. We bought it thinking we’d have more kids and fill it up, but we’re one & done, so if we move, I hope to cut that square footage in half and live cozy. We also have an early retirement dream of touring the national parks with our kiddo, and instead of going Winnebago style, we’re looking at buying the smallest, cheapest RV possible (the Runaway) and only bringing necessities.
Currently our home is 2000 sq. ft. and it’s about perfect; space to be together and space for solitude. Three of us lived in a two bedroom apt for six months last year and while I loved being such a close part of my teens life, claustrophobia took over. There was no place for my husband to work on his music b/c of TV noise and no place for me to read or work quietly because of constant interruptions, four extra guests and we were at capacity and don’t even get me started about the cacophony of dogs barking every time someone entered the building…ugh. Tiny houses are intimate and romantic but for me, unfortunately, that is where it would have to stop in my dreams. ;)
There is a wonderful documentary about a couple building a tiny house available online. It is interesting to see normal people adapting ti the challenges of building it themselves, and they also talk to some very inspiring people around the country that live in tiny houses. Highly recommended if you’re interested in this. It was on Netflix, but if it’s not anymore then you can rent it on Vimeo: http://tiny-themovie.com/
I already live in the smallest studio apartment I could find, but I think there will be a tiny house in my future. Thanks for the post, and the great blog all-around!
Just watched the video, really inspiring. This is the path I want to eventually follow! Thanks
This is an interesting concept for a home. I lived in Romania for a couple years, and living in a small home is very normal. 300-500 square feet made up the average apartment for a family of 3-4. I got used to living in the same, but I was grateful to come home to more space and a yard to play in.
They tiny home isn’t for everyone, but it certainly could be a fun adventure.
I really enjoyed this youtube video, and I find the Tiny House movement inspiring, but I the issues around building codes are really daunting. I would be willing to BUY LAND, DIG A WELL, PAY FOR UTILITIES to a small home, but still think it might be not be inhabitable as a primary dwelling because if it is too small. Lot of info online, but here are two links – the first points out common issues around building codes, the second looks like a creative approach to finding a solution.
I wish I had seen this post when it was brand new! G.E., I hope you’ll still reply to my comment.
My partner and I have been interested in tiny homes for almost a year now, but most tiny house proponents and writings out there don’t seem to address what I see as the biggest hurdle (the two of us already live in 350 sq ft, and are perfectly happy with it): building codes and municipal laws.
We want to live in the city, and ideally stay close to downtown. Most tiny house blogs and books I’ve seen talk about building a tiny house on wheels, which keeps it cheap and mobile, but this also means that it is designated as temporary housing. In most of Portland, OR (where we live), a permanent residence can’t be a temporary structure, with the exception of mobile home and RV parks (which aren’t in nice areas, and not where we want to live).
Pretty much the most viable option I’ve come across is this (and this is our current plan):
Buy an affordable, full-sized house with a large enough backyard to accommodate what the city of Portland would call an “Accessory Dwelling Unit” – think like a mother-in-law apartment. It can be a tiny structure, but it needs to be permanent, with a foundation – not on wheels. Build said permanent ADU structure in the backyard, to our specifications, and then rent out the big house and use the rental income to add to our mortgage payments, and pay down the mortgage as fast as possible. From then on out, we’d hopefully live for free, with the rental income covering maintenance costs, taxes, etc.
I’d be interested to know what you think, G.E. Is this really the only viable option, or have you heard discussion of other legally acceptable ways to live in a tiny house, within a large city?
I love posts like these, I’ve seen so many houses get smaller and smaller and much more efficient, my fave being the green homes where you can live completely self sufficiently and off the grid. Growing your own food, living by your own rules, it really makes life a lot different and playing completely by your own standards for good living.
This may not be the best way to think about it, but one thing I like about the idea of living in a tiny home is I could afford to have all the high end finishes and touches I want since the home itself is so much smaller. This means I could have a more luxurious feel to my home and still save money!
While I agree with the points made in this article I could never house my family of eight in something this small. As it is we live a simple life in a small 1400 sg ft home (includes basement area)with very little luxuries. Heck we don’t even have a dish washer.
I truly believe and live a life with minimal stuff and try to keep our foot print as small as possible.
Just watched the documentary “Tiny” off of Netflix. I highly recommend it. I especially like when they say not to let the 100 sq ft house become the new idolatry. The point is to implement the tiny house practices in whatever way is most practical for you in your current situation.
I find tiny homes interesting, but my husband and I definitely feel the need for a bit more space. I like the idea of “right sizing” your home. On a typical day, someone will have spent time in every room of our house. We feel like more space might be nice, but we don’t need it. To me, that’s the perfect size.
Cool novelty, but will not last. You don’t see any wealthy people moving into these. There is, and always will be, a desire to own a large, impressive home by those who can afford it.