February 10, 2017

What’s Up with Tiny Houses?

by Anthony Wright

Imagine packing up all your stuff, not to mention your family, and cramming it into less than 500 square feet of living space.

That’s exactly what people pursuing the tiny house dream are doing, citing some big benefits that come with small spaces: flexible locations, greater efficiency and far lower total cost of ownership when compared to the traditional American home. The “movement” has also gotten the winds of pop culture at its back, perhaps most notably with the hit TV show “Tiny House Nation.”

With all of this in mind, we housing market watchers must ask ourselves a few questions: Just a fad? Who’s buying tiny houses? And are the numbers big enough to materially affect traditional homebuying?

American Downsizing
Over the past few decades, American homebuyers seemed to largely agree that bigger was better. Of all countries in the world, only Australia tops the United States in terms of average home square footage, with Canada rounding out the top three.

Suburban sprawl, available land and American dependency on the automobile are all contributing factors, but the tiny house trend runs directly counter to that conventional wisdom. And according to Kleber and Associates, average U.S. home size by square footage began to decline in the early 00s, and the tiny house trend seems to be an extreme endpoint of that trend.
Rising Costs
I’ve written before about the numerous headwinds that have been preventing a full housing market recovery, among them the affordability of homes. Seventy-seven percent of Millennials—the most powerful group of buyers—cite affordability as their greatest barrier to homeownership.
And while the faithful will tell you that tiny houses aren’t “cheap,” their total overall cost is far lower. 2010 Census data notes the average U.S. home is priced at $272,900, while more recent figures peg that number closer to $400,000. For a certain buyer, abandoning the extra rooms along with the extra cost and utility bills certainly looks attractive.

But … Really?
A healthy dose of skepticism when evaluating a new trend is always important, of course. And there is certainly some skepticism about tiny houses. Hard statistics are a bit difficult to come by at such an early stage, but some evidence suggests that real, true tiny dwellers are few and far between. Per the Globe and Mail:

“The movement seems like a mirage,” [California advertising director Allen Cerf] says. Even in Portland, which is often seen as a city friendly to micro-housing, “none of the owners I spoke to had ever lived in a tiny home.” They used them as rental income, or, in the case of his current landlord, to store bird seed. There was also the constant risk of being forced to move by city officials; one landlady he met, whose tiny-home tenant spent long months travelling for work, moved it onto her property at night to keep its existence hush-hush.

Which isn’t to say the movement isn’t inching toward legitimacy. The American Tiny House Association sprouted up in 2015, complete with recommended building standards, codes and more.

What to expect? Tiny houses probably won’t be taking over the world, but as noted, it’s indicative of a mindset that’s seeking greater efficiency and simplicity in a home. The decreasing footprint of the American home may indeed be something we should be paying close attention to.

Questions or comments? Contact me directly at Anthony.Wright@Quanex.com.

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Posted: February 10, 2017 by Anthony Wright Filed under: housing, market, Tiny, trends