Why Tiny? … Economic Reasons for Living in a Tiny House

We were recently featured on cable show HLN’s “Making It In America” where the emphasis was on people downsizing due to economic struggles.  This was also kind of the focus when we were featured on CNN’s website and on ABC news in Phoenix.

Money is only ONE of the reasons we decided to live in a tiny house (check out the FAQ page for more reasons) but I thought I would write a series about Why Tiny?  and I’ll start with economics, because that seems to be the most urgent motivator for most people.  (excepting maybe No Impact Man…?  his motivation seemed to be a desire to make his wife miserable!  oh, wait, saving the environment.)

WARNING: THIS IS GOING TO BE AN OPINIONATED RANT.  :) 

I heard a statistic once (and I’m going to totally mess this up – I said I “heard” it, not “remembered” it…) that you could buy a home for two years’ salary in the 1950’s, whereas now it costs… 20 years’ salary?  I can’t remember the exact numbers, but my takeaway was “oh, wow, the cost of housing has risen dramatically!”  Well, you know what, it’s actually only risen an average of 0.2% per year since 1900, according to this guy.  Here’s a chart from his blog: (observationsandnotes.blogspot.com)

Graph of U.S. Home Prices since 1900 (adjusted for inflation)

So that is interesting.  Or not.  What is going on then?  Oh yes – the other variable in that statistic: Salaries… Income… Wages.  Talking with a friend of mine recently about switching careers she reported findings that we (Gen X) are the first generation to not “do better” than our parents.  (Because this is the US, “do better” means do better financially.  You have to go to France or Bali or North Korea?! to find that Happiness Index crap.)

Before I get into Income, did you notice the manic jag in the chart above that occurred around 2006?!  Wow.  Interesting how when you push loans on people who can’t afford them houses really fly off the shelves and the demand creates higher prices (?)

The researcher who developed the chart above explains the rise in housing costs that started in 1996/97 has no single cause, but a few obvious causes include:

  • historically low interest rates
  • growth of risky new mortgage products (i.e. ARMs)
  • ridiculously lenient lending criteria
  • new ability to bundle resulting risky mortgages into groups that obscure the risk

He says this may have started as early as the deregulation of the banking industry in the 1980s and “This so-called “subprime” mortgage crisis ultimately snowballed into the worst financial crisis in America since the Great Depression.”

Back to incomes.  Basically, incomes (other than for the top 1%) have remained stagnant since 1970.

Here’s a chart or two from a CBPP (center on budget and policy priorities) article:

Graph of family incomes stagnating since 1973 for the lower and middle classes.

Graph of income gains for the upper 1% compared to the lower and middle classes.

Look at that middle class down there on the bottom of that chart!  “Jobs, job creators, we need more jobs”.  Sure, and maybe we need to get paid according to the decade that we live in!  It was odd to me that we didn’t hear about the Occupy movement or the 99% in any of the presidential debates.  Because, to me, our current economy feels like a game of Monopoly….

I have always HATED the game Monopoly.  When I played it as a child with my brother and sister we would break the rules constantly to level the playing field and not end the game in tears.  Whoever was banker might notice a long face and a trembling lower lip and suddenly say “the bank is feeling generous!” and start handing out free money to everyone!  (either we were extremely co-dependent… or socialist.)  This happened several times during each game – basically whenever anyone started getting low on funds.  Haha!  It’s a game, it’s supposed to fun!

As an adult in my twenties I played the game with friends who did NOT break the rules and hand out free money.  I lost.  And I was SO upset.  Not just over losing.  (Though I don’t enjoy that either.)  I was upset because, to me, the game Monopoly represents all that is wrong with our society.  Those with the most money keep making more, those with the least money keep losing more, until they finally… lose.

Thank GOD life is not all about making money or owning property!  (it’s not, right?!)  It’s not.  Hard to tell sometimes, but it’s not.

I digress.  Why Tiny?  Because we, like most everyone else, are getting paid the same flat salaries as people were in the 1970’s.  And the price of housing has increased slightly more than inflation.  That, coupled with the fact that we are BOTH in the building industry, which tanked after the crash of 2007/08.  We chose to lower our costs in order to save money to buy some land and get some semblance of financial independence and security.

The game has changed.  You can’t buy a starter home, sell it for more, use that money on a down payment on a bigger home, sell it for more, then get into the home you really want.  That game was based on constant growth, which is ridiculous anyway.  Check out my other opinionated rant on that topic.

You know what is so cool though?  Because we live in a Tiny House our stress levels are SO low!  We were paying about $1,400 per month in housing costs (and that’s relatively low for 2 people).  Now we’re paying about $350.  You know what that means?  We don’t have to work all the time.  We can do other things we enjoy.  :)

What about YOU??  Are there economic reasons for why you want to live in a Tiny House?

Paz,

Carrie

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Categories: Opinionated Rants, Why Tiny? | 19 Comments

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19 thoughts on “Why Tiny? … Economic Reasons for Living in a Tiny House

  1. I don’t think its a purely political debate and that the issues are purely political, I think we give all political parties too much credit. In my opinion they are ALL corrupt… I think a good portion of our issues have more to do with teaching people about finances, or rather NOT teaching people about finances. There are a couple of generations now who have never learned to save money, have never learned to manage money and who see a $4.00 morning Starbucks as a need rather than a want (did anyone have a class in school that was mandatory that really taught you about managing money? It should be required, without that skill you are a pawn for advertisers). When they can no longer afford these ‘needs’ they look for someone else to provide it. I think people could better fix the issues if they got more introspective rather than looking to cast blame on others…
    That is as political as I get… I have no faith in any of the politicians out there… they all suck in my opinion but WE, as the American people, CAN do something about the health of our nation… one of those things being to live within our means… for me, building a tiny house is a way to get out of the rat race and a way to be able to put my hours towards things I WANT to do rather than HAVE to do to pay for my hobbies… which get non-existent if you’re working all the time…

    “Don’t ask what the world needs. Ask what makes you come alive, and go do it. Because what the world needs is people who have come alive.”
    ~ Howard Thurman

    • great comment Macy, thanks for sharing your opinion! I liked the part about how WE can change things … and getting out of the rat race. and I love that quote.

  2. I did have a bit about politics in this post, but it was… polarizing. as politics seem to be. And I want the discussion to be about economic reasons for downsizing / living smaller / more simply. Sorry to those whose comments I deleted. no personal offense intended!

  3. Coping with the economic slow down…

    My husband and met and married in the mountains of Colorado. We both worked, my husband often had two jobs and I worked 60+ hours per week to pay for our 998 sf condo in a resort area. We spent so much time working to pay for he lifestyle that we had no time to enjoy the lifestyle. So 5 years go we began looking at options closer to our families, but still near mountains. We decided on North Carolina or West Virginia. We each searched the Internet for houses we liked for our “10 list.” We had one house in common which we purchased from the bank for about $37K. It was twice as large as the condo which sold for $200K — $60K under the asking price.

    So, we don’t have a tiny house (yet) and we still have much more stuff than we need. But, because of the space we do have we have been able to offer a home to a gentleman who had been couch surfing for a couple of years.

    My hope is that by the time we are retirement age 10-15 years we can sell this house to a family with a couple of kids and down size to a small house 300 to 500 sf (my hubby can’t give up his 3-400 books) plus as we age the loft becomes a little iffy so we need a bedroom on the main level with a loft for grandkids! So, that’s our plan!

    • great story! I think it sounds like a good plan. I can’t believe you could find a house for $37k! I’ve lived in Colorado / California / Arizona and now New Mexico and I forget that there are still affordable houses out there. and don’t feel bad about not living tiny – buying an existing home / building is the most “sustainable” / “green” thing you can do. (provided you update it for energy efficiency.) arguably greener than a tiny house because you aren’t using additional natural resources to build it.
      best wishes to you!
      Carrie

  4. DeeDee

    Hi, just found you guys, and love what I see so far. My economic reason for wanting a tiny house is that I’m deeply in debt after about four years of under- and un- employment, and I’m currently spending fifty hours a week at a job that pays for roughly 60% of the essentials — so I’m falling further and further into a hole. I’m 52 years old, and if something doesn’t change drastically, I’ll spend the rest of my life struggling and broke. Life HAS to mean something more than this. I want my joy back, free from the constant stress, worry, insomnia, and fear of trying to support a house that’s slowly killing me. I’ve promised myself — the day my youngest child moves out (hopefully within a year or two), the house goes on the market. Can’t wait.

    • hi there, glad you found our blog! I’m so sorry to hear about your long work hours and overwhelming expenses. you’re not alone though, it’s very common.
      there have been times in my adult career life where I find myself thinking “how can I make more money?” or, why didn’t anyone teach me that we’re supposed to look for jobs that pay a lot?!” but I don’t really even like working that much (haha!), so more often I find myself thinking “how can I spend less money?” We absolutely love our tiny house – the fact that we OWN it outright and the fact that our expenses are so low! it’s a huge relief.
      and no, you’re not missing anything, we haven’t posted prices yet, if you’re interested just send us an email via “contact us”
      best wishes to you!
      Carrie

  5. Paul - The Kind Little Blogger

    Great post guys! Things aren’t much different here in Australia–other than the price of everything (a “cheap” house is $250k+) and our wages (average=$70kish)–but in terms of the Great [Australian] Dream, we have it; we’re taught it.

    People work long and hard to earn the money to fund superficial lifestyles. Why these lifestyles? Because they’re expected, and anything less is looked upon as perverse. My partner is just about to finish university (with a law degree), he is keen to get out there and earn money to fuel the lifestyle that is expected of him. I don’t agree with it and find it hard to get my point across. I’m at a stage in my life where I want to reduce my expenses and my income, thus, maximising free time to do things I enjoy. I think tiny houses / smart-sizing is a way of achieving this. To those out there, such as yourselves, that have made the move, I am thankful for the inspiration.

    I’m sick of the merry-go-round.

  6. Love reading all you write- your rants are actually my favorites! :)

  7. Pat

    Ditto to Kat’s comment! Love your blog.

  8. Bettina Johnson Larsen

    Hi Carrie…from Tulsa OK!! I love the posts and the comments. Downsizing is wonderful – have gone through one phase myself and planning for another @ retirement! The plus being less stuff! and less stuff also = less stress.
    Bettina Larsen

    • hi Bettina! very cool to hear from you here on our blog! fun! isn’t it so true: less stuff = less stress. amazing how many decisions can be governed by inanimate “belongings”… good for you.
      take care,
      Carrie

  9. Christy Larsen

    I love your opinionated rants Care! And I had to smile at the “bank feels generous!” that is EXACTLY what we did!

    • thanks sister! wasn’t that SO sweet of us the way we played monopoly?! we were terrible losers…. haha.
      xoxo
      Carrie

  10. In a way I’m with Jay Shafer on this. I’m tired of taking care of a lot of stuff and a big house. We don’t have a really big house as far as some would count it, but I consider it fairly large with 1690 sf on the upper level and a walkout lower level the same sf with about 1000 sf finished and the rest as storage. I have been working on a list of what is the economic benefit for living in a small/tiny house. Anyone should be able to read it at https://docs.google.com/open?id=0B7JHV925CUpfWElaQThJeWk4cG8.
    It is a work in progress still. I don’t know enough about small/tiny house budgeting yet to really know the details (would love to talk with someone who is living the tiny house life sometime who is willing to discuss it). We are both looking to retire in a few years, give or take some. Depends on how comfortable my wife feels about being provided for. We both know at least one of us will be working at least part time if we attempt to keep even part of the lifestyle we currently have regardless when we retire. I just want fewer things to be concerned about and to be better able to be a good steward of what I have and use. I want a bit more time to do things I want and help others. I am also really tired of pressure from all sides, financial industry-marketing-other people, pushing me to buy more and bigger. I like small. I feel more secure and more comfortable in smaller spaces with less stuff. I have spent the last year downsizing my stuff and will continue for some time to come until I am comfortable with what I have. Not there yet.

  11. sunshineandrain777

    I started feeling the need to have my OWN place while I paid mortgage payments for a small (<1000sf) house in town. I saved for 7 years and was able to put a nice down payment on 20 acres in the country and then sell the house. I have lived on my farm in a 29' Airstream trailer (approx.200sf) for 14 years until a wildfire burned my farm to the ground this summer. (08/03-04/2012) Monthly expenses about $250/mo. (land payment + electric). I have a well for water.

    Currently, I am getting back on my feet through a grant from FEMA and am awaiting a low-interest loan offer from Small Business Administration. The FEMA grant has allowed me to obtain a 12' x 15' (110sf) metal, insulated shed that I am converting into a cabin. I bought used appliances through Craigslist, and saved a ton of $, and will have a couch, twin bed, shower, toilet, sink, apartment-sized refrigerator, hotplate, crockpot, convection oven, and microwave oven and my dog's crate (as well as the 20-gal hot water tank and hotel window heat/cool unit) with plenty of shelving and a wire rolling closet. What more could a person want or need?

    I have a few years yet to OWN my farm. I love having almost no overhead.

    I came upon Tiny Houses a few years ago and have drawn many house plans for them. The Airstream had lost a lot of its insulative powers through the years, and I was not interested in refurbishing it. Now that I lost my dwelling to fire, I have ordered and received a gooseneck trailer, 102" x 20' bed, and will start building a Tiny House (136sf) when the electrician and plumber get my cabin livable.

    I had not thought to make my Tiny House self-sufficient (power and water) before the fire, but I am seriously considering doing so. Talk about NO overhead! If ever there were another disaster, I'll take my Tiny House and go!

    These are my "economic reasons for why you want to live in a Tiny House…"; though, most of my reasons are not economic.

    Thank you so much for your blog, your sharing of yourself and your interest in others.

  12. I can give you several reasons for a small house and applaud you for what all of you’re doing. I know I couldn’t go really small. However, designing a small house gives almost anyone the excitement of creating something that’s truly important as far as I’m concerned, one’s environment or nest as we called it.

    If you’re single and go out to buy a house you get stuck with somebody else’s idea of what you need and want. I’ve had a huge sunken bath tub three times now. First as a kid. The architect decided this. No one used it except for me as a kid. I put a school of bullheads in it. Nobody needs these horse troughs.

    Two bathroom sinks in the bath…why? Most people who have these things don’t have a passel of kids to herd around in the AM. Have you ever used them while someone else was using one? I haven’t. I’d rather use a different bathroom, wait, or use the powder room sink. I wouldn’t build a master bath that way. I checked with a friend…they were 7 women and one man growing up. Her dad thought put in a second sink in the bathroom. Voila. Did they use it? No. Why? People wanted their privacy.

    All those toilets…who’s supposed to clean them and run all over flushing them to keep them functional vs.funky? Overwhelming open floor plans? What a waste of energy along with really tall ceilings. Open the utility bills and freak out.

    I’m constantly amazed at these humongous houses with 10K square feet and even more. I’m told they’re owned by couples sans kids. The architecture often becomes ugly just because there’s just so much one can do with a house before it starts to look like a technical theme park or corporation not a home with god forbid real people all warm, snug, and cozy.

    I read recently that only 5% of homes built involve hiring an architect. If you admire good architecture that’s a shame. I think it’s fair to say we have some really ugly uneducated looking housing in the US.

    I believe it was Bernard Maybeck who said houses shouldn’t be huge. Read “A Pattern Language” which used to be considered the building bible and teaches one how to make rooms do double duty.If after you’ve built your tiny house you find yourself wanting more go for it. You’ll have some good experience under your belt.

    w

  13. goldenpath2

    Carrie, I agree with much that has been said on these pages, and would like to add my thoughts based in part on observation, of just how it was that American society came to accept the notion that bigger is better, and why the concept of less is more is quickly taking hold.

    I believe it goes back to the 19th century, when an economist Thorstein Veblen introduced the term “conspicuous consumption” around 1900 to describe the accumulation of capital wealth during the second Industrial Revolution. The term was used to describe the “upper classes” who publically flaunted their social prestige.

    The 20th century saw a significant improvement in society’s general standard of living, and the new middle class applied the patterns of “conspicuous consumption” learned from previous generations, applying the term to those with significant discretionary income. Suddenly the issue of social status became important and “conspicuous consumption” became a behaviorial addiction…until, that is, the most recent down turn in the areas of housing and employment, which has seen the notion of conspicuous consumption begin to break down, giving rise to a new imperative of “Less is More” and the associated emergence of the “Tiny House Movement”. While it is true that changes in the economy are not the only reason for this ground swell in support of more efficient living, it is the catalyst for much of it.

  14. dan

    It’s a great idea, to build a small home you can afford to pay down without becoming a slave. It seems like such an obvious decision to better your life not by having more, but by needing less. Here is the problem however, where are you going to put the thing? If you have no land, or family with land, you are going to have issues because most cities do no allow dwellings under a certain sq footage. This seems wrong, one of many wrong things people are being subjected to these days. Home ownership for everyone, what a great idea. Small affordable houses, the dream can be kept alive if only for one concession from local government. Toss out that minimum size and build parks to have these homes.
    Allow people to put whatever size home they want on their lot.

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