Tiny houses, big prices - and probably a bad idea in general in several ways

The tiny house movement, or as I have started calling it, precisely to bring out the technology angle, the microhome movement, has been getting more and more momentum lately. It's probably even "trending."

That said, maybe there's reality that people aren't looking at.

A pricey London microhouse. / Photo via MSN.

I know that not every microhome is going to cost $450K, like this one in London — which, at just 188 square feet, is also small for the microhome movement. Per a friend, "location, location, location" is part of that price.

Nonetheless, I have no doubt they cost more per square foot than traditional homes. Because there's a large surface area to volume ratio, these places have to have a lot of insulation — and something more costly than traditional fiberglass, I'll venture. There probably has to be a lot more precision of fitting than in a conventional house. Appliances have to be higher tech to perform well at their smaller size.

In turn, that all also means that these houses may not be quite so environmentally friendly as a good old-fashioned apartment. And certainly more expensive.

Also, as more and more of my friends, along with me, pass various "milestone" birthdays — do we really want to live with two floors of housing? I don't. And, that's the only way the microhomes, especially the smaller ones, work. Also, as we get older, with more restless sleep, do we want to live in a loft that, in the tiniest microhomes, may be little more than a pallet? At nearly 2 meters tall, I don't.

So, beyond "big prices" there may be big hidden costs.

Another? Look at the way this one is designed. What if you forget to turn off a burner on that electric stove? Your sleeping area is right above it, and not that high.

The shower/toilet of a microhouse. Photo via MSN.

Or, per this second photo? Do you want a toilet inside your shower? Also, if you're of limited mobility, is this even feasible for you?

I could stand an apartment with 100 square feet less than what I have now, if not 125 square feet. But, I'd still like 500 square feet without the concerns I just raised.

As for the privacy issue of a house? Well, instead of full-blown apartments, duplexes and quadruplexes address a fair amount of this.

And, are more environmentally friendly.

I want to look at this in a bit more depth, though.

That's in part because I would say there are microhomes and then there are micro-microhomes.

I'd put this baby in the second class. I'm going to throw out a rule of thumb that anything under 350 square feet, which would be a small studio apartment in much of the country, but an average to above average one in a New York or San Francisco, is a micro-microhome.

And, I'll call 350-550 square feet a microhome. (That leaves 550-750 square feet as, let's say, a minihome. I could definitely do that, other environmental issues aside, but, let's not get distracted.)

Because of the high degree of technology and special materials needed, I'm going to venture that a micro-microhome costs 4x as much per square foot, all other things being equal, as a conventional home. In other words, I suspect a small home in London, at the top edge of minihome size, probably also costs $450K.

And, I'll venture that a microhome costs, on average, about 2x as much per square foot as a conventional home. In other words, a microhome of about 375-400 square feet might price out about the same as this micro-microhome.

(That said, as I get more information to confirm or disconfirm all of this, I'll update.)

That said, I have found some stuff with a quick teh Google.

First, appliances cost at least the same (if not more to fit microhome sizes), so that adds to per-square-foot costs there.

That said, Forbes has some detailed information, and it's not just "location, location, location":

These home may be environmentally friendly–they force owners to reduce their possessions and, often, to use less power–but they’re not exactly cheap. Tiny houses typically cost between $200 to $400 per square foot. On a square foot basis, that’s far pricier than the average American home–and tiny homes don’t include land.
 Take the Tumbleweed Tiny House Company, considered the Cadillac of the tiny house world. Tumbleweed prices its 161-square-foot “Elm” model at $66,000, or about $410-per-square-foot. Canoe Bay makes an even costlier model: its 400-square-foot “Escape” ranges from $79,000 to $124,900 (about $200 to $310 per square foot) depending on features. Even midrange tiny homes cost between $20,000 and $40,000–as in the 204-square-foot bungalow by Wind River Custom Homes for $40,000. One builder, Greg Parham of Rocky Mountain Tiny Houses, proudly priced his 136-square-foot “Boulder” at $27,350. As Parham declares on his web site, the total cost is well below the final price tag of competing models.

And Forbes confirms what I had been thinking in one way: The cost of shrink-to-fit itself adds to costs:

Builders say the high per-square-foot price tag for tiny homes is due to packing a bunch of expensive, shrunk-down features–water heater, refrigerator, stove, toilet, air conditioner–in a teeny space. “If we added another 100 square feet our costs would go down,” points out Steve Weissman, president of Tumbleweed Tiny House Company. “We still have to have a bathroom, a kitchen, and all of the mechanicals.”

Beyond that, one still has the other “overheads” of conventional houses, too: Insurance, property taxes, maintenance and upkeep, etc. And again, because of the special details of microhomes, once things do break or wear out, some of the maintenance costs are probably higher than with a conventional home.

More here confirming these costs.

So, unless one lives in a London or NYC, where land is at a premium AND one owns one's own pocket park of land space, why would one buy a microhome, let alone a micro-microhome?

I'll venture a mix of a variety of ideas.

One is the desire to be "green." As noted above, this is surely a bad idea. If one wants to be green, rent an apartment.

I've already mentioned that an apartment would be much "greener," or that a duplex or quadruplex, especially the latter, would be at least somewhat greener and yet have more privacy than an apartment.

Or, there's another option. If one finds like-minded people, joining a commune can be even greener than renting an apartment.

Second is probably a desire not to be tied down, since many of these places may not be attached to a permanent foundation. This may or may not be a bad idea environmentally, but it surely is one financially. (You've now got to consider the cost of a wheeled "base," or a trailer, and if you own the trailer, or certainly if the microhome is on a wheeled base, there's new maintenance costs.) A better option would be a small motor home the same size, then ditching one's car in favor of a moped, scooter or similar. Or, if one really doesn't want to be tied down, a better answer psychologically or ethically would probably be to learn how to build a log cabin and live off the grid.

Microhome with Prius effect. Certainly, cost savings are gone
with the pool. So, too, are environmental benefits.
Photo via this post at Tiny House Talk.

Third is probably some people seeing this as the housing equivalent of a Prius, that is, a status symbol of environmental commitment. Again, actual environmental commitment suggests this isn't the best answer. (Neither is a Prius, if bought in exchange for selling a 2-year-old Camry.)

Related to that? I think something such as a 188-square-foot box (which by no means is the smallest one out there), is an architechtural design show piece/toy as much as it is anything. I doubt that a lot of places that size or smaller are inhabited full-time when built, and I really doubt a lot of them are inhabited full-time five years after building.

Fourth is the issue of DIY vs. professionally built, and this also ties in to true vs hidden costs. A lot of people may see inexpensive costs listed for microhomes. However, those are for do it yourself builders, whether working from scratch, or in some cases, a kit of some sort. Again, given the special design and engineering issues of a microhome, I'd say one should be careful going down this road.

That includes remembering that a DIY house of any size costs a lot of your time. That includes paying in yet more time by "Dumpster diving" if you're trying to build out of scrap materials. Per wheeling around a microhome, that same link also warns that, in the author's opinion, a lot of people scrimp on trailer costs and get ones that aren't load-rating to haul something as heavy as their house. he also notes that cheap microhomes that are eye candy for many people don't have central heat or air. That saves on duct work space, but, unless one lives in a four-season temperate climate, room heat or AC is going to cost more, especially per my caveat above about insulation.

Speaking of, a lot of the micro-microhouses don't look that well insulated, either.

Anyway, that's my take. The microhome movement looks tempting, but if one wants to really be an environmentalist, it's probably not such a good idea. It also seems driven by the American love of housing, which squares with the "home as castle" idea of privacy (even as many Americans are OK with surrendering more and more of their online informational privacy to the National Security Agency, Big Business, or both.)

Housing prices — is light at end of tunnel now here?

That's what S&P/Case-Shiller is intimating. The major housing market monitor says that, nationwide, prices have risen four consecutive months.

Housing industry monitors say that, with another couple of months of good news, we could soon see a year-over-year increase in housing prices.

Now, will that provide a dose of economic optimism for the larger economy? A resident of 1600 Pennsylvania Ave. in Washington, D.C. certainly hopes so, for one.

I would say that, if we have one more month of housing price rises, and even prices alternating with rises for the rest of the way out, no spikes in gas prices, and a reasonable papering over of Eurozone issues, that adds up to 1 full percentage point in voting for Obama.

In a Virginia, a Pennsylvania or Ohio, maybe even a North Carolina, that could be a difference maker.

JP Morgan Chase's Jaime Dimon says he has a plan to end the housing doldrums. Shorter Dimon: Let the feds do all the regulating, to get those damned state AGs out of the way, then let the feds stop regulating me, but, don't make me responsible!

You expected something different?

Apparently, Joe Nocera did. Via a financial adviser, he looked solely at Dimon's "regulations are too complex" complaint, which probably has some validity, ran with that like he was flogging a straw man and ignored the rest. He does admit that the Dimons of the world will likely game overly complex regulations, but that's about as skeptical as he gets.

Economic good news, it seems

I won't link to the stories, because they're getting splashed everywhere. But, first, November unemployment fell in 41 of 50 states as part of the national drop to 8.6 percent. Second, albeit primarily due to apartment construction, the housing industry is set to be part of the solution, not part of the problem, for the economy for the first time since 2007. Third, a Gallup Poll notes that Americans not only expect to spend more than 10 percent more on Christmas this year than last year, but personally feel more confident about making such spending, not just having a "generic" increasing confidence for the economy in general.

We've still got a ways to go. But, this is a start.

Underwater homes, underwater recovery

Until we get housing and mortgage debt issues addressed, places like Phoenix and Las Vegas, where home prices fell another 10 percent in just the second quarter of this year, are going to be a long-term drag on the economy.

Former Reaganite economics adviser Martin Feldstein has some reasonably sensible ideas, focused on wiping all debt above 110 percent of a home's current value off the books, with owners in turn signing a simple, hardcore statement that if they accept the cramdown, they could lose other assets in case of a default. 


As he puts it, large parts of the country are in a deflationary housing market.


That said, this isn't enough. We need to address the larger issues of:
1. Tax deductions for mortgage interest;
2. The myth of home as investment;
3. The quasi-myth, at least, of home as ATM.

And, that's just within the world of housing. We're not even talking about things like the widening income gap.


Until we look at the larger context, we will have some variant, if not as big, on this housing bubble in the future.

2012 for home prices to hit bottom?

Housing analysts who talked to the Associated Press many not be quite as gloomy as those who talked to the New York Times yesterday, but they're not a load of joy.

The AP has says it may be 2012 until the housing market bottoms out, in a good story that looks at the broader effects of the housing bubble. It also mentions the foreclosure fraud committed by mortgage signing services, a fraud the banksters don't want to accept any responsibility.

Also worth noting is the spread of problem to new areas:

(T)he damage is now spreading to areas that had long escaped the worst of the crisis. They include Dallas, Denver, Minneapolis and Cleveland. Economists regard them as housing bellwethers — metro areas that are reliable indicators of where national prices are headed.

Denver and Dallas are on pace to hit post-housing bust lows in the next few months.

Yet more reason why we should look askance at Rick Perry's boastful talk of Texas' economic miracle.

Housing ownership falling back to '80s levels?

The New York Times says that yes, just such a thing could happen before the housing bubble finally, fully deflates.

This isn't just more and more subprime loans going belly-up. On the side of "fundamentals," it appears more and more would-be buyers are willing to continue the wait-and-see as to how much further the market might go.

And, this isn't just a decision in high-priced urban areas.

The Associated Estates Realty Corporation, which owns 13,000 apartments in Georgia, Indiana, Michigan and other Midwest and Southeast states, also is seeing more people deciding to rent.

“We have more of what we call ‘renters by choice’ than I’ve seen in the 40 years I’ve been in the apartment business,” said Jeffrey I. Friedman, chief executive of Associated Estates.

Beyond that, it appears that other Americans have finally stopped buying into the myths told by the National Association of Realtors and believed by people like my parents about the "investment" of owning a home.

Especially given the craptacularly cheap value with which many of today's Sunbelt suburban homes are built by the likes of D.R. Horton, et al, this is an investment that, frankly, sucks.

Besides, as long as there's such a glut of homes on the market, even if housing quality were better, there's no chance of serious appreciation.

That said, the continued slump affects more than just housing. Realtors were a major newspaper advertiser. And, they made money off legal notice classifieds for zoning changes, development hearings, etc. that city and county governments had to hold.

In the housing biz itself, this also affects subcontractors, many of whom, like carpenters, would be the contractor on farmed-out remodeling, etc.

The AP has a great follow-up story on the broader effects of the housing bubble. It also mentions the foreclosure fraud committed by mortgage signing services, a fraud the banksters don't want to accept any responsibility.

Housing prices could stay depressed for years

That’s a serious claim, and it’s not just anybody claiming it. It’s the stance of Yale economist Robert Shiller, co-creator of the Case-Shiller Home Price Indices.

Shiller says nobody should be surprised if housing prices don’t start climbing before 2012. Read his reasoning why.

Home sales offer a glimmer of hope

A February jump in existing home sales offers a glimmer or two of economic hope.

True, much of the jump is sales of repos, but they have to be sold sometime.

And, the West, ground zero of the housing bubble, actually paced the increase.

Home sales economic ray of sunshine?

An iudex of sales of new homes are UP 6.3 percent.

That said, sales are still down in the bubble-laden West, and the National Association of Realtors cautions against reading too much good news into the data.