Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Tiny Houses May Signal a Big Market Change

Housing-Market / US Housing Dec 02, 2014 - 06:37 PM GMT

By: MISES

Housing-Market

Jonathan Newman writes: The flowering of the tiny house movement is due in large part to the most recent boom-bust cycle, which left many homeowners wondering if mountain-sized homes are worth equally sized debt or a risky gamble on future housing prices. For some, this meant moving into a house that could be smaller than their previous house’s bathroom.

Although definitions vary for what “tiny” means — from the hardcore enthusiasts to the more inclusive tiny-housers — most agree that any residence smaller than 1,000 square feet fits the bill (but most are less than 500 square feet). And speaking of the bill, such dwellings can range anywhere from $10k to $50k, depending on the size and amenities, and they can enjoy total monthly utilities in the double digits.


Thoreau would be proud, too, as many of the tiny-housers build on their own and/or go “off the grid” (the r/homestead and r/tinyhouses subreddits have notable membership overlap, for example). They eschew public provision of various utilities by collecting rainwater, using solar panels, and installing composting toilets. Another way the tiny-housers thumb their nose at the government is by building on trailers to skirt building codes that dictate minimum square footage or other regulations. Randy England, in an August 2014 Mises Daily article, noted how such laws hurt the poor, who would benefit greatly by accessible cheap housing.

Debt Looking Less Attractive

The tiny house movement is a natural consequence of the most recent macroeconomic swing. After a boom-bust cycle, capitalist-entrepreneurs attempt to reallocate capital into profitable lines of production. This can be a painful process for many, as workers get laid off and prices adjust. Decision-making is difficult when vital information like interest rates and other prices haven’t accurately reflected consumer demands or time preferences in the past. These necessary market corrections are made even more difficult when central banks and governments get in the way, either by revving another cycle or disrupting prices and market processes even further. In spite of the gargantuan and manifold stimulus programs and expansionary monetary policy since 2008, firms like Tumbleweed Tiny Houses and SmallWorks have grown and thrived, attracting workers, capital, and customers when the powers that be would have them fueling and refueling bubbles.

The average house size has climbed steadily over the past few decades, even though the average number of people per household has fallen over the same time period — an unorthodox sign of a growing housing bubble, albeit in hindsight. At the peak of the crisis in 2007–2008, the average household member had about 985 square feet to himself. The members of the tiny house movement suggest that much space is more than enough for an entire household of 2, 3, or even 4 people.

Volatile home prices, increased underemployment and unemployment, and a growing fear of debt seem like the perfect mix for a popular tiny house movement.

I asked a few tiny house owners about their experience and motivation, and found that avoiding debt was a major factor in their decision to go small. “I could afford this house without a mortgage” one owner observed, while another remarked “We are debt-free, and we didn't want a huge mortgage. Seeing the housing bubble definitely reinforced that view (we are now 29, and it was kind of happening when we were getting married and deciding how our lifestyle should be).”

When asked about the future of the tiny house movement, owners replied with several economic reasons for why they believe there will continue to be a demand.  

“Pragmatism will be a driving force. Primarily due to financial constraints,” an owner replied.  “These constraints could be external (people can't get a job that pays enough to afford ‘the American dream’) or internal (people choose this option to avoid the economic hardships imposed by buying a McMansion.)”

“I believe [there will continue to be a demand], yes,” another owner said. “Not only has the housing bubble added to the tiny house movement, I think millennials and other young folks who will have crushing student loan debt will find [traditional] home ownership to often be an unattainable dream ...”

Perhaps we can chalk up the tiny house movement as another unintended consequence of the Federal Reserve’s low interest rate setting starting around 2002, and the federal government’s similarly timed initiatives to increase homeownership. Or maybe we are witnessing the start of a major cultural change, and our conceptions of the typical family or community are readjusting in the wake of macroeconomic upheaval. Either way, the movement has urged me to reconsider installing that second bowling alley next to my two-million volume library. Rothbard was very prolific.

Comment on this article.

Jonathan Newman is a 2013 Summer Fellow at the Mises Institute and teaches economics at Auburn University. See Jonathan Newman's article archives.

© 2014 Copyright Jonathan Newman - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in