There are now over 105 million Google results for the search term: Tiny House. Clearly, this movement is red hot- but why is it so appealing?
A Tiny House is smaller than 200 square feet – less than 1/10th the size of a typical American home. Tiny Houses are often built on flatbed trailers, so you can think of a Tiny House as a portable studio apartment. The appeal is based on two factors: changing values and shifting socioeconomics.
How are the two related?
Americans are worse off (financially) then we were a generation ago. Since 1978, college tuition and fees have increased by 1,225%, medical costs are up more than 634% and housing is 370% more expensive.
As a whole, we are woefully unprepared for retirement. Not surprisingly, these figures directly correlate to increasing debt: 35% of Americans have unpaid bills reported to collection agencies2. It’s only a matter of time before average people take a look at their lives and say “I can’t do this anymore…I don’t want to do this anymore.”
The most shocking thing about the Tiny House Movement, to me, is the broad appeal; students, professionals and retirees all want freedom from debt and an opportunity to live in creative, expressive ways.
If people want to get out of debt, how can it make sense to take out a Tiny House loan?
The average Tiny House costs between $25-40k. The maximum loan duration is seven years. Terms are always dependent on individual borrower profiles and lender criteria, but you can see that we’re talking about short-term financing that is comparable to a car loan. When the Tiny House loan is paid after just a few years, the borrower owns her home. Now she has choices: live in the Tiny House long term and save money each month, rent it out to generate additional income or resell it.
This is a game-changer for many people who currently have only a few options: live at home (with relatives), pay rent or get a 30-year mortgage. Whether the Tiny House is intended to be their starter home or permanent residence, it becomes a cost-effective way to build toward a more secure financial future.
My friend Ethan Waldman described it well during a recent interview. He said, “My quest to start living in a tiny house wasn’t borne out of a need to downsize or drastically cut expenses, although both happened as a result. Rather, it fit into a larger game plan of mine to have a more flexible lifestyle that kept me from being chained to a desk all day.”
Living in a tiny home obviously isn’t for everyone. It’s a dramatic change in lifestyle that’s going to need some justification.
Would you ever live in a tiny home?
This is a guest post from Kai Rostcheck, the founder of Tiny House Lending, which helps people find personal loans to buy or build a Tiny House.