The downsizing of some American homes

by on July 11, 2014 at 2:25 pm in Economics | Permalink

Doug Immel recently completed his custom-built dream home, sparing no expense on details like cherry-wood floors, cathedral ceilings and stained-glass windows — in just 164 square feet of living space including a loft.

The 57-year-old schoolteacher’s tiny house near Providence, Rhode Island, cost $28,000 — a seventh of the median price of single-family residences in his state.

“I wanted to have an edge against career vagaries,” said Immel, a former real estate appraiser. A dwelling with minimal financial burden “gives you a little attitude.” He invests the money he would have spent on a mortgage and related costs in a mutual fund, halving his retirement horizon to 10 years and maybe even as soon as three. “I am infinitely happier.”

There is more here, and for the pointer I thank Peter Marber.

Z July 11, 2014 at 2:47 pm

I have an acquaintance in the real estate business. She used to specialize in high end properties, the McMansions that popped up all over in the late 90′s and 2000′s. Now she is moving toward smaller, boutique properties. She says the well off buyers are not into the big gaudy spreads and the action is now in high end condos, townhouses and small homes in more rustic environments.

Brian Donohue July 11, 2014 at 3:08 pm

Boomers.

Tim July 11, 2014 at 3:28 pm

And young people. And people with kids. Many of us don’t want to spend our lives commuting or sending our kids to the “best” schools if it means taking away from spending time together. Good enough with plenty of time to spend together is better than “the best”.

BC July 12, 2014 at 12:40 am

There’s actually some merit to this in the sense that the so-called “best” schools are really the schools that happen to have the best students. Wherever the best students go, those schools will become the best schools. There do seem to be some networks effects though.

Z July 11, 2014 at 4:25 pm

As the boomers tip into decrepitude, the housing market in some regions will get very weird for a while. New England is wicked old, for example. When those boomers head to Florida or the grave, a glut of certain housing is likely. On the other hand, The Villages will be booming for the next 15 years.

Spencer July 11, 2014 at 4:36 pm

Mass population growth has been under 1% for decades.

People with out good education have been leaving the area for years and being replaced with people who came here to go to school and remin in the area.

Interesting, medical doctors in Mass have the lowest average income of any state in the union, but Mass has the highest number of doctors for 1,000 population of any state.

During the real estate bubble my son’s sister in law — a young woman with only a high school education working as a hairdresser — moved to Nevada and became a dealer and a rel estate agent. I claim this moved raised the average IQ in both states. Certainly, it improved the average income in both states.

JWatts July 11, 2014 at 4:59 pm

“Interesting, medical doctors in Mass have the lowest average income of any state in the union, but Mass has the highest number of doctors for 1,000 population of any state. ”

You mean Supply and Demand works in the Medical Profession. Who knew?

Z July 11, 2014 at 5:14 pm

We think of gentrification as an urban phenomenon. Mass is doing it state-wide. It really started in the 1980′s. There were so many people moving out of state, the rental truck companies had six month waiting lists. They would pay you to take a truck from Florida to Mass.

The tech boom slowed the outflow, but southern New Hampshire was still filling up with Massholes in the 90′s. The tell is the school population. It has been declining in Mass for over a decade. Even though the population has stabilized, fertility rates have dropped and families continue to move away.

Jan July 11, 2014 at 5:44 pm

Mass has a lot of med schools, teaching hospitals and research institutions for a state of its population, which makes it an attractive place for many docs, even if the tradeoff is lower pay. Maybe a doc wants to teach on the side, or focus primarily on research and do clinicals one day per week. A lot couples meet in med school and probably find it convenient to settle down where they are.

Also the disproportionate share of residents and fellows in MA–a group this is low paid no matter what state they practice in–brings down the average physician compensation.

leftistconservative July 12, 2014 at 3:38 am

which is why the overclass has been importing human livestock in the millions via mass immigration. What? You thought the USA was a democracy?

Dave from Boston July 11, 2014 at 2:47 pm

Two observations:

1. Doug doesn’t have any friends or a significant other. Where would he put them?

2. Doug should think twice how much his Rhode Island State pension is really worth….

My comments aside, I think this is a great idea but most cities and towns in New England would make these impossible to build. It takes two years to build a conforming structure.

Jan July 11, 2014 at 3:43 pm

1. He said he built it with a mind toward resale, so maybe one day he will upgrade to a double wide with a wife. Also, I lived in Boston right out of college. None of my friends really entertained at home–all our places were small and relatively crappy, at least those of us in the attractive, fun neighborhoods in the city. We hung out at bars, restaurants, outside and sporting events. You don’t need a big house to have friends.
2. He’s probably not counting too much on the pension since he a) recently switched careers to teach (reducing his years of service, cutting down his pension), b) plans to retire early and c) is doing personal investing in mutual funds.

Z July 11, 2014 at 4:29 pm

My office is larger than my first apartment in Boston. I called it a compartment because it was so small. NYC is similar as well as other cities. That first apartment was probably 200 square feet, including the shower.

Norman Pfyster July 11, 2014 at 2:58 pm

My bedroom closet is bigger than that.

The Anti-Gnostic July 11, 2014 at 4:39 pm

My wine cellar is bigger than most houses.

Sigivald July 11, 2014 at 6:12 pm

I own a tent bigger than that house.

(And it’s not the biggest tent in my friends group, but I do historical re-creation, so we’re outliers.)

kiwi dave July 11, 2014 at 3:09 pm

LIke so many of these trend articles, if you keep reading, you find there’s no actual trend (Jack Shafer used to do a great job at Slate dissecting this type of article, back when Slate was good). Here, you have to go to the 12th paragraph:

the number of tiny houses in the U.S. is, well, tiny — just in the thousands per unofficial industry surveys … the median size of new single-family houses is the biggest ever — 2,384 square feet in 2013, a 3.4 percent increase from 2012.

Jan July 11, 2014 at 3:56 pm

Interesting. You could attribute some of this to population migration to the Sun Belt, where homes are cheaper than many other parts of the country, allowing people to build more house for their money. (Also, a large share of all new construction is probably in these growing metros). That wouldn’t necessarily be in conflict with a narrative that some significant share of people arestarting to prefer smaller dwellings–just that more people are now finding it within their means to buy bigger homes (their preference).

MikeW July 11, 2014 at 5:16 pm

I agree, the trend is that people are talking about these tiny houses, not that people are actually buying them. A&E just hopped on the bandwagon with a new reality series on the subject, Tiny House Nation, but I think these things will go the way of beanie babies and pet rocks.

Instead of articles covering what are essentially novelty homes, I wish we’d hear more about that 2384 sq. ft. number. It’s really ridiculous – we could all live quite comfortably in a much smaller space. Do we really need an eat-in kitchen AND a dining room? A living room AND a family room? A dedicated “office/computer room”, when a corner of a bedroom would work just as well?

When a Taiwanese friend visited my 1200 sq. ft. home, his jaw dropped at how much space I had all to myself. I didn’t have the heart to tell him my home is what is considered “tiny” these days.

Sigivald July 11, 2014 at 6:13 pm

“Need”?

We don’t “need” houses!

But we like them, and we like not having to have our office/computer space “in a corner of a bedroom”. And many people like to not have to eat in the kitchen!

I’m finding 1,200 feet small, myself.

andrew' July 11, 2014 at 6:50 pm

Having been a participant in the great room fad I realized the benefit of splitting it in two so one stays clean for visitors.

mpowell July 13, 2014 at 12:08 am

Plenty of people make the wrong choice to have a long commute and bigger home because a long commute is terrible. But the aesthetics of not having your computer in your bedroom are enormous. And if you think you don’t care about aesthetics, you’re probably fooling yourself. It’s not wrong to prefer a bigger house all other things being equal.

JasonL July 11, 2014 at 3:11 pm

You don’t have to go that far for the general point to be valid. Many to most people are drowning in their homes. We’ve been looking to build a really nice 2,300 sqft or a bit less for DINK living, and the market just doesn’t work that way without going full custom. Around here you can get nice and 3,500+ sqft or a starter home with very little in the way architectural interest or design or materials quality because it must be your starter home.

Urso July 11, 2014 at 6:56 pm

Diminishing marginal returns on square footage for sure. I just wouldn’t have guessed the diminishment starts at 150 sq ft.

Gary Steinmetz July 11, 2014 at 3:11 pm

This lifestyle is all great and well unless one has … children.

Dave July 11, 2014 at 4:04 pm

How big of a house would you really need though? Over the past few decades it’s been a significant increase in average and median house size in the US while the average family size has declined. At the moment the US poor have larger houses on average than the European non-poor. Somehow the Europeans have managed.

msgkings July 11, 2014 at 4:29 pm

They’ve managed by having even fewer kids than Americans do.

Andrew Edwards July 11, 2014 at 11:43 pm

Is this sufficient to explain the gap? What is the average square footage per occupant in the US versus Europe? Can we estimate it?

andrew' July 11, 2014 at 6:55 pm

One remedy for kids is outdoor living space. It’s a pain but the problem with kids now is getting them away from the screens. My kid uses 4 sq ft right in front of the laptop and the bed is optional.

Nyongesa July 12, 2014 at 12:44 am

Agreed… a retractable wall…and..roof, on the kids rooms would be well worth the investment.

andrew' July 12, 2014 at 4:19 am

Would be nice. But what I had in mind was a trampoline.

andrew' July 12, 2014 at 6:22 am

Young kids in your house demolish the place and increase the space needs exponentially but that just gives them more space to destroy. So the trick is to keep them outdoors as high a percentage as possible. A side benefit is US soccer will become comptitive.

I like your idea of a garage door on a child stable.

andrew' July 12, 2014 at 6:36 am

True kids story from yesterday.

“What is this odd object in the middle of the carpet? Chocolate? OH! It is a turd. How does a lone turd end up on the floor behind enemy lines. No pets. No college frat guys. We’ll just never know. Even sociopaths know not to leave shit on the floor. It’s kind of a giveaway. Kids simply don’t know that the first rule of shitting is we leave no man behind.”

Brian Donohue July 12, 2014 at 2:40 pm

25 years ago, I would have found this appalling.

Marie July 12, 2014 at 4:54 pm

Part of our point in moving to a small house was so that it would actually be kind of inhospitable.

John Mansfield July 11, 2014 at 3:24 pm

Well, Rhode Island is a small state.

Affe July 11, 2014 at 3:31 pm

I was hoping to find a midget when I looked at the photos. Alas.

Andrew Gilmore July 11, 2014 at 3:29 pm

Correct me if I’m wrong, but does Cowen not call this in “Average is Over”? Certainly doesn’t prove him right, but it’s trending that direction . . .

cliff arroyo July 11, 2014 at 3:33 pm

I bet beans taste really good in that little house.

The Engineer July 11, 2014 at 3:33 pm

For a lot less than $28k, you could get an older, smallish home in any number of ghettos across this country.

Forget the inner city ghetto, there are many older inner ring suburbs (like Calumet City or Dolton in Chicago) with an older, smaller housing stock that is dirt cheap.

But you know that’s not what this is all about. It’s not about living cheaply. It’s about something else.

White people are weird.

Steve J July 11, 2014 at 3:47 pm

You can get cherry-wood floors, cathedral ceilings and stained glass windows for $28k in the ghetto? Turns out my impressions of the ghetto were completely wrong.

The Engineer July 11, 2014 at 4:27 pm

Of course you can. Old houses often have unusual architectural features like stained glass windows and hardwood floors.

Sigivald July 11, 2014 at 6:15 pm

And by the time they’re $28k in the ghetto, they’re ruined, from all I’ve ever seen.

That glass is likely to be broken or rattly, not new and crisp.

The hardwood floors are, if you’re lucky, merely stained and damaged, and not covered with glue and carpet.

(If you’re lucky, too, nobody’s broken in and stripped the copper out of the pipes and wiring.)

NathanP July 12, 2014 at 12:30 pm

White people are, in fact, so weird that they consider these things.

John Mansfield July 11, 2014 at 3:55 pm

To go that small, 164 square feet, going small was the point all in itself. At that size, construction costs wouldn’t scale with size anymore. 350 square feet would have cost only a fraction more.

Bjartur July 11, 2014 at 4:07 pm

“It’s about something else.” It’s an interesting something else. Kind of like the people who don’t have TVs so they can repeatedly tell people that they don’t have a TV. And maybe people who pay >$100/yr to rent communal bikes.

The Engineer July 11, 2014 at 4:28 pm

Bjartur knows white people.

Curt F. July 12, 2014 at 7:15 am

I pay merely $25 / yr to rent communal bikes. So I’m glad that my life is OK in your book. WTF do you have against communal bikes?

Norman Pfyster July 12, 2014 at 10:21 am

I think the point of his comments is that you can turn around your own question and ask, “WTF do you have against owning your own bike?” It’s not like it’s expensive or hard to store. It would be a fair response to say, “To avoid theft issues.”

andrew' July 13, 2014 at 4:01 am

Is bike renting pareto improving? They sell less bikes initially but maybe they sell more bikes in thelomg run.

Urso July 11, 2014 at 6:55 pm

Probably, but assuming it would’ve only cost $500 to add another 200 sq ft — if he didn’t want 200 more square feet, he’d have wasted $500. A nickle for an elephant is only a good deal if you’ve got a nickle and need an elephant.

Thor July 12, 2014 at 5:09 am

Exactly. Would we be reading about this guy if he had built a 400 sq ft home? Probably not.

PS — I build a 200 sq ft sleeping cabin for guests and kids. 10×10 would have been fine, but doubling the size meant room for a bookcase, a table, and two chairs, plus windows on three sides.

andrew' July 12, 2014 at 6:05 am

I like that people are doing experiments in reducing footprint.

Books are on tablets. Movies are streaming. We hire a guy to bring his lawn equipment (and we shouldn’t even have the lawn). At the end of the day what you really NEED is a bed.

anon July 11, 2014 at 4:19 pm

The larger the living space the more stuff most people will put in it.

The old saying is true: you don’t own your stuff, your stuff owns you.

B Cole July 11, 2014 at 4:37 pm

True story: I bought a used Airstream trailer for $3k and lived in it for five years. But illegally.

andrew' July 12, 2014 at 6:06 am

Have you checked out the “van life” videos on YouTube?

B Cole July 13, 2014 at 1:13 am

No. But I also had an Aero Belo that I rented out for $750 a month and I am familiar with the renovating old trailers idea…if you live in a city or place where you can get away with it, a great way to go…

Kevin Erdmann July 11, 2014 at 4:47 pm

Square footage has been rising sharply. The census bureau tracks this. Adjusted for long term interest rates, homes are inexpensive.

https://research.stlouisfed.org/fred2/graph/?id=HOUSTSFLAM1FQ,

Slappy McFee July 11, 2014 at 5:17 pm

Can we stop worrying about income inequality and income transfer programs and just build more closets for the poor to live in now?

andrew' July 11, 2014 at 6:28 pm

Yes. On secure trailers.

S July 11, 2014 at 5:38 pm

5 pound douche in a 1 pound bag

Steve Sailer July 11, 2014 at 6:30 pm

I live in a tract built in the early 1950s with most homes originally about 1,600 square feet on lots of around 7000 square feet. These old ranch houses are slowly being torn down and replaced with massive two story structures, some with East and West wings that must be in the 6000 sf range and are being offered for over $3 million. I’m guessing these are aimed at prosperous extended family cultures from the Middle East that intend to have multiple generations living in the same building.

Jason July 11, 2014 at 9:40 pm

We have a similar phenomenon in the DC area as well, though the homeowners tend to be wealthy white professionals like lawyers and lobbyists who want a large house that’s close to the city hence in an older, close-in suburb.

Darren Johnson July 11, 2014 at 7:12 pm

This is getting huge here in portland. Doctor couples are doing it. They pay some lumberjacks to build a nice little house for their 2.5 kids right in the city. Culture flows down so it’ll probably be common 25 years from now.

Dismalist July 11, 2014 at 7:45 pm

Somebody mentioned “starter homes”. Is there an accepted definition of “finisher homes”? I’m sure I live in one.

David Bley July 11, 2014 at 7:58 pm

I moved south for lower housing prices in 1978. In 2009 we downsized from a 5 BR 4 bath house to a 3 BR 2 bath house. I would find it hard to live in a ‘tiny’ house, but I applaud having the choice. It is a shame that most zoning and building codes do not allow building these small houses on a foundation. Most of them are built on a trailer frame that is 8 feet wide by 16 to 24 feet long to get around zoning and building codes.

The Other Jim July 11, 2014 at 9:46 pm

Seriously, this is a very sweet troll, Tyler.

I love the way you suggest that a childless 57-year-old can live more cheaply than everyone else. And this means we can all live cheaply!

Yay!

DMS July 11, 2014 at 9:56 pm

Yes 3000 SF for one person is a bit excessive but 164 SF for 1 person is also pretentious.

DaveL July 11, 2014 at 10:49 pm

The article doesn’t say (or I missed it) what the lot the tiny home is on cost. In the Boston area in many towns, even small lots are costing hundreds of thousands. Mr. Immel’s home might have been 1/10th the price of the whole deal, or at best 2/10ths. In fact, people are buying older small homes on small lots, tearing down the home and building a new one the max size the zoning will allow. The person who eventually buys Mr. Immel’s tiny home and lot will probably do exactly that.

DisposableSky July 13, 2014 at 10:30 pm

Many tiny homes are on trailers due to zoning regulations, so lot cost can be zero if you find a friend willing to let you on his property. Usually you can’t get approved for building on an actual foundation due to minimum size requirements. Tiny homes are less agile versions of an airstream trailer, essentially.

andrew' July 12, 2014 at 4:23 am

On submarines you get one third of a cot space.

Roy July 12, 2014 at 8:03 am

Portlandia

Marie July 12, 2014 at 5:06 pm

Man has a pretty little cabin, I hope he enjoys it, but this isn’t what people want it to be. It’s not some return to rational living. It’s just people who can’t find apartments they like.

My grandmother lived in the house she grew up in, I believe she had 12 or more siblings. Two bedrooms, one bath, several attic and closet areas, I’d guess under 1200 square feet. Obviously all the kids didn’t live there at the same time. This guy’s choice in no way resembles her family’s, and I can’t think he’d want it to.

jorod July 13, 2014 at 12:27 am

He also has no family, no friends, no life…..

TallDave July 13, 2014 at 4:13 pm

cathedral ceilings

164 square feet

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