Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

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

6 Critical Money Making Rules