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
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

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