Tiny House Movement Thrives Amid Real Estate Bust

By: AP Published: Monday, 29 Nov 2010  4:21 PM ET (CNBC)
As Americans downsize in the aftermath of a colossal real estate bust, at least one tiny corner of the housing market appears to be thriving.


To save money or simplify their lives, a small but growing number of Americans are buying or building homes that could fit inside many people's living rooms, according to entrepreneurs in the small house industry.

Some put these wheeled homes in their backyards to use as offices, studios or extra bedrooms. Others use them as mobile vacation homes they can park in the woods. But the most intrepid of the tiny house owners live in them full-time, paring down their possessions and often living off the grid.

"It's very un-American in the sense that living small means consuming less," said Jay Shafer, 46, co-founder of the Small House Society, sitting on the porch of his wooden cabin in California wine country. "Living in a small house like this really entails knowing what you need to be happy and getting rid of everything else."

Shafer, author of "The Small House Book," built the 89-square-foot house himself a decade ago and lived in it full-time until his son was born last year. Inside a space the size of an ice cream truck, he has a kitchen with gas stove and sink, bathroom with shower, two-seater porch, bedroom loft and a "great room" where he can work and entertain—as long as he doesn't invite more than a couple guests.

He and his family now live in relatively sprawling 500-square foot home next to the tiny one.

Shafer, co-owner of the Tumbleweed Tiny House Company, designs and builds miniature homes with a minimalist style that prizes quality over quantity and makes sure no cubic inch goes to waste. Most can be hooked up to public utilities. The houses, which pack a range of amenities in spaces smaller than some people's closets, are sold for $40,000 to $50,000 ready-made, but cost half as much if you build it yourself.

Tumbleweed's business has grown significantly since the housing crisis began, Shafer said. He now sells about 50 blueprints, which cost $400 to $1,000 each, a year, up from 10 five years ago. The eight workshops he teaches around the country each year attract 40 participants on average, he said.

"People's reasons for living small vary a lot, but there seems to be a common thread of sustainability," Shafer said. "A lot of people don't want to use many more resources or put out more emissions than they have to."

Compared to trailers, these little houses are built with higher-quality materials, better insulation and eye-catching design. But they still have wheels that make them portable—and allow owners to get around housing regulations for stationary homes.

It doesn't pay to remodel your home

By Les Christie, staff writerNovember 16, 2010: 5:32 AM ET

NEW YORK (CNNMoney.com) -- Looking to spruce up your home and wondering what will give you the most bang for your buck at resell time?


Install new fiber-cement siding. That cost an average of $13,382 and returned 80% of the investment, according to Remodeling magazine's 2010 Remodeling Cost vs. Value survey, done in partnership with the National Association of Realtors (NAR).

Like every other renovation job though, it returned a lower percentage of its costs in added home value this year than it did in 2009.

In general, anyone planning a home remodeling will pay a lot more for the job than they will get back in return when they sell. Only 60% of remodeling costs in 2010 would be recouped by homeowners, the report said.

Exterior improvements mostly performed better than interior ones, owing to the necessity of maintaining a home's "curb appeal."

"In today's buyers market, given the large inventory, where people have so much selection, it's important to have the exterior catch the eye so they're willing to step inside," according to Lawrence Yun, chief economist for NAR.

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The cost vs. value equation has been getting less attractive for years, but 2010 has seen a particular decline in the percentage of home improvement costs recouped.

On the average remodeling job, homeowners recouped 16% less value than they had in 2009, the steepest slide the survey has recorded in its nine-year history. This happened despite the fact that construction costs declined for the first time since 2004.

Adding a new mid-range bath, for example, returned nearly 100% of its approximately $15,000 cost back in 2003. Today, the same job costs more than $40,000 and only returns about half its cost.

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In general, the more spent for a job, the lower the percentage of return. That's apparent in comparing kitchen remodels.

A mid-range kitchen remodel costs nearly $60,000 and returns just 70% of that expense at resale. A high-end renovation adds just 60% of its $113,000 cost.

The lowest return of any job was for a midrange home office renovation, which cost an average of $28,888 and added $13,235, just 45.8%.

Low cost exterior improvements do well. An exterior steel door replacement return 102% of its $1,218 cost and new garage doors recoup 84% of theirs.

Two jobs tied for the best return on any midrange remodeling investment costing more than $10,000. Adding a wood deck or doing a minor kitchen remodeling, which involves replacing cabinet doors and counters, buying new appliances, sinks and faucets and repainting walls and trim et al, both recouped 72.8% of their costs.

Home Ownership at Lowest Level in a Decade

Published: Tuesday, 2 Nov 2010 11:34 AM ET (CNBC)

The nation's homeownership rate remained at its lowest in more than a decade, hampered by a rise in foreclosures and weak demand for housing.

The percentage of households that owned their homes was unchanged at 66.9 percent in the July-September quarter, the Census Bureau said Tuesday. That's the same as the April-June quarter.

The last time the rate was lower was in 1999, when the rate was 66.7 percent.

The homeownership rate was around 64 percent from 1985 through 1995. It then rose dramatically during the Clinton and Bush administrations, hitting a peak of more than 69 percent in 2004 at the height of the housing boom.

After the housing bubble burst, the rate has been declining gradually.

About 18.8 million homes, or 14.4 percent of all houses and apartments, were vacant, according to the government survey. Without vacation homes, that rate would be 11 percent.

The number of vacant homes has soared over the past four years from about 16 million at the start of 2006. It has been hovering around 19 million since the end of 2008. There are around 131 million housing units nationwide, according to the Census Bureau.

About 2.5 percent of all primary residences were vacant and for sale and 10.3 percent of all year-round rental units were listed as vacant and for rent.