As the fallout from the collapse of the housing bubble continues to work its way through our economy, it’s become very clear that the the days when a house was nothing more than a giant ATM machine are (hopefully!) pretty much over. That lifestyle came to symbolize, probably more than anything else, the wanton consumption that we Americans are (sadly) known for the world over. Now, with all kinds of resource depletion looming, we can only hope that the debt culture has reached its zenith and is permanently headed back down to something simpler. Let’s rejoice in that – for the sake of our sanity, our pocketbooks and the planet.
Still, we all need a place to live, right? Owning a home has always been a big part of the “American dream” and still is. But what we’d forgotten in the last couple of decades is that a house is supposed to be a home…a place to live, a sanctuary, not a giant soul-sucking financial headache designed to impress family and friends. Who in their right mind wants to live in a headache these days?
I sure don’t. Never did in fact. I actually live in 768 square feet and it’s the one and only house I’ve owned. I never did the giant ATM thing, so my payments stayed reasonable throughout the life of the mortgage. When I paid it off in October 2009 (about 4-1/2 years early) my monthly payment – including taxes, but not insurance – was $400.19 and only $57.17 more than the very first payment in August of 1984. (And this was with a typical ’80s adjustable rate mortgage that started out at 10.25%!)
Of course, home prices have risen (and interest rates dropped) since 1984, but the same principle holds: buy a house you know you can actually afford, put decent money down, don’t pull money out of it in the form of home equity lines of credit, and you are unlikely to ever get in trouble with your mortgage payment. The entire foreclosure disaster happened because everyone – bankers and home buyers alike – ignored these very basic rules.
Downsizing – or never having upsized in the first place – is, it turns out, very smart and will become more so in the coming years. Here’s why:
1. Small houses generally cost less – a lot less – than the big monster McMansions. I do wonder how long this will last though, with peak everything looming. Once a majority of people figure out that small houses are far more desirable, the big places will, I suspect, become very hard to unload. In the not-so-distant future, small homes will likely command a premium and the big places will have to be turned into duplexes in order to sell.
2. Because of its lower cost, it’s easier to save a down payment for a small home. One of the things that fueled the housing bubble was that lenders no longer required a down payment or they would actually lend buyers the down payment in addition to the mortgage. (Are you kidding me???) If you save up your down payment the old fashioned way, you will genuinely own 15% or 20% of the house on the day you walk in the door. You will then be much less likely to find yourself “up-side-down” (owing more than it’s worth) if home values decline.
3. A small home is generally assessed at a lower value, which means you pay less in school and county taxes. As school districts and county government continue to struggle with dwindling financial resources, our taxes are likely to continue climbing. We who live small won’t be hit nearly as hard as those who do not.
4. A small home with its lower value requires less insurance coverage. As climate destabilization continues to cause natural disasters, everyone’s home owner insurance rates are likely to climb, but somewhat (hopefully) less so for smaller homes.
5. Repairs & maintenance cost less on a smaller home. It’s a lot cheaper to put a new roof on a 900 square foot house than a 3000 square foot one. In the event of a natural disaster, a small home will be cheaper to repair, requiring less time and materials.
6. Small houses enclose less space and are therefore cheaper to heat and cool. As fossil fuel prices continue to rise, you won’t be hit as hard as your typical McMansion owner.
7. A smaller home will have fewer light fixtures and less room for dozens of electronic conveniences. It will therefore use less electricity.
8. Small houses are warm. This one is proof of #6. I have visited very large homes all designed to impress. Without exception, every one of them has been cold. My assumption is that the owners simply can’t afford to heat the place.
9. Small houses don’t echo. Ever watch that silly Extreme Makeover, Home Edition show? Ever notice how each monster house they build has the acoustics of a parking garage? Ugh.
10. Small houses help you live with less stuff. You simply don’t have room for tons of junk and a small house trains you to understand that.
11. A small house can help you retire. How? By spending less of your income on shelter, you free up funds to invest for your retirement. And after you’ve retired, your small home won’t eat up as much of your retirement income.
12. A small house can help you learn to be creative in use and storage. Think about people who live on boats. Every possible nook and cranny is utilized for storage. A small house can work the same way with some clever design. This is a major premise put forward by Not-So-Big House author, Sarah Susanka.
13. Small homes are used in their entirety. If you live in a house with rooms you rarely use, your house is too big. A right-sized house is the most efficient because you’re not heating and cooling space you don’t live in. Another point that Sarah Susanka makes so well.
14. A small house is easier to clean. Assuming you can keep the clutter out (see #10) less space means less time spent cleaning.
15. If you’re building new, a small home uses fewer materials. Fewer trees will die on your behalf. Fewer resources will be mined. Less of your lot will be bulldozed leaving more of the surrounding landscape (small as it may be) intact.
Here’s a little segment from PBS on Dee Williams, one of the movers and shakers in what’s come to be known as the tiny house movement. Her itty-bitty, beautifully crafted home on wheels may be a bit more extreme than many of us would want, but her sentiments about living smaller are right on target. I particularly love the shot of her sitting on the tiny porch of her house, surrounded by a neighborhood of looming McMansions. That, to me, says it all.
Watch the full episode. See more Need To Know.
If you really think about it, there’s nothing to be gained by building or buying more house than you need. If you’re in the market for a home, and you still find yourself looking at the big places with lust in your heart, then you really need to stop and consider your motivations. Why might impressing other people be so much more important to you than living wisely, minimizing your resource use, and helping to provide a more habitable planet for your children and grandchildren?
Something to think about.
Hey folks, happy Friday! Have a great weekend!
