For a long time in this country, owning a home has been a part of the "American Dream." It became a representation of achievement and something people can take pride in. On top of that, it gave families a sense of stability and security. The thing is, homeownership isn't cheap, and most people have to borrow money to buy and own a home. But a decade ago, that wasn't a problem. Mortgage interest rates were low, so monthly payments were feasible for a lot of people. But it got so easy that attaining the ultimate American Dream of homeownership then became more of an expectation than a privilege. For a lot of American families, it was as if things couldn't get better. But as home values continued to rise, people became more dependent on their home as a valuable asset. People were taking out second mortgages, and banks were lending out money to practically anyone who wanted it. Times were great. And then everything came tumbling down.
When the mortgage crisis hit the U.S. in 2007, homes lost hundreds of thousands of dollars in value, and millions of Americans lost the biggest asset they had ever had and one they had planned on having for a long time. Hundreds of thousands of Americans are still losing their homes every month, as unemployment and other economic factors continue to plague this country. But economists say things may be starting to turn around. New home construction jumped 15% last month -- the fastest pace in four years. Mortgage rates continue to hit record lows, giving people a chance to refinance and reduce monthly payments. And foreclosures have also fallen to a five-year low. But although things are getting better, many Americans are digging themselves out of some pretty big holes.
Even if you aren't paying off a mortgage, owning a home can still be very expensive and a struggle for people who have been laid off or had their income reduced, things many Americans have experienced over the past few years.
Upkeep and taxes on a home can get pricey. Annual property taxes nationwide average about 1% of a home's value, according to the Tax Foundation. Annual maintenance bills for a home in the U.S. average from about 1% to 3%. But what if you could reduce those expenses and still own your own home? Well, there's one group of Americans that have found a way to do just that, and they're doing it debt free so they can save for the future, or in some cases, rebuild the savings they've lost.
Two words: tiny house. Literally. The size of the average American family's home has continued to grow over the years, along the amount of stuff in it, so instead of struggling to keep up, some people have decided to downsize to the extreme. An average traditional home in the U.S. costs about $156,000. The median price of a tiny house in the U.S. is about $25,000. For a lot of people, buying a house for $25k means no debt, smaller bills, and a chance to start saving again.
So just how tiny is a tiny house? They're usually around 200 square feet. To give you an idea of how big, or tiny, that is, the average new American home last year was 2,480 square feet.
Living in a tiny house also means having a tiny fridge and a tiny shower, so you use less power and less water. The land you live on is also less valuable, so your property tax is less expensive. A lot of people who are joining the tiny house movement are also DIYers. Buying your own materials and building your own tiny house can save you even more money. And a lot of these homes are more ecologically friendly than the typical American home. So living in a tiny house dramatically reduces a family's expenses across the board. And all that saving means more money in your pocket down the road, and more money in retirement.
For some it's easy, but for others, it's simply a means to an end. Living in a tiny house is all about the quest for better: a better life, and a better future for one's family.
Thinking about downsizing? Check out these resources: