Boston.com, ABC News, CBS News, Oprah Winfrey and other mainstream media outlets have ramped up their coverage of the Tiny House movement – a shift from McMansion-sized expectations to very small, often portable dreams. Tiny houses range from 80-220 sq. ft., typically cost $25-45k and seem to have unquenchable appeal; related videos have been watched nearly 27 million times, over 750k people “like” Tiny House Facebook pages, and social keywords reach nearly 700k people daily.
But who would want to live in such a minuscule domicile? Especially one built on a trailer? I wouldn't blame you for presuming that Tiny Houses appeal to a fringe market. But the actual demographics are astonishing.
Middle and high school students, collegiates, young professionals, mid-lifers and retirees are all jumping onto the Tiny House bandwagon (pun intended – some of the most unique styles are based on caravans). Municipalities as diverse as Texas, Wisconsin and Oregon are utilizing Tiny Houses as a way of alleviating homelessness, while private investors from Washington D.C. to California and everywhere in between are planning new Tiny House communities.
Economically, Massachusetts's residents fair better than our counterparts in other states. Nationally however, two entire generations (both young and old) are falling out of the middle class. Here are the numbers:
- Median household income (2012) is $64,153 – 5th highest
- Unemployment rate is 7.4% - 18th lowest
- Only 11.6% of our population (764k people) are living below the poverty line
The outlook could be worse, but I wouldn’t argue with you for remaining skeptical. Let's consider these nation-wide statistics from the U.S. Department of Commerce:
- Median middle class household income in 2012: $51,017 and in 1989: $51,681
- U.S. official poverty rate in 2012 = 15.0% (46.5 million people)
- Real household income has declined by 8.3% since 2007
- Young adults age 25-34, living with their parents, had an official poverty rate of 9.7%. But if their poverty status were determined using only their own income, 43.3% had an income below the poverty threshold.
- Average amount needed to send a child to an in-state college for the 2012-13 academic year: $22,261 and for a private college: $43,289
- 75% of Americans are nearing retirement with less than $30,000 in their retirement accounts. Forbes calls this "The Greatest Retirement Crisis in American History."
- Housing prices have increased by 56% since 1990.
- 3/4 of us do not have enough money saved to pay our bills for six months.
- In 2012, healthcare costs for the typical American family of four exceeded $22,000, "Almost as much as the cost of attending an in-state public college ($22,261) for the current academic year."
How can a Massachusetts family living on a median income of $64k afford the bloated costs of housing, education, healthcare and retirement? We can't. This is an inherently unsustainable economic model. Something has to change, and this is where I look at Massachusetts, typically a forerunner of social-economic shifts, and feel that we are missing a critical opportunity.
Our state conceived of the Minute Men, who played a critical part in the Revolutionary War. The Boston Tea Party was (arguably) the spark that ignited a revolution and led to democratization of what we now call the free world. We introduced the 3rd (and most stringently enforced) anti-slavery bill, held the very first national women's right's convention and became the first state to legalize same-sex marriage. We have one of the most thriving business communities in the world (personally speaking, I'd put our entrepreneurs - including the MassChallenge team - up against anyone, anywhere at any time).
But we are dropping the ball on this social movement, and it is costing us already.
- Boston is the 31st most expensive city in the world. How will we retain our best and brightest minds if they can't afford to live here?
- Massachusetts saw the 5th highest increase in homelessness among all states between 2012-2013, counting 19,029 people during January 2013. Each motel room for a homeless family costs the state an average of $82 per night, or approximately $30,000 per year.
- The cost of room and board averages $7,500-9k per year. That’s $30-36k over four years - money that our college students could be investing more practically in order to solidify their own (and our state’s) economic future.
Here are a few possible solutions, which I realize won't fit everyone:
1. Instead of paying $30k per year to house homeless families, we could provide them with Tiny Houses - thereby saving our state substantial money while improving their quality of life.
2. Instead of paying residency fees, college students could purchase and live in Tiny Houses. The houses would pay for themselves within four years and could then be lived in rent-free, rented out or sold to pay off loans (or used as a down payment on a larger house).
3. Instead of paying rent, you could buy a Tiny House. It would pay itself back in less than a few years, leaving you in a better position to save for retirement.
4. You could start a Tiny House business. This industry hasn't even come close to reaching scale yet. Someone is going to figure how to produce more Tiny Houses at less cost. Ramping up the industry will create jobs and additional business opportunities in land lending, peer-to-peer financing, insurance, building, etc.
Kai Rostcheck is a social entrepreneur who is launching several Tiny House initiatives including www.ilovetinyhouses.com, www.tinyhousedating.com and www.tinyhouselending.com. Contact him at firstname.lastname@example.org.
The author is solely responsible for the content.
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