Tiny house movement thrives amid real estate bust

GRATON, Calif. – 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."

Click image to see more photos of tiny houses


AP Photo/Ben Margot

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.

Since the housing crisis and recession began, interest in tiny homes has grown dramatically among young people and retiring Baby Boomers, said Kent Griswold, who runs the Tiny House Blog, which attracts 5,000 to 7,000 visitors a day.

"In the last couple years, the idea's really taken off," Griswold said. "There's been a huge interest in people downsizing and there are a lot of young people who don't want to be tied down with a huge mortgage and want to build their own space."

Gregory Johnson, who co-founded the Small House Society with Shafer, said the online community now has about 1,800 subscribers, up from about 300 five years ago. Most of them live in their small houses full-time and swap tips on living simple and small.

Johnson, 46, who works as a computer consultant at the University of Iowa, said dozens of companies specializing small houses have popped up around the country over the past few years.



Before he got married, Johnson lived for six years in a small cabin he built himself and he wrote a book called "Put Your Life on a Diet: Lessons Learned from Living in 140 Square Feet."

"You start to peel away the things that are unnecessary," said Johnson, who now lives in a studio apartment with his wife. "It helps you define your priorities with regard to your material things."

Northern California's Sonoma County has become a mini-mecca for the tiny house industry, with an assortment of new businesses launching over the last few years.

Stephen Marshall, 63, worked as a building contractor for three decades before the real estate market tanked three years ago. That's when he jumped into the tiny house business, starting Petaluma-based Little House On The Trailer.

His company builds and sells small houses that can serve as stand-alone homes equipped with bathrooms and kitchens, and others he calls "A Room of One's Own" that can be used as a home office or extra bedroom. Many of his customers are looking for extra space to accommodate an aging parent or adult children who are returning home, he said.

He said his small houses, which sell for $20,000 to $50,000, are much cheaper than building a home addition and can be resold when the extra space is no longer needed. His company has sold 16 houses this year and aims to sell 20 next year.

"The business is growing as the public becomes aware of this possibility," Marshall said. "A lot of families are moving in with one another. A lot of young people can't afford to move out. There's just a lot of economic pressure to find an alternative way to provide for people's housing needs."

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Freshening up the inventory

As market slows down, brokers pull and re-list apartments


As the market slows, an increasing number of brokers have pulled apartments off the market, with the intention of giving them a short hiatus from the lackluster real estate environment and then re-listing them.

The goal? To bring new attention to properties that have lingered for weeks or months without any movement. In some cases the sellers have dropped their prices before putting them back on the market, but in other cases the move has merely been designed as a breather to turn the stale units into "new listings" again when they re-enter the fray.

"It really only works well when it's the beginning of one season and the end of another," said Deanna Kory, a senior vice president at Corcoran. "You don't want to do anything that would come off as being a trick."

In August, when the market was even slower than normal, Kory pulled about a half-dozen listings. She then re-listed them last month. The properties ranged in price from about $1 million to $3 million, she said. She added that she knows of other brokers who did the same in August and then re-listed them after Labor Day, when they were more likely to get a fresh look. Kory said it is still too early to determine how potential buyers will respond to the re-listings, but she is hopeful.

Putting a unit back in the system after it's been off the market for more than 90 days restarts the clock, so that "time on market" is calculated from the beginning of the new go-round. The freshness makes it more attractive to potential buyers: Most brokerages have separate links on their Web sites leading to the newest listings, making sure that the most recently added properties get extra attention.

In many cases, newly listed properties also generate automatic e-mails to prospective buyers who have signed up to receive information about new sales from a brokerage's Web site.
But even if the hiatus is shorter than 90 days, some brokers have found that a break from the market can still be helpful.

Tracie Hamersley, senior vice president at Citi Habitats, said she took one property off the market for the summer and re-listed it last month. The sellers of the four-bedroom, three-bathroom co-op at 30 Beekman Place had dropped the price once, by nearly $100,000, and were asking $1.799 million.

Earlier this summer, the sellers almost sold the apartment to a buyer who was ready to pay in cash. But the deal fell through at the last minute when the co-op board didn't approve the prospective owner. After that, it felt like a natural time to pull the listing and wait for a new season to begin before restarting the marketing process.

Hamersley noted that she had recently convinced the sellers to drop the price to $1.7 million and said she has seen an increase in inquiries since re-listing the property.

"Any way that we can try to reintroduce it to the market" helps give the property a fresh face, she said. At a recent event held for brokers and buyers, she noted, "Empirically people were reacting to it in the way they would a new listing."

Hamersley took another apartment off the market this summer — a 600-square-foot convertible alcove studio at 201 East 21st Street. But that property has yet to return to the market, since there have been a glut of similar apartments for sale in the same building.

Several of those other studios have, however, recently sold, and Hamersley and the sellers are now thinking about re-listing it.

Every year, the volume of deals tends to fall off in the summer, said Jeff Krantz, vice president of sales and marketing at City Connections Realty.

"If you look back, generally you see listings taken off in summer and put on in fall," he said. This year, he noted, "I wouldn't be surprised if it was happening a bit more."

While Krantz didn't de-list any properties this summer, he said he did recommend that some sellers wait until several weeks after Labor Day to advertise their apartments.

According to a Prudential Douglas Elliman market report put together by Miller Samuel, there were 21.8 percent fewer Manhattan sales in the second quarter of this year than there were during the same time last year.

Sales of Brooklyn properties dropped a more severe 44 percent during that time period, according to Miller Samuel.

The soft sales environment has required some creativity when it comes to making properties stand out to buyers, especially as they remain longer on the market.

Hamersley said she has tried various sales tactics aside from taking listings down and then bringing them back to market with new prices. She has, for example, distributed advertisements to renters rather than just to property owners. And she has put one property up for rent as well as for sale.

The approach appears to be helping. She said she's seen an increase in potential buyer interest since the beginning of last month, despite the overall market turbulence.