Tiny Homes Won’t Fix the Housing Crisis

To put it in context, this is a Canadian magazine, and here in Canada the housing market is just absolutely insanely irrational. There has been no downwards housing price "correction" since the early 90s. The 2008 bubble-pop never happened here. Interest rates remain at record lows and the COVID-19 crisis seems to have led to massive _increase_ in housing prices rather than a decrease. It's a huge distorted market with real estate, construction, and renovations etc. being the largest part of our Ontario provincial economy with primary industry, etc. declining every year. It all feels just insane.

My little hobby farm has probably "doubled" in the 8.5 years I've owned it, but I don't feel great about it -- where will my kids live? Where will I retire to? When will this all blow up in our faces? My 70 year old father in law would love to retire, and sell his place and somehow reduce his costs and move closer to us... but my area has become completely unaffordable as Toronto money is suddenly blowing up the market out here with bidding wars and no-conditions offers and the like, stuff we never saw before.

So yeah in that context I can't even imagine being working class and trying to make a go of it. It was bad before, but it is only getting worse. Rents are absolutely mental even in outlying areas that should be cheap.

And most importantly given that these outlying areas around Toronto (Hamilton, Oshawa, London, Cambridge, Woodstock etc.) are often where the few remaining manufacturing sector jobs are, what happens to the manufacturing sector when their employees can no longer afford housing near the factory?

I work as a structural engineer and write a newsletter about, among other things, technology for lowering construction costs.

A tiny house will be cheaper than conventional housing by virtue of being a lot smaller (building costs are usually expressed per square foot or square meter). But as the article points out, these are usually built with fairly high end finishes (wood paneling, granite counters, etc) - their cost per unit area is actually somewhat high. Actual low-cost construction, like the sort used on mobile homes, eliminates most of these expensive finishes, because they’re a major cost driver.

And in the US at least, a house not permanently attached to land has to be financed as property, like a car, rather than real estate, which means the tiny houses attached to trailers will be financed at a much higher interest rate than a traditional mortgage.

Generally I think these are more of a niche lifestyle product, a mobile home for people who don’t want to buy a mobile home, more than any sort of affordable housing solution.

The idea that tiny homes are the solution to the housing crisis ignores the fact that the housing crisis is really a land-in-desirable-places crisis, and a result of a natural pyramid scheme which has emerged due to population growth and increasing popularity of cities (amplified by low interest rates). Tiny houses don't fix that problem.

The housing crisis is really a people refuse to leave Toronto and Vancouver crisis, no matter how little they make. It is also a refusal to live in anything without a lawn.

Imagine if San Francisco had wages which were often lower than Cleveland for many jobs, but had the same housing prices. That is the state of Toronto and Vancouver. Incomes there are lower than other Canadian cities.

The other issue is that Canadians are very used to lots and lots of space. 500 sqft per person kind of space. Lots of lawn for the kids to run around on kind of space.

Combine a refusal of people to leave those two cities and the desire for detached spread out housing, and you get this.

Wages can't rise either as there are tons of people who are willing to stay in Toronto no matter how relatively poorer they are as a result. In an economically rational market, people would leave Toronto over the costs and salaries would rise (like they have in San Francisco, where people have left to Seattle and Denver and remote work over pay not going very far). That is not happening in any meaningful quantity.

I guess I never realized that tiny homes were supposed to fix the housing crisis? I'm not sure this article really said that they were either. Anyways, I think this is the main idea of the article:

"The imagined owners of tiny homes, in other words, are likely childless and able-bodied, and they likely have at least ten grand to spare (plus, perhaps, the time or resources to build a home) and minimal familial responsibilities. If housing justice is truly our goal, then tiny living leaves a large contingent of people behind."

We need to start building tiny soviet style apartments: https://www.youtube.com/watch?v=CQgaCwrQQy8

Add to that some "coffin" motels. Once people have a place to sleep near a place they can work they can start moving upwards.

My mom grew up in one, and I stayed with my grandma in one every time I visited. Sure, I slept on the kitchen floor, but it's not that bad.

Ah, the difference between Europe and America.

Here, a 300-400sqft single-bedroom apartmant would be considered standard and suitable for a single or 2-person household with median income. A two-bedroom 500-600 sqft apt would be considered just fine for most families with 1 or two kids (esp. if those kids are same gender or while they're small). Anything above that gets you into upper-middle class or above. Alternatively, a 4-member family with two minimum incomes could get by with 400sqft (it'd be cramped but wouldn't be considered outrageously small).

The difference is also that these are almost exclusively in an apartment building, where your neighbours help insulate you from the elements, resulting in lower heating/cooling costs.

I'm amazed whenever I read an article mentioning home sizes in the States (or in this case Canada) and have to double-check whether my sqft<->m2 conversion is okay because I can't believe how much more room is considered "normal" over there.

Tiny homes wouldn't solve the housing crises, but looking across the pond, I'm thinking it'd still be a boon for low-wage earners. I know I'd rather be in my own 200sqft than have to pay off huge mortgage or rent a 600sqft of "wasted" space.

Even if I prefer or have to rent, smaller units would be cheaper, while still more expensive per sqft, in theory netting the landlord more profit for the same apt. complex. Sounds like a win/win, what am I missing?

I lived in a Tiny House in Florida while I was on contract work. The rent was free and came with the job, and at first it was pretty cool, but then it quickly was not. The main issue is that to live and work with any level of efficiency requires you pal everything. Vacuum? Need a plan. Cooking dinner, need a plan. It’s like trying to find a charger for a Tesla Roadster in the first few years - everything required careful planning. After the contract, I moved into a hotel and it was instantly better.

This seems to be Canada focus, but the US seems very similar with affordability issues in major cities. Everything I am seeing an hearing about housing cost in the US related to land, labor and lumber. Cost per sqft is crazy high and getting higher, builders would be able to build more but there just isn't enough highly qualified labor in the US, and the shutdown is preventing lumber from being milled. We cannot do anything about Covid lumber shortage or the land shortage but we can do something about the Labor shortage. When I was in high school, there were shop classes, and home building classes that focused on the building trades. These classes were in the processed of being phased out to focus on students going to college and STEM. The US education system needs to focus on being an on ramp for College and Trade-schools and stop selling on students short.

The best solution to the housing crisis ever discovered thus far is widespread remote work. This allows people who don’t want to live in major cities the ability to live anywhere, reducing the cost for those that do want to live in a city.

The fact that a country as large and sparse as Canada has to contemplate tiny homes to address housing is ridiculous. Never mind that the speculative construction market has been churning out tiny condo equivalents.

I lived in _much_ denser cities with their own speculative real estate market, but the developers haven't resorted to "optimizing" units as aggressively as the micro-condos I've seen in Toronto. The one bedrooms / studios are about as large as apartments in Beijing / Shanghai. But 2-3 bedrooms new constructions feel dramatically smaller. Being Canada, these units will negatively impact generations.

Imo, the fix for the housing crisis is for governments to invest in the economies of small towns and cities with lots of land that can be built on or property that is vacant. Everybody wants to live in sf, new york, seattle, etc. because they are where the jobs are and that also attracts culture. If state governments could give grants or tax credits for companies to start or expand out to other parts of states that are under utilized, this could cause people to move to those areas and relieve pressure on the overpopulated areas.

I don't have a clue what any solution looks like or even what problem is trying to be solved.

Growing up in the USA home "ownership" is always touted as an investment but for example in Japan, it's often more like buying a car. The moment you buy it it's a used house and the price goes down just like a car would. The point being home ownership is viewed differently.

Also, the recent episode of the Flash Forward podcast pondered the idea of guaranteed housing. They complained that 60% of people on minimum wage can't afford a 2 bedroom apartment in the USA but coming from Tokyo my first thought was "why is the standard a 2 bedroom apartment?" There are 100s of thousands of studio apartments all around Tokyo and it's normal to live in one. From $400 a month and up. I'm sure Hong Kong it's even more normal.

Is there any significant number of professionals who think tiny homes are a solution to anything? I am more under the impression that the people touting these were mainly arm-chair urban planners, more motivated by pinterest than safe and efficient resource allocation. Apartments are safer, cheaper, more efficient, easier to build, etc.

Ultimate solution is a mind machine unification and living on a server farm travelling through the cosmos

Tiny houses might not, but a wholesale decommodification of housing could.

We shouldn't be trying to price housing on the market, we should be pricing housing and land based on how well it houses people.

If we started taxing the land rather than the land plus improvements and gave a credit for every housing unit I guarantee you we'd see parking lots turned into housing.

Other approaches include: removing minimum parking requirements, rent control, strong tenants unions, stronger eviction protections, publishing landlord statistics on eviction rates, low rise distributed public housing with protected operating budgets, right to buy laws, prohibitions or increased regulations around short term rentals, support for community land trusts, up zoning, tax incentives for increasing the affordable housing supply, and yes, mother in law apartments, cottages, and other permissive zoning for additional housing can help too.

There are very tractable ways we can chip away at this problem at a local and regional way. We shouldn't be speculating on housing as an asset, we should be ensuring everyone has a place to live.

I was actually hoping for some actual production of tiny homes to bring the price down for a mass buy of single and couples housing. Instead we have extended family living in the same home during a pandemic with predictable results.

The article is about "Tiny Homes ALONE Won't fix the Housing Crisis".

Of course, trivialized solutions don't fix any realworld problems, so this article doesn't provide much light...

When you have a city, where every surface is built, can you still say that there is a housing crisis? Maybe now, it is time to talk about real problems ?

I don’t believe that there is a shortage of homes. The demand we are seeing is driven by investment. There are many more empty and low-use properties out there than most would suspect.

Hear me out.

Reported vacancy rates (the ones you’ll hear quoted in the media) are usually discovered by asking real estate agencies how many of the properties on their books are currently available to rent.

Actual empty residences are harder to quantify. There are two studies I’m aware of that attempt to do this. In Melbourne, Australia (one of the ‘anglo’ places that suffers from this rampant property investment problem) there is the Speculative Vacancies Report[0] published each year by Prosper Australia. They determine which properties are empty using data from the water utilities companies. In the UK there is this study[1] where council data is used to determine the number of ‘Low Use Properties’ (LUP’s) in various jurisdictions.

From the first study (Melbourne), I remember one interesting finding was that the higher the capital gains in an area, the higher the vacancy rate tended to be. And the vacancy rates were sometimes very high. I remember them being over 25% in Docklands (Melbourne’s Canary Wharf) and around 10% in many other areas maybe five years ago. Completely unintuitive. Surely those places should have a relatively low rate of empty properties if they are such desirable places to live (as the rapidly rising prices suggest).

From the second study (UK), it’s clear that the higher the value of properties in an area, the higher the number of LUP’s.

Curious about what the case might be in New Zealand (where the property market is similar - if not worse - than places like Canada, the UK, and Australia) I went looking for statistics. I found two that are relevant. The number of households and the number of private dwellings. Obviously every household must have a dwelling, so the difference should give an indication of the situation. This data goes back to the mid 90s. Turns out that back then (when house prices were sane) the difference was around 3.5%. Today it is more like 7%. Those are national averages. From the studies mentioned above I expect that the percentage of empty and low use properties would be highest in the major cities (where prices and capital gains are highest). I wouldn’t be surprised if 10% of properties in the cities are empty or getting very little use.

I used to work as a postie (mailman). I saw firsthand how many houses were empty. The wealthiest streets always had the most (owners were away on holiday for 6 months or a year at a time, living elsewhere while renovating or planning to ‘flip’, the property was on the market, it was a second home, etc). In one particularly nice street, over 25% of the houses didn’t have residents at any one time.

This housing affordability issue doesn’t need a supply side solution. A speculative boom creates extra demand. The solution is to make property a less attractive investment.

[0] https://www.prosper.org.au/wp-content/uploads/2019/04/Specul... [1] https://theodi.org/event/friday-lunchtime-lecture-empty-home...

Edit: A holiday home used to be an expense. Now it's an investment. That's a problem.

There is no housing crisis. U.S. has more than plenty of good quality, large, and more than affordable houses (many of them are probably beyond repair but this is a consequence of their abundance and lack of demand).

Housing crisis is only about the very few already overpopulated spots being hyper-attractive for people to move in because that's where opportunities are. There is no way to "fix" this because even if housing is by some magic affordable, so many people will flock there that commute times will increase beyond survivability and people will pay with their time instead of money (that works in exactly the same way as home prices rise when mortgage fall: this is a free market).

If you want to fix it, you need to stop these places from being attractive, or prevent people from moving. Both sound like a Soviet Union-style dystopia.

It's better to just concede to the fact that housing in attractive areas is a scarce resource for which there is always a competition and most people who are there, simply shouldn't be there, them being there is just a result of their Dunning-Kruger effect.

There is a middle ground of "regulated rental" but this is precisely a compromise, a middle ground between buying and market renting. Buying a place in attractive location is winning a lottery: if place is ALREADY attractive, the rental yield there is low because price to buy is sky high due to countless trillions of printed money sloshing around, so it makes no sense buying, it only makes sense buying before it gets attractive, but it can't be predicted. Regulated rental gives you same opportunity: rent now and if in 30 years the place became attractive, you are renting at a small fraction of real cost, you won. This is not a solution, it is just a step halfway to the Soviet Union where the Party decided where you should live.

When someone claims many reasons why a thing is good or bad, the actual reason is often unstated.

“Tiny homes are bad because I like the idea of socialist communes and people won’t give them a try if they can have their own house”