Benefits of Building Small Houses

  MONEY

Consider the two hypothetical home purchase scenarios.

HOME 1 - 2,000 sf @ $150/sf

  • Purchase price: $300,000
  • Down payment (20%): $60,000
  • Loan amount: $240,000
  • Loan terms & rate: 30 years @ 5%
  • Monthly payment: $1500 +/- (principle, interest, taxes, etc.)
  • Utilities & maintenance: $200 ($.10/sf per month average)
  • Total: $1700/mo for 30 years

HOME 2 - 500 sf @ $250/sf*

  • Purchase price: $125,000
  • Down payment (same as above): $60,000
  • Loan amount: $65,000
  • Loan terms & rate: 30 years @ 5%
  • Monthly payment: $400 +/- (principle, interest, taxes, etc.)
  • Utilities & maintenance: $50 ($.10/sf per month average)
  • Total: $450/mo for 30 years

* Smaller homes are more expensive per SF to build.

$1700 vs. $450 per month.  $612,000 vs. $162,000 Over the life of the loan.  $450,000 difference.  If we're willing to reconsider the want vs. need equation, the financial impact could be life changing.  Early payoff seems like an achievable goal, which would further decreasing overall housing costs.

  TIME

Reduced expenses means less work time is required to generate the income necessary to pay them.  Reduced home size means less time is required for cleaning, maintenance and repair.  Less time dedicated to housing means more time for other things.  What would you do with the extra time?

  RESOURCES

  • Smaller homes consume fewer resources.
    • Building materials for initial construction and future maintenance and repair.
    • Power to heat and cool.
    • Water and cleaning agents.
  • Less land is disturbed during construction which decreases ecological impact.
  • Smaller footprint means less land covered by impervious surfaces.  Which helps limit storm water runoff and leaves more ground surface available for landscape and re-absorption.
  • Sustainable building practices and materials can increase resource conservation and decrease maintenance costs.
  • Renewable energy systems like solar and water catchment can take resource conservation a step further.