Does Small Equal Cheap?

Posted July 1st, 2009 by Anne Lupton and filed in Issue 8: Bureaucracy/Regs.

It is common in our culture to see real estate as an investment. Most homes are a very high ticket item that commonly take half a lifetime to pay for. When that much time and money is “invested” in a house it’s understandable that such homeowners would want to protect it, at least keeping the value steady with inflation or improving the value with remodeling projects.

One factor that homeowners see as out of their control (which may be actual or perceived) is what happens to the properties surrounding their home, which can have a profound impact– if not sheer saleability– on real estate values. This fear of sliding property values is a motivating force for homeowners to attempt to control zoning laws in their neighborhood and community. And one common perception of a factor that causes property values to deteriorate is square footage of neighboring houses, ie. smaller homes are worth less and will cause larger homes they are next to be worth less also. Or, rather, that is the common perception.

But, witness those homes designed by visionary architects like Sarah Susanka and Ross Chapin. And, since meeting her at the Midwest Renewable Energy Fair, I have since found out about Sonya Newenhouse and her Casa Kit Homes. sonya-newenhouse-1Their philosophy is to build small, but rich with detail. I would hardly consider these homes to be cheap and cheesy. Their beauty and quality of construction enhance, not denigrate, the value of the neighborhood.

Those people in control of zoning laws probably feel there’s no way to control the value of a property/neighborhood , and future house that’s built on it, than by controlling its size. They supposedly have no control over the quality of craftsmanship, so the only fall-back is to lock in minimum square footage. I’m sure another motivating factor in keeping house sizes larger is to make sure the tax base is kept high. They can charge more in property tax for a 3000 s.f. house than a 1000 s.f. one. More property taxes coming in help to “grease the wheels” of running a city or municipality.

In new developments the primary motivation is the bottom line of the developer and builder(s). If they can sell a 2500 s.f. house for 20% more than an 1800 s.f., yet it costs them only 10% more to add on those 700 more square feet, it becomes a no-brainer to push the sale of a larger home. I’m sure very little mention is made during the sales process of future property taxes, heating and cooling bills, and cost of upkeep. The benefits of having those extra square feet is emphasized over the long-term costs. Multiply that extra profit margin by the 30-80 homes that are in a typical new development and you end up with a very hefty profit. Business as usual, right?

Thankfully, there is an emerging paradigm shift in how to do business: the triple bottom line… looking out for people, planet, then profits. And how to run local governments: The Natural Step. revelations-house-mrea-1 I am far from being an expert in either one of these emerging philosophies, but have recently become aware of this growing trend. It’s encouraging to see there are those among the human race that still weigh their heart and soul over their pocketbook.

For the individual seeking to build a smaller house it can be an impossible battle going against the common perceptions that small equals cheap. That’s why so many in this movement to live small and light choose to live away from encumbering zoning laws and prying neighbors. Sometimes the good fight is too much. I applaud those individuals and families who are courageous to stick to their ideals in seeking simpler living both in urban and rural areas. If you’re among those who seek this path there are many others like you out there. The Internet has become a tremendous tool for connecting those people of similar philosophies. If you want to continue the conversation on the challenges of living small and light there are many groups you can join:

The Small House Society
Tiny Houses
Little Houses
Cheap Shelters
Simple Life Connections
Shipping Container Homes
Frugal Rural Living
Underground House
Seattle Small Homes
Fiddle Sticks Small Spaces
Low Cost Community Housing
Tiny Home Collective
The Small Home Design-Build Forum

And of course all the websites and blogs by the contributors here… can’t forget that one.

There is always the option of filing for a variance permit when you’re seeking to build a home of a smaller square footage than your neighborhood allows. Be prepared with extensives plans, pictures, and testimonials from other people who have built small, but high-quality, homes. You will sit before the county and city government officials in charge of hearing your case. You will feel very much like you’re on trial for thinking outside the box. Bringing all your materials together and doing a dry-run presentation before your friends and family might not be a bad idea, either. The more prepared you are the better your chances will be of having the board approve your variance. It’s definitely worth asking. And when you win make sure to tell us all about it to inspire others to do the same… well, even if you don’t win it can be a great learning experience for yourself and others.

3 Responses to “Does Small Equal Cheap?”

  1. AnonNo Gravatar says:

    Actually, there are studies and information out there that if you look for it you will find that the builders wish to build smaller homes. There is this tricky bit about city zoning. I worked on a study in my local metro area that compared zoning codes for a number of 1st to 3rd ring suburbs. What was found was so shocking the developers funding the study were threatened by the cities being studied that they would never pull another permit or get another zoning approval passed in that city, where they owned land or had options on land, if the study were published in it’s original format. So it got buried.

    Basically, add up minimum lot size, minimum setback allowances, minimum square footage for a house and you are looking at a subtle but effective method of gaining larger more expensive housing. A larger home brings in more tax revenue to a city than the equivalent square footage amongst three smaller homes. In addition, that larger home brings one family with two children versus three families with 6 children in total. That means fewer public services are needed in relation to the tax base.

    Add this scenario to another calculation. Most developers will tell you that their largest expense in building a home in the 2000-2007 era is the cost of land. Not the cost of materials for a house. So from a builder’s point of view you either need to maximize the use of the land with an oversized home, which brings a larger margin, or lots of small homes with smaller margins added together to get the same margin overall. The land cost is the same either way. The niche that was not being filled was the “lots of smaller homes” and there were a number of builders/developers that I knew that struggled to get enough homes on a plot of land through zoning/building to make the business work. The problem that they constantly ran into was that if they built to the density level (read smaller homes on smaller plots) of the original metro area they couldn’t meet setback requirements and so literally couldn’t build a whole subdivision in the “smaller house” design that they KNEW would sell to empty nesters and the growing baby boomer population.

    You can continue to blame the builders/developers and I agree they participated in the system but you really might want to turn your ire towards your local planning and zoning departments who hold altogether too much power with accountability towards the NIMBYs first and foremost.

    Thanks for a good article. Keep up the great work and know that the issue is multifaceted.

  2. AnneNo Gravatar says:

    I hope my article didn’t come off as too slanted against the average general contractor/builder. I do apologize. Are you one? I wholeheartedly agree that local government carries more power to influence housing size than a GC. Builders are, after all, business people that seek to sell their product to the market that will pay. And there is becoming more of a market for smaller homes, in every demographic group. Hurray! And thank goodness for builders like Mark Morgen at BearPaw Construction who regularly talk homeowners into smaller square footages (I’ve been to a couple of his seminars at the MREA fair).

    Government doesn’t operate on a business model, instead seeking to maintain or increase it’s tax base (it’s source of income) whenever possible. Although, theoretically the different parties keep a balance of political views on taxation and spending… theoretically. When issues of housing square footage and setbacks is addressed with local government I’m sure the bottom line is to seek to maintain the highest possible tax base over issues of community cohesiveness, even though there are many examples of new-ish housing developments that cater to small & cozy & cooperative that turn out to be better for the community. It’s very difficult for governments to tax community cohesiveness/happiness. Although I’d argue that such costly factors as crime, high school dropout rates, teen pregnancy, and unemployment are good metrics to measure anti-happiness in a community.

    I really need to read The Natural Step, however dry it may be, to really get a handle on the details of implementing ways to grow community. I fully expect the paradigm of local government to shift to advocating for smaller homes to take 50-100 years. I wish it were quicker, but lasting change is better than fleeting change.

  3. AnonNo Gravatar says:

    No, I’m not a builder. Not unless you consider my cob hut of 200 ft2 equating to me being a builder. I worked in the industry in the past. I worked on that particular study 10 years ago. It is sad, nay, frustrating, that everyone directs their ire towards the builders. You have no control over them beyond how you spend your money. Their market research impacts their business decisions to a point but the larger impact is at the zoning and planning level and very few people are willing to take up the fight to get those laws changed. Most of the enviro, small house movement, etc etc. focus their frustrations on the builders. If it were possible to build small homes and make money there would be an entrepreneur in the market doing just that. The issue is at the city/county level. That is what people need to be complaining about. The rest is just a waste of breath.

    The original lawsuit that established county/city/municipal ability to regulate on the basis of building type, size, etc. had one very important line of reasoning:

    paraphrased: shall regulate for the health, safety and well-being of it’s citizens.

    The powers that they now use are quite far from that original level of regulation.

    If you want to know about changing codes and about regulation issues you should look to the strawbale and cob communities. The vast majority of the people building such homes have quite a bit of experience with codes and regulations that do not fit their purposes. You’ll learn quicker about community from them than from reading the natural step, while good, is a bunch of la la dream type stuff. Not very concrete. I believe in the concrete and starting with reality. Join those forums and read the back “issues” and you’ll have a better education than you can get many other places.

    And really, I do wish you the best of luck. Fighting this fight publicly, out in the open, while dreaming and living your life is something to be admired. Which I do. I’ve done that in the past and life intervened. So I know how much it takes. Best of luck and KEEP WRITING!