Why a Not-So-Big House Is Sounding Rather Grand
|
TOOLBOX
   Resize
|
Ten years ago, architect Sarah Susanka published a coffee table book called "The Not So Big House." The premise of the book was that we should build smaller but nicer. It was a counterstatement to the McMansions sprouting up in developments all over the country, with their double-height ceilings, vast basements and $100,000 kitchens.
Back in 1998, it seemed like a quaint idea. But Susanka clearly touched a nerve, as her "Not So Big" idea has grown into a multimillion-dollar franchise, with several books and a successful Web site. Just in time for the 10-year anniversary, that first book has been expanded and re-released.
Today, as families are struggling to pay the heating and cleaning bills for those double-height ceilings, and as hundreds of thousands of McMansions are falling into foreclosure, building smaller and cheaper seems like a really smart idea. Too bad it's so hard to sell your house these days, or you might just try it.
One of the problems with a big house is that so many other expenses rise along with the square footage. It's very difficult to live cheaply in a huge house.
First, along with the bigger monthly mortgage payments, you have higher real estate taxes and insurance premiums. If you live in a flood plain (and that affects more and more people as maps are being revised to reflect global climate change), you also have to pay more for flood insurance. (Federal flood insurance is limited to $250,000; you have to buy private insurance to get more coverage.)
More square footage means bigger energy bills. Even if you turn the thermostat a few degrees up in summer and down in winter, you have that much more space to heat and cool. And while some houses are built with energy-efficient windows and other eco-friendly amenities, it's still a lot of space to heat and cool.
You also have to furnish, clean and maintain the space. So there might be an extra 1,000 square feet of floor to polish or re-carpet. You have more walls to wallpaper or paint, more trim to touch up. More bathrooms to clean, more bathroom tile to grout. More light bulbs to replace.
If you have a large garden, you've got more yardwork. If you hire a gardener, you might be charged $50 a week to cut the grass rather than $25 for a smaller yard. A long driveway may cost $150 to clear after a snowstorm, whereas you might be charged $75 for a short driveway (or you could do it yourself).
And then there are extra charges for people who live in expensive homes in truly swanky neighborhoods.
If you live in a top neighborhood, it feels as if everyone charges more to perform basic services. Your housekeeper might tack on an extra $10 per week, and a contractor might add another 10 percent to the price of building out your kitchen. If you have doormen, you will tip them more each year if you live in a fancy building than if you lived in a less expensive building. Stores in fancy neighborhoods often sell more expensive goods, the restaurants are more expensive, and so on. Think about the holidays: If you live in a fancier neighborhood, you might feel pressured to do more elaborate holiday decorations.
But in times of economic stress, the idea of building smaller but nicer doesn't seem good enough. The financial crisis seems to require an even bigger idea. How about this: Build for cash. That's right -- do without a mortgage entirely.
There have been stories in the media recently about people building extremely small homes, some just 65 to 100 square feet. That's right. An entire house that is six feet wide by 10 feet long, or smaller than the average master bathroom. The good news is that these houses, which have toilets, showers and a kitchen, cost less than $15,000 to build. And many are portable, so they can be hitched up to a truck and driven to the next destination. (So you save on hotel costs as well.)
In a recent CNN story, one home builder showed the 65-square-foot house he built for himself, but it wasn't big enough for his wife. So, he's building her a 250-square foot house for herself.
In building a small house that costs less than $1,500 per year in which to live, the owner said he had found a new business: Already he has built 11 tiny homes for other people who want to live cheaply and mortgage-free.
Q: My 84-year-old father (who is not in great health) bought into a senior-living community several weeks ago, just before the market crash. He must pay the balance of what he owes, about $200,000, by the end of his first month, which is within the week.
He has all of his investments and his IRA in the stock market. They were worth about $1 million but are now worth 40 percent less. He also has a condominium in Florida on the market for $90,000 but will probably not sell anytime soon.
He is reluctant to draw from his portfolio now, at its lowest point ever, but needs to come up with this cash.
I have asked him if we should use my existing home-equity line to help bide some time to wait for the market to recover. I have a $100,000 line of credit from which I would probably draw about $50,000 for his purchase. He would then pay down my line of credit monthly. Is this a bad idea?
A: It's a generous offer, but before you tap into your existing home-equity line of credit, I think your father should go back to the senior-living community and ask whether he can have more time to come up with what he owes. Surely, he is not the only retiree who has watched his net worth plummet 40 percent. Liquidating his investments this week probably wouldn't be a great idea.
He should see if the community could be more flexible and create payment terms that work better for him. If the community cannot be flexible, then he should tap whatever resources he has. If you can draw down $50,000 or more on your home-equity line of credit, that would help.
It would put your credit in danger if your father doesn't pay this bill on time each month and you can't afford to make the payments. But as long as your father can afford the payments and is willing to make them, that would be fine.
He will need to adjust his will, however, so that if the debt is not repaid before he dies, his estate will pay off your credit line as part of the bills owed before funds are distributed to his heirs. Your father could also sign a promissory note agreeing to repay you the money you used from your credit line. You should talk to him about how to document this loan so it makes sense to his future executor and his other heirs.
Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is "100 Questions Every First-Time Home Buyer Should Ask." Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites, http:/
Copyright 2008 Ilyce R. Glink and Samuel J. Tamkin; Distributed by Tribune Media Services