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affordable housing

Aging in Place, Part 2: Long Term Affordability Considerations in House Design

aging in placeJamie PurnellComment

Smaller houses, lower taxes

This cheerful tiny house became an on site short term rental after hosting us for a few years while we built.

This cheerful tiny house became an on site short term rental after hosting us for a few years while we built.

Over the years, many of us have seen incredible increases in home costs around the country, and in fact, the world as a whole. There are still some places where costs have actually gone the other way, as industries have changed, moved around, etc. but a lot of places seem to have become inexorably (and sometimes alarmingly) more expensive. These changes can occur very quickly and can make for real financial concerns. When you've lived in and loved your home for a long time, to be pushed out by rising property costs seems terribly unfair. Yet it happens. Even if your home is paid off entirely, property taxes never end, and the costs can be substantial. When you're thinking about aging in place rather than resale, upward trends in prices can be a devil in the details.

Incorporate a Rental into your Plans

One of the things we've opted to explore to hedge for this potential is to incorporate a rental into our property. Getaway and weekend rentals have solid demand in our area because it's a vacation town near the water. For the same reason, the likelihood of our property taxes going up in the future is very real. These factors make us feel that a rental is a good investment for us. The nature of a rental might be quite different depending on your location, so this sort of consideration should be a part of your planning stages. Our location is well suited to short term rentals, but other places might better support full time rentals, or even a mixture depending on season. Some areas that might be best suited to incorporating a rental on site (be it an ADU, a mother in law cottage, a separately accessible suite or even an extra room in the home) include locations near natural features that draw visitors, in city locations, seasonally weighted areas (ski towns, lake properties, leaf peeper locations in the NE), areas with colleges get the idea. Some areas might NOT carry a demand for a rental enough to justify the extra costs, so you should weigh that into your planning as well. The old real estate admonition about "location, location, location" is always worth a revisit. Another area worth some thought...if you build rental space into your property plan, will you maintain it yourself or hire on helpers to assist with the cleaning? If so, do spend a little time researching those costs. For example, if you're in a remote location and don't want to do the work yourself, it might strain likelihood that someone will drive a long way for a two hour job once or twice a month. Be sure that your location will support your endeavors from start to finish. Taking an appropriately critical and reasoned approach can help when it comes to this process of cost forecasting.

Smaller Houses can be Dynamic too

Extra space on your property doesn't have to be static endeavor either. It can also be a multi functional space depending on your needs at the time - a one time rental could also be great for a future craft studio, home based business, place for visitors, or even a spot a live in caretaker could occupy if needed. There are potential tax write offs for many of these scenarios that could be useful as well.

Plan for the future

If you do decide your location will support the costs and work associated with maintaining a rental on site, you may find yourself with a lot more financial flexibility when it comes to staying in a home or an area that you love for the long haul. No aging in place plan can really work well without giving finances due thought. I can't think of too many more distressing things about building a dream home than discovering a decade down the line that it's become unaffordable. You might not be able to prevent rising real estate related costs, but you can make decisions along the way that cover your bases. There's a lot of comfort in that.

Tim Sherno: I Want To Build This Small Home But Not For Me, For Everyone Else


The Ladder House

“You have to heat the whole house ‘ya know, not just the rooms you use.” My 16 year old whacks me with a big learning moment. “Same goes for A.C.” (Dang it -he’s right!) (Again.) (This is happening way too often.) That moment was the beginning of this journey. 

Fast forward through a bunch’a learning moments a lot’a research and a heap'a reading a ton’a soul search and just plain searching PLUS something a co-worker said in passing one day and -wammo' the idea of small got big. Huge in fact. HUUUGE. 

What was said in passing? “I don’t think I’ll be able to afford a house until I’m 40.”  The person who said this was 25 at the time. Imagine being 25 and saying that! Imagine being the parent of a 25 year old and hearing that!  

Fact: In 2013 when the average college undergraduate was handed their diploma they were greeted by $30,000 (1) in debt as they left the stage. Congratulations! Welcome to the real world. 

Oh and there’s this: According to the National Association of Colleges and Employers, the average starting salary for the graduating class of 2013 was $45,327 a year. Ouch! Good luck with that. 

Keep in mind that these young folks are paying rent as they pay off their college dept. How much of that rent money are they ever going to see again? None of it. Any tax breaks from rent? Nope. It’s worse than that. There are different income to debt ratios used to qualify for a home loan -none of them exactly favorable to the income debt ratio described above. (Banker: How much student debt do you have? Oh! Goodness me! Well ok then, how much do you earn? I’m sorry, could you repeat that? That’s what I thought you said. Here’s a free pen. Have a nice day.”) 

So there's debt and salary and one more fact...  it feels like piling on, but what the heck! Fact: The average home price in the United States in 2013 was$265,000. (3) 

What about that $265k house? Here comes the biggie. According to the U.S. Census Bureau, the average house (or median house, I get the two mixed up all the time) in 2012 was 2,306 square feet and climbing! (4)  I think it’s safe to assume it’s actually larger than 2,306. I won’t quibble. Yes we could have a spirited discussion about wether or not anyone really needs that much house but it would be purely academic because most recent college graduates can’t afford that much house so the debate would be like arguing over riding english or western on a unicorn. (I’d say western, that’d be cool!) 

Things have changed. I bought my first house in my 20’s and it endures as the single best financial decision I’ve ever made. It started me on my way, saved me money on my taxes every year and actually made me money when I cashed in the equity earned by good old #1 to buy #2, and #3 and so on. The American dream looks like a house but in reality it’s not a house at all, it’s a ladder. A ladder that helps young people climb into the middle class, save money and years from now retire.  

The problem is that the lowest rung on the ladder is out of reach for too many young people just starting out. 

Previous generations graduated from college and started saving to reach that lowest rung, but that’s not what’s happening now. Now recent grads are using what could be home-downpayment-money to pay off existing college debt while at the same time pouring money down the drain in rent. “I won’t be able to afford a house until I’m 40.” (Oh, I get it now.) (6) 

Simply put; students are graduating with higher debt, starting salaries haven’t kept pace to help balance that debt and houses are bigger and cost more. 

There’s only one way out of this mess and the best part is, it comes with a lot of upside.

If you can’t make the budget fit the house then make the house fit the budget. In other words, create a new lower reachable rung on the housing ladder. That’s the idea behind The Ladder House. A house designed to be affordable, designed to be beautiful and inviting, and one of the biggest design features isn’t visible in the plans. What is it? 

Drumroll. Flash of light. The answer is: a mortgage. (Blink) (Crickets) Mortgage? Boring. Yes, but follow along. Financing a home with a traditional mortgage comes with a several financial benefits (a.k.a. money bennies.) Like what? The mortgage interest deduction, a financial vehicle to build credit, equity and the promise of a return on investment. Hmm, not so boring. The Ladder House is a permanent home and so it’s eligible for a mortgage with all the money bennies included. But there’s more.

The design itself features two private bedroom floors (top and bottom) each with a full bathroom. Between the private bedroom floors is a shared living space with a full kitchen. The three-floor plan creates the option for an occupant/owner to have a renter who helps further reduce monthly out of pocket expenses.  

And because the house is small and well insulated energy costs are squeezed down from slurps to sips.  

Now include state of the art electronics that allow all lighting, appliances, heating and cooling, everything to be operated and adjusted with an app and you end up with a house that serves people, not the other way around. 

Turning a house into a home. The concept is exciting, but that doesn’t mean anything if the house itself isn’t enticing. The good news —just look at it! The Ladder House is a knock-out. Ample natural light, space planning that apportions square footage according to use not tradition, a clever kitchen that doubles as home base, lighting throughout the house that creates different mood/use zones. It’s worth saying again, “a house that serves people, not the other way around.”

Now consider the additional savings that come from building multiple units on a housing development scale —the result is a real, viable, brand new lower rung on that ladder that leads to the American Dream. A community of Ladder Homes. 

To share a vision you have to have something to show people and that’s the immediate goal of The Ladder House.  Build one. Put people in it. Let other people see people living in it. Let those other people go back to their bosses and investors and tell them what they’ve seen and hopefully get one of those investors to work with a forward thinking bank and create the first community of homes designed to help young people reach the American Dream. 

I offer heartfelt thanks to Shawn Dehner, he’s the guy who designed The Ladder House from the basement up. (7) Additional applause for Shawn for creating and hosting this website to help advance the small-house movement. (8) Finally a full-on standing ovation for Shawn for making designs available for free. 

I want to believe that 20 years from now small starter homes will be everywhere and recent grads and recent retirees will live side by side and enjoying the benefits of smaller living. When that day comes the only question left to ask will be, “What took us so long?”  

That will be then, this is now and someone has to be first.  If you’re reading this then you’re already part of this movement, heck, you may be considering re-sizing (right-sizing) your life. (9) People say it’s liberating. I’ll let you know. Thanks for reading. Good luck building. 


FOOTNOTES. (Footnotes?) Yes, footnotes!! 

(1) Look it up yourself, there are tons of sources on this one. 

(2) National Association of Colleges and Employers website.

(3) U.S. Census Bureau.   

(4) More Census Bureau. 

(5) Oh right! Retirement. Imagine how much easier retirement would be if it included the option of a smaller more affordable, more efficient, lower maintenance house? 

(6) And keep in mind it’s the same problem for young people who don’t go to college. And single moms or dads. And the newly divorced. Or widowed. 

(7) Shawn is the guy who designed all the houses on this site. He’s talented. Nice. And a visionary. 

(8) Don’t say ‘tiny-house,’ they're on wheels and can’t be mortgaged. I say ‘right-sized-house.’

(9) I tend to write a lot. Sorry, but it’s been building up in me for a while.