How much space do you *really* need?

Plus — I'll hitch a ride in this whale anytime

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  July 29, 2023 • Issue #102 Happy Saturday! This week, we’re discussing tiny homes, what the Fed’s most recent rate hike means for mortgage rates and a house of mythic proportions.

Are tiny homes the future of affordable housing?

Escape/Roy Hawke Bigger is better, right? Not always. For some homebuyers, the allure of having a ton of space — be it a few extra bathrooms or a kitchen worthy of Martha Stewart — has worn thin. Instead, they’re opting for an affordable, compact space that comes with less maintenance and a lot more freedom. Enter the tiny home. These minuscule abodes, once relegated to the architectural fringe (and reality TV fodder) have suddenly become mainstream. Their increased popularity has led to tiny home communities popping up across the country, from North Dakota to New Jersey. Eighty-six percent of Americans surveyed by software and digital service review platform Gitnux said they would live in a tiny home. As a result, the market for these small-footprint homes is expected to increase by nearly 5% between 2022 and 2027. Lower maintenance costs, eco-friendly construction and the ability to move anywhere (the homes have wheels on them) reduce homeownership costs and provide unparalleled flexibility when it comes to changing locations. Dan Dobrowolski, founder of ESCAPE Homes, recently told me that tiny homes can be a perfect choice for modern living because they’re “energy efficient, [and] very green with an incredibly small carbon footprint.” They’re also more affordable than full-sized properties. The average cost of a 186 square foot home lies between $10,000 and $30,000, according to Gitnux. However, location and size matter. For example, a 400-square-foot home offered by ESCAPE Homes currently sells for around $95,000. Even smaller homes can sell for about $50,000. (Though some designs can sell for over $200,000.) The tiny home sector has also played a role in providing alternative housing for the homeless populations in cities across the nation such as Madison, Wisconsin, and Portland, Oregon. For homebuyers eager to simplify their lives, and navigate a housing market where high prices and low inventory are the norm, this just might be the answer. Do any Money Moves readers live in a tiny home? Would you consider moving into one? Let me know at leslie@money.com.

The Average Home Is Now Worth Over $350,000 — an All-Time High

Homebuyers Have Lost $60,000 in Purchasing Power in a Year

The Fed did it again

Getty Images As anticipated, the Federal Reserve announced another 0.25 percentage point rate hike to the federal funds rate this week. With this increase, the fed fund will range between 5.25% and 5.50%, the highest level in 22 years. Fortunately, for most homebuyers hanging in there (meaning, they still want to buy a house), the latest increase isn’t expected to affect mortgage rates all that much. In short, the mortgage market has already priced the Fed hike — plus one more before the end of the year — into its prices. But this week’s rate hike is significant in another sense: Experts believe it marks the potential peak of the central bank’s rate tightening cycle that started in March 2022. And that’s important for the simple reason that interest rates may finally stabilize, giving buyers a chance to prepare for a home purchase without worrying about rates skyrocketing as soon as they find their dream house. There’s one more bright spot to this week’s rate hike, according to Dan Richards, executive vice president of Flyhomes Mortgage. From the beginning, the whole point of these rate hikes was to lower consumer prices without “breaking” the economy — and on that front, the Fed has undeniably succeeded so far. “Just a few months back it looked nearly impossible to get inflation down without triggering a recession and spiking unemployment,” Richards told me in an email. And although inflation is still above the Fed’s target range of 2% (it’s currently at 3%), “it’s a lot closer than anyone thought we’d get without massive job loss,” added Richards.

The Return of Student Loan Payments Could Put the Squeeze on Homebuyers

Listing of the week

Scott Gibson Captain Ahab would love this home Get ready to let your imagination take flight (or submerge, as the case may be) in this custom-built home in Santa Barbara, Calif. Known as the Whale House, for obvious reasons, the property features three bedrooms, 3.5 baths and a spiral staircase that winds through all three of its whimsical stories. A tree-lined interior courtyard occupies the belly of the beast, and a 75-foot-long lap pool leads to a grotto at its tail. The home, built in 1978, sits on half an acre of land near the Santa Barbara Botanical Gardens. Listed by Daniel Carpenter of Sotheby's International Realty, this whale of a home can be yours for the colossal price of $3.25 million. Scott Gibson

‘Til next time, P.S. Have you seen a unique listing on social media I should feature in this newsletter? Or have a question about housing or mortgages you desperately want answered? Let me know on Twitter at @LeslieLCook or via email at leslie@money.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.

Money’s Essential Home Buying Resources: Summer 2023

On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance CompaniesMortgage Refinance Calculator or these refi tips. Key question: How much house can I afford?

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