Americans Seen Living Large in 'Micro Homes'

Aug. 26, 2006 — -- Libby Crawley knew she wanted to downsize from her 2,700-square-foot house but she never thought she'd end up with something as small as she did -- 700 square feet.

"When I first drove over and looked at it, I thought it was way too small," she says. "There was no way I could fit into this house."

To her surprise she did fit. The space is efficiently organized, adequate and functional. And the tiny home held another surprise.

"Heating and air," she says. "Actually, my utility costs are probably less than $100, year 'round."

At the height of the real estate boom, about nine of Crawley's houses could have fit in the big homes -- the "McMansions" -- that were the hottest on the market. Those homes were priced in the millions and ran to 7,000 or 8,000 square feet. Now, they are languishing on the market, and homes half that size are in demand. But the next trend may be in even smaller homes.

Only a tiny fraction of the new houses being built are micro homes. But with median new home prices still $230,000, builders like Tim Russell of V2 World in Phoenix think they are at the beginning of a trend in affordable housing.

"Although we have historically been lower than the median price of homes in America," Russell says of the Phoenix market, "over the last four years our prices have increased two- and three-fold."

Russell delivers a 720-square-foot, energy-efficient home, complete with furniture and appliances, for $125,000 to $150,000.

And it's not just in Phoenix: Micro homes are being built all over the country. They range from as few as 450 square feet to 2,200 square feet. They are being built on land that was once too small to accommodate a home, land that is often close to a city center.