Dear Dave,
What is your opinion on paying cash for a “tiny house”?
Wes
Dear Wes,
This may be a really un-hip or un-cool thing to say, but I wouldn’t buy a tiny house at all. Paying cash for something like that might make the move smarter, but that still doesn’t mean it’s a smart choice.
Now, don’t take what I’m saying the wrong way. I don’t have a problem with people who build tiny houses or buy them. My problem with these things is that there’s no track record on them. There’s also a pretty good chance they’re going to be just a fad. Another problem is that you’d have a really small market when it comes time to sell your tiny house. In other words, they probably won’t go up in value like a traditional home. They may actually lose value over the years.
There’s a thing in economics called the supply-demand curve, and from what I’ve seen tiny houses also have a tiny demand and pretty narrow market appeal. Their appeal seems to be mostly for early adopters and people who think they’ll never be able to afford a house. That means they’re not going to have broad appeal when you get ready to sell them, either. And that creates a problem.
I could be wrong, though. I mean, if enough people buy tiny houses and they become a real part of our culture, then maybe they’ll do okay. But right now it’s an unproven product line and an unproven concept. So I wouldn’t buy a tiny house. Honestly, I wouldn’t even buy one at half of its current value because I’d be afraid it would drop to a fourth of its value. There’s just no proven record at this point of these things going up in value.
—Dave
Dave Ramsey has five New York Times best-selling books. “The Dave Ramsey Show” is heard by more than 8.5 million listeners each week on more than 550 radio stations. Ramsey’s latest project, EveryDollar, is a free online budget tool.
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