Shrinkage

When I was a kid and I couldn’t fall sleep right away, I would imagine wonderful spaces designed to my specs.

The one that I remember best was a secret door under our stairwell.

It opened up into a sprawling subterranean playground accessible only by a firehouse ladder.

There was a batting cage. There was a store room packed to the ceiling with candy and snacks. There were arcade games and movie theaters and a bowling lane. There was a pool with a waterslide.

Translating this into my current understanding of how much space stuff takes up, my subterranean layer was probably about 7500 to 8500 ft.² of “rad.”

Many years down the line, and a year after leaving cardiology fellowship and entering into private practice I found myself house hunting for the first time.

Although exactly none of the items in my boyhood imaginary subterranean lair were on our checklist, my wife and I did find that our vision for what our new home should look like expanded ever outwards.

We ended up with a beautiful 1890 Victorian with high ceilings, wood floors, lots of light, and a tastefully updated chefs kitchen. There was a finished basement with a sewing room for my wife and wine cellar for me. There was a fancy front loading washer and dryer conveniently located in a hidden closet in our master bathroom (which also has two sinks and a clawfoot tub.)

The cost was reasonable relative to my salary and we loved the place so we bought it.

And I still love the place.

It’s just that it’s… too much.

Too much empty space waiting to be filled with new purchases that I have no desire to make.

Too many closets and garages and basement nooks to store the detritus of our past unnecessary purchases.

Too many cubic feet of air to efficiently heat in the winter and cool in the summer.

In fact every summer we all religiously move our mattresses down to the basement and camp out together in the cool foundation-insulated air during the hot July and August nights.  And our life is none the worse for having shrunk our living space. In fact it’s kind of cozy.

Which is why now when I close my eyes and imagine my dream house, it has more in common with a MP3 player than a mansion: The smaller the better.

So when I heard Graham Hill’s TED talk about his company: www.lifeedited.com I was intrigued.

Mr. Hill is a gent who made millions of dollars early in the.com bubble and eventually found himself somewhat disillusioned with the lack of happiness that the big purchases and the big spaces that he purchased brought to his life.

He combined this disillusionment with the conventional trappings of wealth with his own entrepreneurial spirit and began developing prototypes of small apartments that packed generous amounts of functional living space into small amounts of actual space through the use of clever design, multi functional furniture, and the editing of the unnecessary.

A brief video of his prototype 400 square-foot New York apartment can (and should) be seen here:

And aside from being a really cool space, the economic benefits of sacrificing square footage, without sacrificing livability are numerous and obvious.

It is easy for me to imagine moving my family of five into an optimized 1000 square-foot living space having seen Hill’s approach to 420 square feet.

And what would the economic benefits of such a “trade down” be?

1. Transforming Current Unneeded Square Footage Into Liquid Equity.

If we were to sell our house today and move into a 1000 square-foot space in the same neighborhood, I estimate we could extract about $4- 500,000 worth of investable money.

(Houses are valued by the square foot, not by the livable square foot. )

It goes without saying that this money could then be invested and allowed to compound on itself thus turbocharging our own (already speedy) journey towards financial independence.

2. Tax savings.

Real estate taxes, like homes, are assessed by the square foot.

All other things being equal this would be a 66% savings in real estate taxes per year. (Not chump change.) This little adjustment would greatly decrease our post financial independence expenses without (I suspect) sacrificing any real happiness.

3. Less maintenance.

Houses are in many ways probabilistic. The more square footage you have , the more things you need, and the more things that can go wrong.

And eventually the things that do go wrong are undoubtably more expensive to fix in a larger house.  (Roofers charge by the square foot too, just like tax assessors and real estate appraisers.)

4. Energy efficiency.

When we turn on our air conditioner, the upstairs of our house laughs at us.

The cold air is a thimbleful of spring water spritzed into a boiling cauldron.

All coolness dissipates, elevates and is neutralized by the heat sink in our rafters. What little coolness stays on the ground level eeks its way out between our floorboards and our windowpanes.

Small spaces, on the other hand, are easy to insulate, cool and heat, often passively.

In addition to being the right thing to do for our planet, this move towards efficiency would also be the right thing to do for our pocketbook.  (Not to mention the temperature in the house would consistently be more comfortable.)

5. Ease of cleaning.

Less square footage means less space to clean. Sweet.

And beyond the personal reasons for thinking about this concept, there are the societal arguments.

I recently heard an excellent interview with the famed bond trader Jeff Gundlach.

He was relatively bearish on new home construction going forward because of the aging of the baby boom generation.

His thinking was that when the boomers sell their homes in the coming years to fund their retirements, this supply will create a glut of old homes on the market, leading to negative price pressure.

The glut will be compounded by the ongoing lack of real wage growth by the majority of Americans.

These are not good dynamics for new homebuilders.

Gundlach argued that the growth within construction will come from the building of multi-generational family homes, and… you guessed it, micro-housing!

All roads lead to microtopia…..

Is the lifeedited concept attractive to you? Can you imagine downsizing… and liking it?