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I might once have said "Why not just by a condo?" Then I was in a homeowners association ...
Prices on the micro-homes range from $120,000 to a little more than $180,000.
Seems pricey to me.
$120,000 for 364 sq.ft. is $330/sq.ft., a total rip-off even for a middle-class quality house. I'd only pay $100/sq.ft. for a normal size house. If you want me to buy a micro-house, then price it at a micro-level like $10/sq.ft. As such, the houses should be going for $3,640. That's all they are worth.
Since neither the cost of building the house nor the value of the house is linearly related to its size, it does not make sense to scale houses up or down to extremes. There is a happy middle ground in which the price per sq. ft. is highest. But that global maximum isn't higher than $100 / sq.ft. Builders are going to have to accept that reality or find a new industry.
Here's something else that builders need to get straight. Why would I pay a builder over three times as much to build a house then I would have to pay for an identical prefabricated house? As builders continue to overcharge, they make pre-fabrication more cost effective, which in turns allows pre-fabrication to be further developed and refined -- a positive feedback system that makes pre-fab ever cheaper.
Eventually, we'll all be able to print out a house using a 3D printer that can render building quality materials (synthetic or natural). Then the cost of a house will be the blueprints (free via Bit Torrent or open source), the cost of the materials (perhaps $100/ton), and the cost of the electricity used in printing (a few hundred dollars). Hmmm, can anyone say from dirt to McMansion for under $10k?
Maybe the path back to affordable housing is to make builders obsolete.
HA from the comments...
"Oh, and if you let people stay there for free you can call them "stay free mini pads". "
http://southeastportland.katu.com/news/business/developer-bets-people-will-buy-tiny-micro-homes/439818