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Dave Says

Dave Says
Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Paying Cash Doesn't Make it Smart

Paying Cash Doesn't Make it Smart

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 mover 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

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Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.