Thinking Tiny...Tiny Mortgages, Tiny Insurance, Tiny Processes, Tiny Regulation
There's just one problem with tiny houses, the rest of the housing industry hasn't zoomed out yet. As author Adele Peters notes in her article "...a mortgage for a $100,000 house costs the bank about $2,300. But a mortgage for a $20,000 house also costs $2,300... Now the bank has worked on their own design problem: a new mortgage...". (This House Costs Just $20,000—But It’s Nicer Than Yours)
So while segments of society try to shrink their footprint, the financial institutions have not started right-sizing their loan and insurance offerings and processes. The only way financing makes sense for tiny house purchases is that the loan process is streamlined ruthlessly to generate enough volume and margin. However regulation makes that difficult even if the financial entities are willing.
Time to whip out the "Uber" adjective--will peer-to-peer "Uber" style loans enter this financing gap? Could you query for a loan on your house search app and get individuals willing to finance your tiny house? Can individual home mini-loans operate with less regulatory overhead if they stay under a minimum?
It's common to make simple things complex, but it is an art to simplify the complexity - Business Advisory | Architecture Consulting | Business & IT Strategy
8 年Nice article, Tonya. Thought provoking. Is there any learning from microinsurance and short term loans?
Advisor Business Strategy, Strategic Alliances & Business Development
8 年Tonya we hear of Peer to peer lending startups in the range of 3 digits in numbers. An example oft quoted is the LendingClub. Technologies like block chain are further making them more reliable and lean in their operations to handle small ticket loans. Regulators play catch up. It is also interesting how peer to peer credit supply adjusts to the demand.
Marketing Consultant
8 年Great POV. This highlights the issue of the American dream. Banking, municipalities, and the legal system all demand their piece, and their processes are basically manual! This barrier to entry will get worse with the shrinking middle class, and the housing business will suffer.