Micro-Apartments: A Tiny Solution to a Big Problem?

Gabrielle Karol

Tiny ApartmentWhat would you give up in order to pay less in rent?

For New Yorkers, Mayor Bloomberg is hoping the answer is less space … a lot less space. In late January, Bloomberg announced the winner of a contest to build 55 micro-units, or apartments between 250 and 370 square feet, on a city-owned lot on Manhattan’s east side.

Rent prices for the tiny, prefab apartments—aimed at young, single urban dwellers—will start at $914 and go up to $1,873. Bloomberg hopes that the micro-units will be the first of many tiny, affordable apartments that will help solve the city’s lack of affordable housing. Currently, New York City has a shortage of 800,000 apartments. 

New York isn’t the only city looking at tiny apartments as a possible solution to its rental market issues. In the fall of 2012, San Francisco approved an amendment allowing apartments as little as 150 square feet; previously, apartments had to be a minimum of 220 square feet.

Is the rental market so bad that city-dwellers really need to consider such tiny spaces? We’ll examine how the lack of affordable housing hurts the economy, and how micro living spaces could provide a solution.

Lack of Affordable Housing

Currently, nearly 9 million low-income households are on the brink of becoming homeless, according to an analysis by the Center on Budget and Policy Priorities, using data from the Department of Housing and Urban Development. These households are struggling with a lack of housing assistance, the high cost of rent and utilities, and/or severely substandard living conditions. The number of these at-risk households has grown by 43% since 2007.

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It’s not just those with very low incomes feeling the squeeze: Nearly 40% of Americans pay more than a third of their income for housing, according to the U.S. Census. Yet, most personal finance experts recommend people keep housing costs to less than 30% of their income so they have enough breathing room to achieve other financial goals, like saving for major purchases, paying for education costs or squirreling away for retirement.

How the Housing Problem Hurts Society

The housing crisis affects not only individuals but also the economy. If you can’t effectively save for retirement because you spend so much on housing, you’ll be more likely to depend on government benefits, which is a drain on society’s resources.

Lack of affordable housing can also lead to increased poverty. For the nearly 9 million households at risk of becoming homeless, high housing costs mean skimping on food and medical care, moving frequently to find lower rents—which can interrupt a child’s education—and even experiencing periods of homelessness.

RELATED: ‘Generation Rent’: Why Young People Won’t Buy Homes

Perhaps most importantly, the lack of affordable housing is an issue that spans suburbs and cities. The subprime mortgage and foreclosure crisis highlighted the dangers of too-high housing costs in suburban areas, and recent attempts to find housing for those displaced by Hurricane Sandy have underscored the lack of quality affordable rentals, with some victims in New Jersey paying as much as $1,800 a month to rent two-bedroom motor homes.

  • PhilChance

    On the legal required space; my sister while receiving state aid had to have a certain sq. ft. for her family.  It met the size requirements but was a hole.  She should have been allowed a nicer, smaller place.  It is okay to limit the # of persons but we should be more realistic.  BTW I now live in Asia in a smaller space and it is wonderful.  We can easily look to other places that have had more efficient living situations for many years to find what will help us.  Apartment Therapy will get your brain open to the idea.

  • Quoted price seems awfully low

    “Rent prices for the tiny, prefab apartments—aimed at young, single urban dwellers—will start at $914 and go up to $1,873.”

    Where did you get these numbers? You would be hard pressed to find a room in a shared multiple bedroom apartment for under 1K in that neighborhood, let alone for a well designed studio.