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From Novelty to Necessity: The Growing Tiny Home Movement

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The Tiny Home Movement

Visualizing the Rise of Tiny Homes

Born out of the desire for a simpler, more affordable way of life, the tiny home movement has spread at a furious pace—with the global market estimated to grow by a CAGR of almost 7%, adding nearly $5.2 billion in market size by 2022.

Given the economic pressures of today’s world, these alternative housing solutions have become not only a viable option for many people, but a vital one.

Today’s infographic from Calculator.me illustrates how the tiny home market got so big, and how it fares against traditional housing when it comes to providing environmentally friendly and affordable options.

How Did Tiny Homes Get So Big?

It was not until the 2009 recession hit the U.S. that tiny homes became more of a realistic option, as the benefits of downscaling became more apparent.

From then on, three things propelled the popularity of tiny homes: rising house costs, shrinking incomes, and a greater consideration for the environment.

Today, 63% of U.S. millennials would consider living in a tiny home. However, the need to go tiny is not only confined to millennials, as 40% of tiny home owners are over fifty years old.

Tiny Vs. Traditional

According to the infographic, a home is considered tiny (or micro) when it is between 80-400ft², and is at least 8ft in height.

Tiny homes also come with a tiny pricetag, costing just $23,000 on average to build—meaning tiny homes are almost ⅒ the price of traditional homes.

MetricTiny HomesTraditional Homes
U.S. Median Cost$59,884$312,800
Average Cost To Build$23,000$206,132
Home Ownership78% own their home65% own their home
Mortgage32% have a mortgage64.1% have a mortgage
Credit Card Debt40% have credit card debt37% have credit card debt

Other benefits of tiny home living include:

  • Avoiding mortgage debt
  • Less maintenance required
  • Allows for a more flexible lifestyle

Further, tiny homes are providing people with alternative solutions for more sustainable living.

An Environmentally Friendly Way of Living

Certain models of tiny homes use energy from solar panels—presenting ample opportunities for an independent off-grid lifestyle. Moreover, research from Virginia Tech shows that living in tiny homes reduces energy consumption by up to 45%.

Using less energy can also be attributed to tiny homeowners using the space outside as an extension of their home. In fact, when there is usable space available outdoors, tiny home living may not seem as drastic in comparison to living in a traditional home.

Room For Improvement

There are however, some challenges for those who are considering this way of life. Zoning laws and building codes in the U.S. can be restrictive, with some states more supportive of the idea than others.

Despite these barriers, there are numerous organizations and initiatives that have been created in order to eliminate the pain points that come with tiny homes, and legitimize the industry.

Not Just a Passing Trend

With the promising trajectory of tiny homes, it is inevitable that the interest from global retailers continues to grow.

Japanese minimalist company, Muji, released their own tiny homes in 2017, costing $26,000 on average. At just under 107.6 ft², these tiny homes are prefabricated, meaning they are constructed in a factory off-site.

Amazon also recently announced their foray into the tiny home space, with dozens of models available on their website—delivering new homes right to their customers’ front doors.

The Future Comes in All Shapes and Sizes

Beyond the typical tiny home formats we see entering the market en masse, there are other alternatives which will become more readily available to consumers, including:

  • Traditional modular homes
  • Shipping containers
  • 3D printed houses
  • Recreational vehicles

It is also worth pointing out that tiny homes and these alternative models don’t have to be restricted to under 400ft². Flat packs and do-it-yourself tiny homes can be as big as 1,000ft², with some of the largest models housing up to 24 people.

It is clear that the tiny home movement is not just about going back to basics, but rather, about making home ownership a reality for everyone—potentially disrupting the current housing market in the process.

The question is not if tiny homes will become the new normal, but when.

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Markets

All of the World’s Money and Markets in One Visualization

Our most famous visualization, updated for 2020 to show all global debt, wealth, money, and assets in one massive and mind-bending chart.

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All of the World’s Money and Markets in One Visualization

In the current economic circumstances, there are some pretty large numbers being thrown around by both governments and the financial media.

The U.S. budget deficit this year, for example, is projected to hit $3.8 trillion, which would be more than double the previous record set during the financial crisis ($1.41 trillion in FY2009). Meanwhile, the Fed has announced “open-ended” asset-buying programs to support the economy, which will add even more to its current $7 trillion balance sheet.

Given the scale of these new numbers—how can we relate them back to the more conventional numbers and figures that we may be more familiar with?

Introducing the $100 Billion Square

In the above data visualization, we even the playing field by using a common denominator to put the world’s money and markets all on the same scale and canvas.

Each black square on the chart is worth $100 billion, and is not a number to be trifled with:

What is in a $100 billion square?

In fact, the entire annual GDP of Cuba could fit in one square ($97 billion), and the Greek economy would be roughly two squares ($203 billion).

Alternatively, if you’re contrasting this unit to numbers found within Corporate America, there are useful comparisons there as well. For example, the annual revenues of Wells Fargo ($103.9 billion) would just exceed one square, while Facebook’s would squeeze in with room to spare ($70.7 billion).

Billions, Trillions, or Quadrillions?

Here’s our full list, which sums up all of the world’s money and markets, from the smallest to the biggest, along with sources used:

CategoryValue ($ Billions, USD)Source
Silver$44World Silver Survey 2019
Cryptocurrencies$244CoinMarketCap
Global Military Spending$1,782World Bank
U.S. Federal Deficit (FY 2020)$3,800U.S. CBO (Projected, as of April 2020)
Coins & Bank Notes$6,662BIS
Fed's Balance Sheet$7,037U.S. Federal Reserve
The World's Billionaires$8,000Forbes
Gold$10,891World Gold Council (2020)
The Fortune 500$22,600Fortune 500 (2019 list)
Stock Markets$89,475WFE (April 2020)
Narrow Money Supply$35,183CIA Factbook
Broad Money Supply$95,698CIA Factbook
Global Debt$252,600IIF Debt Monitor
Global Real Estate$280,600Savills Global Research (2018 est.)
Global Wealth$360,603Credit Suisse
Derivatives (Market Value)$11,600BIS (Dec 2019)
Derivatives (Notional Value)$558,500BIS (Dec 2019)
Derivatives (Notional Value - High end)$1,000,000Various sources (Unofficial)

Derivatives top the list, estimated at $1 quadrillion or more in notional value according to a variety of unofficial sources.

However, it’s worth mentioning that because of their non-tangible nature, the value of financial derivatives are measured in two very different ways. Notional value represents the position or obligation of the contract (i.e. a call to buy 100 shares at the price of $50 per share), while gross market value measures the price of the derivative security itself (i.e. $1.00 per call option, multiplied by 100 shares).

It’s a subtle difference that manifests itself in a big way numerically.

Correction: Graphic updated to reflect the average value of an NBA team.

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Charting the Rise and Fall of the Global Luxury Goods Market

This infographic charts the rise and fall of the $308 billion global personal luxury market, and explores what the coming year holds for its growth

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The Rise and Fall of the Global Luxury Goods Market

Global demand for personal luxury goods has been steadily increasing for decades, resulting in an industry worth $308 billion in 2019.

However, the insatiable desire for consumers to own nice things was suddenly interrupted by the coming of COVID-19, and experts are predicting a brutal contraction of up to one-third of the current luxury good market size this year.

Will the industry bounce back? Or will it return as something noticeably different?

A Once Promising Trajectory

The global luxury goods market—which includes beauty, apparel, and accessories—has compounded at a 6% pace since the 1990s.

Recent years of growth in the personal luxury goods market can be mostly attributed to Chinese consumers. This geographic market accounted for 90% of total sales growth in 2019, followed by the Europe and the Americas.

Analysts suggest that China’s younger luxury goods consumers in particular have significant spending power, with an average spend of $6,000 (¥41,000) per person in pre-COVID times.

An Industry Now in Distress

The lethal combination of reduced foot traffic and decreased consumer spending in the first quarter of 2020 has brought the retail industry to its knees.

In fact, more than 80% of fashion and luxury players will experience financial distress as a result of extended store closures.

luxury market McKinsey supplemental

With iconic luxury retailers such as Neiman Marcus filing for bankruptcy, the pressure on the luxury industry is clear. It should be noted however, that companies who were experiencing distress before the COVID-19 outbreak will be the hardest hit.

Predicting the Collapse

In a recent report, Bain & Company estimated a 25% to 30% global luxury market contraction for the first quarter of 2020 based on several economic variables. They have also modeled three scenarios to predict the performance for the remainder of 2020.

  • Optimistic scenario: A limited market contraction of 15% to 18%, assuming increased consumer demand for the second and third quarter of the year, roughly equating to a sales decline of $46 billion to $56 billion.
  • Intermediate scenario: A moderate market contraction of between 22% and 25%, or $68 to $77 billion.
  • Worst-case scenario: A steep contraction of between 30% and 35%, equating to $92 billion to $108 billion. This assumes a longer period of sales decline.

Although there are signs of recovery in China, the industry is not expected to fully return to 2019 levels until 2022 at the earliest. By that stage, the industry could have transformed entirely.

Changing Consumer Mindsets

Since the beginning of the pandemic, one-quarter of consumers have delayed purchasing luxury items. In fact, a portion of those who have delayed purchasing luxury goods are now considering entirely new avenues, such as seeking out cheaper alternatives.

However, most people surveyed claim that they will postpone buying luxury items until they can get a better deal on price.

luxury market supplemental

This frugal mindset could spark an interesting behavioral shift, and set the stage for a new category to emerge from the ashes—the second-hand luxury market.

Numerous sources claim that pre-owned luxury could in fact overtake the traditional luxury market, and the pandemic economy could very well be a tipping point.

The Future of Luxury

Medium-term market growth could be driven by a number of factors, from a global growing middle class and their demand for luxury products, as well as retailers’ sudden shift to e-commerce.

While analysts can only rely on predictions to determine the future of personal luxury, it is clear that the industry is at a crossroads.

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