MONEY housing

How to Cut Your Single Biggest Expense in Retirement

bouncy castle in suburbia
An age-proof home is one where you can live safely, comfortably, and conveniently in your older years. Sian Kennedy—Getty Images

You're going to spend a lot on housing in retirement. Here's how to make sure your home serves your needs as you age.

The single biggest expense you face in retirement is housing, which accounts for more than 40% of spending for people 65 and older, according to the Employee Benefit Research Institute. Yet all too often, you end up shelling out those bucks for places that don’t serve your needs well as you age.

By age 85, for example, two-thirds of people have some type of disability. If you can’t get around your house or community or you don’t have easy access to the medical and social services you need, you could land in a costly nursing home prematurely, according to a Harvard Center for Joint Housing and AARP study.

“People don’t think about how their home will support their needs until they face a health issue,” says Amy Levner, manager of the Livable Communities initiative at AARP. “It doesn’t have to be a catastrophe either. Even something as simple as a knee replacement could make it difficult to stay in your home or drive, at least short term.”

Here are 3 ways to make sure you’ll stay comfortable in your home as you get older.

1. Get your house in shape: Three-quarters of people would prefer to stay in their current home as long as possible in retirement, according to AARP. Yet just 20% live in a house with features to help them live safely and comfortably there in their older years. Among them: a first-floor bedroom and bath so you can live on the main level if stairs become hard to climb, wider doorways that make getting around easier if you need a walker or wheelchair, and covered entrances so you don’t slip in rain or snow.

Those can be pricey renovations, so the best time to do the work is while you are still employed so that you can use current income to pay the bill instead of tapping savings, says Levner. But many adaptations that make a big difference when you’re older are inexpensive. Those include raising electrical outlets to make them easier to reach, putting grab bars and a shower chair in the bathroom, and installing nonslip gripper mats under area rugs. (A list of the most important steps to take and their typical cost is below.)

2. Take it down a notch: To save money without necessarily moving far away—two-thirds of people want to remain in their hometown when they retire, AARP says—you can downsize to a less expensive, more manageable house. You could use the proceeds from the sale of your current home to add to your retirement savings, while significantly cutting maintenance costs.

The potential savings, based on estimates from the Center for Retirement Research, are compelling. If you move from a $250,000 house to a $150,000 one, for instance, you could net $75,000 to add to your savings, after paying moving and closing costs (typically 10% of the sale price). Meanwhile, your annual bill for upkeep would probably fall from around $8,125 to $4,875, assuming typical property taxes, insurance, and maintenance of about 3.25% of the home’s value. These calculations assume that you own your home outright; if you still have a mortgage, the savings you would reap from downsizing might be even bigger.

141118_ret_ageproof_1

Move in step with your peers: Relocating can also help you cut expenses if you move to an area with lower taxes and a cheaper cost of living. Look for places that have good public transit, transportation services for seniors, and walkable, bike-friendly neighborhoods that are a short distance to stores and entertainment and close to medical facilities.

Where should you go? AARP is now working with dozens of places to create age-friendly communities. They include Birmingham, Denver, Des Moines, and Westchester County in New York (find the list at aarp.org/agefriendly). Next spring AARP will launch an online index with livability data about every community in the U.S. For more inspiration, check out MONEY’s Best Places to Retire.

MONEY Millennials

What Everyone Gets Wrong About Millennials and Home Buying

Millennials on porch in suburbia
Katherine Wolkoff—Trunk Archive

Conventional wisdom says that millennials are a new and different generation. But when it comes to housing, they're likely to be more conservative and traditional than their parents were.

If you’ve come across any stories mentioning millennials and home ownership, you’ve likely heard this refrain: Young people just aren’t very interested in buying a house. Instead, the story goes, they want to rent a cool apartment, live in a city, and walk to coffee shops. Forever.

This narrative was eloquently expressed in a recent New York Times article about a hip, 30-year-old, unmarried couple choosing to rent in a swanky Virginia high-rise. What made these millennials pick a rental apartment over a nest of their very own? The developer of the couple’s new home, Joshua Solomon, had his theories:

“That generation of folks has seen people really get hurt by homeownership,” said Mr. Solomon, president of the company, which is based in Waltham, Mass. “The petal has really fallen off the rose as it pertains to homeownership. People don’t want to be tied down to a mortgage they can’t get out of quickly.”

Sounds like a reasonable conclusion, right? Multi-unit construction is up, after all, and first-time home buyers are in historically short supply.

But if you dig a little deeper, both Solomon’s generalization and the “millennials don’t really want to own homes” trope turn out to be largely untrue. A number of surveys have shown that the vast majority of millennials would love to own a place of their own. Recent research from housing site Zillow, for example, found that adults age 22 to 34 are actually more eager to own a home than older Americans.

According to Zillow’s data, young married couples in which both partners work (represented by the orange line in the left graph below) currently own homes at a rate close to or above historical norms for their demographic. Even single employed millennials (the yellow line in the right graph) are slightly more likely to own a home than their counterparts in the ’70s, ’80s, and ’90s.

Zillow

So if young adults want homes more than previous generations, why is their homeownership rate at a historic low? The answer is that millennials are getting married later in life, and not having two income streams makes it much harder to scratch together a down payment.

From 1960 to 2011, Americans’ median age at the time of their first marriage increased by six years, to around 29 from 23 for men and 26 from 20 for women, according to Census data. Then came the financial crisis, which pushed marriage back even further by making financial stability—a marital prerequisite for many— a rarity among recent college graduates. According to one recent study from the University of Arizona, only about half of adults ages 23 to 26 and at least one year out of college have a full-time job.

As a result, the millennial generation’s overall home purchases are down—but they probably won’t be down forever. Zillow’s analysis shows that if millennials were marrying at the same pace as previous generations, their rate of homeownership would be 33%, four percentage points higher than now and roughly the same as in the 1990s. Once this generation begins to tie the knot, the evidence suggests, it’ll be buying homes at least as frequently as older Americans once did.

Old School Values

In fact, there’s some evidence that home ownership is more important to millennials than it is to Gen Xers or boomers. In a recent survey, forty-six percent of respondents ages 18 to 34 told Zillow they believe “owning a home is necessary to being a respected member of society,” and 65% said “owning a home is necessary to live The Good Life and The American Dream.” Both results were higher (in most cases, significantly higher) than older age groups.

America’s newest generation—post-millennials—are perhaps the most old-fashioned of all. A shocking 97% of teens age 13 to 17 believe they will one day own a home, and 82% say homeownership is the most important part of the American dream. If anything, buying a home seems to be getting more attractive, not less.

So millennials really want a home, but they still want a cool home, right? One that’s urban, and different, and close to a Blue Bottle Coffee? Maybe when they’re still young and single, but a large amount of evidence suggests that even today’s young adults look to the suburbs once children come along. Highly dense “core cities” like San Francisco and New York are attractive to millennials looking for fun and adventure, but they’re also extremely expensive to live in when dependents enter the picture.

Research suggests a negative correlation between big cities and child populations. City Journal found that between 2000 and 2010, the population of children 14 and younger fell by 500,000 in the country’s densest urban areas, including Los Angeles, Chicago, and New York. As children disappeared from cities, the nation’s 51 largest metro areas lost 15% of adults 25 to 34—the same age range when many begin to marry and start families. “While it’s not possible to determine where they went,” the Journal noted, “suburbs saw an average 14 percent gain in that population during the same period.”

Mollie Carmichael, principal at John Burns Real Estate Consulting, is already seeing millennials flee cities to more child-friendly environments. “We do find that the millennials want to be in urban areas, but usually when they’re not married and they’re renting” says Carmichael. “But the trigger is marriage, and then frankly they want more traditional areas and more traditional environments than even their parents. They want suburban; they want single-family detached; they want a yard.”

What about millennials’ much-reported fixation on urban-ness? There’s some truth to it, Carmichael acknowledges, but “urban to them means they want the ability to walk to the park and walk to the Starbucks. It’s more about accessibility, and that could be driving to those great places they want to go.”

In the end, America’s newest adult generation isn’t that different from the previous ones. Millennials may Instagram their new home instead of sending photos through the mail, but not much else has changed.

TIME Hong Kong

Watch Hong Kong’s Poor Demand Their Say in the Way the City Is Run

Lower-income groups have a huge stake in democracy protests currently rocking the city

After more than three weeks of pro-democracy protests that have paralyzed parts of Hong Kong, anger at the city’s leader has reached an all time high.

They were exacerbated even further when Chief Executive Leung Chun-Ying told reporters Monday that if he gave in to protesters demands and held an open election, it would result in the city’s lower-income groups dominating politics.

Leung’s comments affect half of the population of Hong Kong who earn HK$14,000 ($1,800) a month.

In response, a group of protesters made up of civil society and political organizations marched to Government House Wednesday demanding an apology.

Amy Tse Tsz-ying, a social worker, told TIME that if half of the people in society are not represented in government then Hong Kong’s social problems will never improve.

“Democracy is highly related to the living conditions of grassroots people,” she said.

The chances of getting an apology out of Leung are slim but the march showed that the pro-democracy movement is not just about lofty ideals but rooted in real social problems

TIME housing

Berkeley May Ban ‘No-Pet’ Restrictions on Apartments

Avocado
A dog named Avocado looks over a cliff overlooking the fog-covered Pacific Ocean while on a hike on Wednesday, Jan. 8, 2014, in San Francisco. Marcio Jose Sanchez — ASSOCIATED PRESS

The all-pets-welcome rule that would be the first of its kind in the nation is raising landlords' hackles

Updated Oct. 21, 3:07 p.m. ET

According to Craigslist, there are about 14,867 apartments and houses available for rent in the San Francisco Bay Area as of late October. Limit those to apartments that are cat- and dog-friendly, and the rental stock plummets to less than one-third that number. But residents in Berkeley may soon find themselves less limited, if a new proposal to outlaw pet restrictions passes muster.

Berkeley City Councilman Jesse Arreguin is expected on Tuesday to officially ask the city’s housing and animal care commissions to explore the effects of banning “no pet” policies—laying groundwork for more specific legislation later on. If passed, such a law would be the first of its kind, according to housing industry groups and the American Society for the Prevention of Cruelty to Animals (ASPCA).

Arreguin’s office told TIME that while details are still in flux, the proposal could require all landlords to accept tenants’ pet dogs and cats, as well as “small house pets” ranging from rabbits to reptiles. The caveat for owners is that their animal must be able to be “reasonably accommodated” and must be well-behaved, not disturbing other renters. Owners could also become obligated to purchase pet insurance, and take care of any property damage caused by the pets, even if it exceeds their security deposit.

Arreguin’s chief of staff, Anthony Sanchez, says that the measure was partly born out of confusion over “emotional support animal” rules. In addition to state law allowing animals that help with disabilities such as blindness, renters can also currently get a note from their doctor saying they need Fluffy or Fido to help with conditions like anxiety. Sanchez says this has led to concerns from landlords about whether the renters truly have a legal basis for keeping their pet, as well as conflicts among tenants in buildings that generally do not allow pets.

“We noticed more and more tenants and landlords having disputes,” Sanchez says. “This seems like a way to address all those issues.” In other words, Arreguin believes that simply allowing all pets, but tightening regulation of how people care for their animals within a rental situation, would eliminate the confusion.

Many local landlords say this dog won’t hunt. Some have complained about potential property damage, like animals scratching up hardwood floors or leaving lingering smells. The caveat that animals be “reasonably accommodated,” Sanchez says, is meant to give landlords some leeway here—like saying that a Great Dane cannot be reasonably kept in a studio apartment, or that one renter cannot reasonably keep 12 cats nextdoor to a renter who is deathly allergic.

Arreguin’s office says such a law could help keep animals off the streets and out of shelters, given that some owners give up their pets when they move into a new apartment that won’t allow animals. Sanchez says that with the new law, it might be feasible to require pet owners to register, spay, tag and vaccinate their furry loved ones before a landlord allows them to occupy a unit.

The ASPCA tells TIME that the organization supports any efforts to get animals into homes. Legislative director Kevin O’Neill also noted that while “there are laws in place to limit landlords from banning pets mid-lease or requiring cats to be declawed as a condition of a lease, the ASPCA is not aware of any law that institutes a complete ban on pet restrictions for apartments.”

After hearing the proposal at Tuesday’s meeting, Berkeley’s city commissioners could take three or four months to return with a well-educated report on how to best propose the law. Until then, the city’s pets will be left nervously tapping their paws.

MONEY Millennials

How Millennials Stalled the Housing Market Recovery

Wrecking ball hitting brick wall
Steve Bronstein—Getty Images

Millennials already have to deal with hefty debt from college, an iffy job market, and growing up in an era where MTV no longer plays music videos, but now they’re being blamed for holding back the real estate boom. Homebuilder adviser John Burns Consulting published details from a study earlier this month concluding that student loan payments will cost the housing industry 414,000 transactions this year that would have totaled $83 billion in sales.

Ouch. The ivory tower is crumbling at the foundation.

It’s been widely assumed that mounting student debt is eating away at this otherwise buoyant housing market recovery. John Burns Consulting’s study — boiled down to a free one-pager for those that aren’t paying customers that got the more thorough report — attempts to quantify the impact.

How did the adviser arrive at $83 billion? Well, we start with the 5.9 million households under the age of 40 that are paying at least $250 in student loan debt, nearly triple the 2.2 million leveraged college grads in the same predicament back in 2005. We then get to the assumption that $250 earmarked for student loan debt every month reduces the buying power of a potential homebuyer by $44,000. That’s bad, and it’s naturally worse depending on how much more than $250 a month some of these indebted students have taken on to pay back. That’s less money they can commit to a mortgage. John Burns Consulting offers up that most households paying at least $750 a month in student loan have priced themselves out of the housing market entirely.

It gets worse

The study only looked at folks between the ages of 20-40. That’s a pretty sizable lot, especially since 35% of all households in that age bracket have at least $250 a month in student debt. However, even John Burns Consulting concedes that there’s “a big chunk of households over age 40 who have student debt” as well. It’s not likely to be as bad, naturally, but it’s all incremental at this point.

This report also happens to come at a time when the housing industry is starting to flinch after a couple of years of boom and bounce. Right now everything seems great. New home sales data released this past week showed the industry’s highest monthly growth rate in more than six years. However, the near-term outlook is starting to get hazy.

Shares of KB Home KB HOME KBH 0.2807% shed more than 5% of their value on Wednesday after reporting uninspiring quarterly results. Revenue and earnings fell short of expectations, and the same can be said about its number of closings and order growth. Earlier this month it was luxury bellwether Toll Brothers TOLL BROTHERS TOL -0.9731% setting an uneasy tone after posting a year-over-year decline in the number of contracts it signed during the period and an uptick in the cancellation rate for existing home orders.

It gets better

The student debt crisis is real, and the skyrocketing costs of obtaining a postsecondary education naturally open up the debate of its necessity. However, it’s also important to remember that university grads are earning far more than those that don’t attend college.

Source: U.S. Department of Education, National Center for Education Statistics. (2014). The Condition of Education 2014 (NCES 2014-083), Annual Earnings of Young Adults.

The median of annual earnings for young adults in 2012 was $46,900 for those with a bachelor’s degree, $30,000 for those with just a high school degree or credential and $22,900 for those who did not complete high school. Those going on to grad school for advanced degrees — and that’s where student loans can really start to pile up — are at $59,600 a year.

In other words, most college grads, and especially grad school graduates, are typically better off than those that didn’t pursue higher education, even with the student loan albatross around their white-collared necks. The housing industry would be better off if colleges were cheaper or if student debt levels were lower, but the same can be said about purchasing power in general. At the end of the day, debt-saddled or not, the housing industry needs its college graduates.

MONEY buying a home

Rupert Murdoch Wants to Sell You Your Next Home

News Corp. has acquired Move Inc., putting Murdoch's business in the thick of the online listings war.

UPDATE—3:28 P.M.

Home buyers take note, your next house could come courtesy of the Murdoch empire. On Tuesday, the Australian billionaire’s News Corp announced it was buying Move Inc., the real estate listings company that owns Move.com, Realtor.com, and other online listings websites, for $950 million.

While Move is hardly the market leader among listing websites—competitors Trulia and Zillow account for 71% of traffic to ComScore’s real estate category—it long claimed to be the most accurate. Thanks to an agreement with the National Association of Realtors, the company’s sites have partnerships with more than 800 multiple listings services, which provide real estate listing information as soon as a home comes on the market. Zillow and Trulia have previously been dinged for out-of-date information, and Zillow CEO Spencer Rascoff raised eyebrows when he appeared to suggest that fixing stale listings wasn’t one of the company’s top priorities. (Zillow has stressed that the CEO’s statement was taken out of context, and emphasized their constant effort to improve listings.)

But despite Move’s data advantage, and recent ad campaigns stressing its superior accuracy, taking on Trulia and Zillow has been an uphill battle. That battle became even more difficult in July, when Zillow purchased Trulia for $3.5 billion, creating an online real estate behemoth. News Corp’s entrance into the market may finally give Move the marketing muscle to fight back. News Corp. CEO Robert Thomson signalled the company’s dedication to Move’s business, stating that the acquisition would make “online real estate a powerful pillar of our portfolio.” He also indicated the company will strongly support Move’s brand. “We intend to use our media platforms and compelling content to turbo-charge traffic growth and create the most successful real estate website in the U.S.,” said Thomson.

A News Corp-powered Move might ultimately be a boon for homebuyers by reducing Zillow/Trulia’s hold on the online listings market. When Zillow’s purchase of Trulia was first announced, some worried the new company would have more leverage to charge real estate agents higher advertising fees, and that this charge might be passed on to the consumer. More robust competition may give agents more options for online advertising and reduce Zillow/Trulia’s bargaining power. However, other experts believe the News Corp. acquisition will have little real effect on consumers. Jonathan Miller, CEO of Miller Samuel Inc, told MONEY the Move acquisition is unlikely to be felt by your average house hunter.

“I think what you’re seeing is [the housing market] improve,” said Miller. “There’s more focus on the housing sector, there’s a lot of cross branding opportunities with News Corp. and their holdings with real estate, but I don’t see it having any real impact on transactions. I don’t think the consumer is going to see this.”

MONEY housing

How the Financial Crisis Put Up Two More Barriers to a Secure Retirement

Two new studies underline housing and income challenges facing older Americans.

Monday marks the sixth anniversary of the bankruptcy filing of Lehman Brothers, a key event in the Wall Street meltdown that led to the Great Recession. The recession wreaked havoc on the retirement plans of millions of Americans, and two studies released last week suggest that most of us haven’t recovered well.

To be more precise: Middle- and lower-income Americans haven’t recovered at all, while the wealthiest households have done fine.

The Joint Center for Housing Studies of Harvard University (JCHS) issued its findings on the challenges we face meeting the housing needs of an aging population in the years ahead. Meanwhile, the Federal Reserve Board released its triennial Survey of Consumer Finances (SCF), a highly regarded resource for understanding American households’ finances.

The Harvard study found that our existing housing stock is ill-suited to meet seniors’ needs, including affordability, accessibility, social connectivity and support services. And high housing costs are eating into the ability of low-income older adults to pay for necessities like food and healthcare.

Housing is the largest expenditure in most household budgets, and so is a linchpin of financial security and well-being. “It’s really at the nexus of your financial health, physical health and healthcare,” says Jennifer Molinsky, research associate at the JCHS and principal author of the study.

Harvard found that a third of adults over age 50 pay more than 30% of their income for housing—including 37% of people over age 80. Harvard defines that group as “housing cost burdened.” Another group of “severely burdened” older Americans spend more than 50% of income on housing. That group spends 43% less on food, and 59% less on healthcare, compared with households that can afford their housing.

Homeowners are much less likely to be cost-burdened than renters, the study found. But more homeowners are carrying mortgages well into retirement. More than 70% of homeowners aged 50 to 64 were still paying off mortgages in 2010.

The Federal Reserve findings on middle-class retirement prospects are equally troubling. Despite the economy’s gradual mending, the SCF found a widening gap in income and net worth. The top 10% of households was the only income band registering rising income (up 2% since 2010). Households between the 40th and 90th percentiles of income saw little change in average real incomes from 2010 to 2013. And the rate of homeownership was 65%, down from 69% in 2004 and 67% in 2010.

Ownership of retirement plan accounts also fell sharply. In the bottom half of income distribution, just 40% of households owned any type of account—IRA, 401(k) or traditional pension—in 2013, down from 48% in the 2007 survey. The Fed attributes the drop mainly to declining IRA and 401(k) coverage, since defined benefit coverage remained flat. Meanwhile, coverage in the top half of income distribution was much higher. In the top 10%, 95% of families are covered.

Overall, the average value of retirement accounts jumped a substantial 10% from 2010 to 2013, to $201,300. The Fed attributed that to the strong stock market and larger contributions. But for the lowest-income group that owned accounts, the average combined IRA and 401(k) value was just $39,100—and that is down more than 20% from 2007.

Considering the stock market’s strong performance in the intervening years, that suggests many of these households either sold while the market was depressed, drew down savings—or both. Meanwhile, upper-middle-income households saw a gain of 20% since 2007.

In Washington, lobbyists and policymakers have been debating about whether a retirement crisis really is looming. The various sides typically filter the data to support their viewpoints and agendas. But it’s difficult to think of two sources aligned than the Federal Reserve Board and Harvard. The SCF, in particular, is widely viewed as a gold standard survey that will be relied on for many economic reports in the months ahead. It includes information on the household balance sheets, pensions, income and demographic characteristics of about 6,500 families.

The JCHS study was funded by the AARP Foundation and The Hartford insurance company, so there’s a possible agenda there, if you doubt Harvard’s independence as researchers. (I don’t.)

Taken together, the studies paint the portrait of a widening divide in the retirement prospects of working Americans. No matter how the data is sliced, we’ve got problems that need to be addressed.

TIME privacy

Airbnb Sued by Group of Users in New York City for Breach of Privacy

Airbnb Said to Be Raising Funding At $10 Billion Valuation
The Airbnb application and logo are displayed on an Apple iPhone in this arranged photograph in Washington, D.C., on March 21, 2014 Andrew Harrer—Bloomberg/Getty Images

The company released user data to New York City authorities investigating suspected violations of housing and rental laws

Around 25 people with apartments listed on the online accommodation-sharing website Airbnb are suing the company to prevent what they claim is a breach of their privacy.

Calling themselves “New Yorkers Making Ends Meet in the Sharing Economy,” the group filed a lawsuit against Airbnb in the state supreme court on Tuesday to prevent the firm sharing their private information with state attorney general Eric Schneiderman.

A source familiar with the case told Mashable that Airbnb furnished the attorney general with information on 107 of its New York City users including payment details, hosts and listing IDs as well as their names and contact information.

The release on Tuesday was the first under an agreement between the two parties reached in May, in which the company agreed to provide anonymous information about thousands of hosts in order to investigate suspected violations of the local rental law.

City authorities requested more information on some 130 users, but Airbnb declined to provide details of those who had filed lawsuits until the case was resolved.

“We will not take action with data from hosts who have previously filed suit until the court makes a decision and we will respect the court’s decision,” Airbnb spokesman Nick Papas said, after clarifying that the users whose data had been subpoenaed were notified by the company.

Airbnb had successfully fought the city’s previous demand in court, which asked for unfettered access to data on thousands of users. This was followed by the updated agreement and the transfer of the anonymous data.

[Mashable]

TIME society

Portland Plans Tiny Houses for the Homeless

Homeless in the Pearl
A person walks by the Right 2 Dream Too homeless camp in Portland, Ore. on Oct. 4, 2013. Don Ryan—AP

Designed to give residents greater privacy and independence than traditional shelters, the micro homes may persuade people who currently live in Portland's "tent cities" to relocate to the sturdier structures

With an estimated 2,000 of its residents sleeping under bridges, on streets and in empty lots in a variety of makeshift shelters, the city of Portland, Oregon, is on a quest to provide more safe housing for those without a permanent address. Thinking beyond typical dorm-style shelters, it has launched a task force that will meet September 4th “to assess the viability of using tiny homes as a potential for housing houseless people,” says Josh Alpert, Director of Strategic Initiatives for Mayor Charlie Hales. Alpert hopes the first batch of homes will be ready for occupancy by late February 2015.

The mayor’s office began looking into the idea of micro homes in June after housing advocate Michael Withey presented an idea to the city council based on designs by architecture firm TechDwell. Alpert says he envisions a pilot program in which up to ten structures are erected on four separate city-owned lots. The idea is to establish the micro communities in various neighborhoods “so that no one area is feeling overburdened,” Alpert adds.

TechDwell

The tiny houses will be selected through a request-for-proposals process and will hinge on two key factors: cost and the ability to meet city and county building codes. Tim Cornell of TechDwell, who has already met with Alpert to discuss his prototype, says he can deliver micro homes that sleep two people and have bathrooms and kitchens built-in for $20,000 each. His FlexDwell prototype (shown at right) measures 16 feet wide and 12 feet deep and features a sloped ceiling that is 12-ft. high in front. Made of prefab materials available at Home Depot and Lowe’s, it includes two sleeping pods joined by a kitchen, bathroom and eating area. To save space, the bathroom shares a sink with the kitchen. “We could have them built on-site in 45 days” after an order is placed, Cornell says.

Because the tiny houses offer dwellers more privacy than big shelters, they may appeal to people who are reluctant to give up the sense of independence that comes from living on the street. The micro homes could also be cheaper than temporary emergency shelters, which cost up to $16,000 a year and lack plumbing.

“If there is a potential to get even one person off the streets, it’s worth trying,” says Alpert. “Simply having a roof over their head may enable them to springboard into finding a job.”

TIME recreation

Inside the ‘Surprise House’ on Governors Island

Laura Parker

Something mysterious is happening inside an abandoned house a stone's throw from Manhattan

At first glance, the only way to distinguish the crumbling Governors Island residence from its colonial neighbors is a small sign on the front door bearing a bright orange question mark — but this is no ordinary house.

Free and open to the public every weekend during summer, the Surprise House is one of the latest projects to take advantage of the island’s growing public programs. An immersive, multi-sensory “experience,” each room has been designed to appeal to the viewer’s curiosity. It’d be cheating to reveal much more — just think of it like a haunted house without the haunted, where cheap tricks or tawdriness have been replaced with down-the-rabbit-hole delights. It’s the work of New York consulting company Surprise Industries, who took up residency inside House 7A last month.

“We want people to feel like children again, exploring and discovering every nook and cranny,” says Surprise Industries co-founder Tania Luna.

Although the concept is similar to other immersive theatrical experiences like Sleep No More and Then She Fell, there are no actors or behind-the-scenes goings-on in the house. People enter in groups of five or six and are left to explore at their own pace. Luna says she didn’t want the house to feel too exclusive. “A lot of similar experiences in New York are built up because they’re so hard to get into,” she says. “We wanted our house to be accessible.”

To achieve this, Luna enlisted the help of NYU grad school student Adrienne Carlile. Carlile is currently studying theatre costume and set design — unlike her previous projects, this one called for an environment people would feel comfortable touching. “On stage, you work with actors who are told very clearly, ‘Do not touch anything unless it is your prop,’” Carlile tells me on the day I visit the house. “This is the exact opposite. I had to find objects that appeared delicate without looking off-limits.”

It’s a testament to Carlile’s skill that it takes a while to for this to sink in. It took me five minutes to shake off my initial reverie, and another five before I found the courage to reach out and tentatively poke something. Curiosity and exploration is vital; sometimes, you can only leave a room once you’ve found the door to the next one. Celebrating this kind of ambiguity is one of the reasons Surprise Industries exists. “Adults can become too serious,” Luna says.

Luna founded the company in 2008 with her sister, Kat. They began curating surprises for small groups with varying budgets — everything from trapeze classes to musical saw lessons. When this became financially unsustainable, they switched to public surprises, charging $25 a head, and corporate team-building activities for private companies. Last year, they learned of plans to give abandoned houses on Governors Island — once officers’ homes during the island’s days as a military base — to different artistic and cultural organizations to create free public programs. They applied, and were granted a summer residency.

Although the houses are free, some have been abandoned for more than twenty years. Luna, Carlile and Surprise Industries director Carolyn McCandlish spent a week peeling crumbling plaster from the walls before they could officially move in. They used money raised during a Kickstarter campaign to buy furniture and props.

Luna is waiting for me on the porch when I finally wander out. She asks for my thoughts.

“I think I need some time to process everything,” I say, truthfully.

She smiles. “Everyone says that.”

Surprise House, located at Nolan Park, No. 7A on Governors Island, is open every weekend from August 16 to September 14 from 1pm-5pm. Cost: free.

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