In 2003, Iowa resident Greg Johnson was putting together plans for a 2,000 square foot home. He wanted to go solar, and when he ran the numbers, it was dauntingly expensive. His solution: pare down the size. By the time he had finished, he had designed—and was happily living in—a 10x7 home.

In Sebastapol, California, Jay Shafer built himself a house that "wouldn't cost a lot of time and money and would reduce greenhouse gases." The result: a living area, bathroom, kitchenette and bedroom packed into a 100 square foot space.

In Olympia, Washington, hazardous waste inspector Dee Johnson sold her 1,500 foot bungalow and moved into an 84-square-foot home that she parked in a friend's back yard.

Welcome to the tiny home movement, as people around the country swap out a key aspect of the American dream—a big ol' cushy home—for the benefits that living really, really small can bring.

People go tiny to improve their quality of life and reduce their eco-footprint. Jay Shafer did it because "I don't like to vacuum or dust." It saves money, too. Greg Johnson spends about $70/year to heat his home. "People are getting smarter about how they spend their money," he says. "Maybe they decide it's better to invest in an education than to make the mortgage payments on a $400,000 home. Or take a vacation!"

Living tiny does have its limits. Big parties are out of the question, and you'll probably do better as a single person. These aren't necessarily bad things, though, as more than one married person will attest. There are also ways to compensate. Johnson, who lives in Iowa City, does his socializing at nearby public spaces—and with the money he saves, he can afford to do so.

There's a growing buzz about tiny homes. They've been covered by Time Magazine, National Public Radio and The New York Times, and only last week CNN dedicated a segment to Shafer and his tiny home-building company, Tumbleweed Homes. (And, yes, both meanings are correct: it's a tiny company building tiny homes.)

The tiny home concept isn't new. Thoreau lived in one—in fact, he wrote a book about it—and before him Thomas Jefferson built a tiny house that he occupied while building Monticello. There are also a great many tiny homes on the water: they're called boats.

Tiny homes borrow wholesale from their floating cousins. Greg Johnson heats his home with a boat heater, while in Jay Shafer's house, the shower is the bathroom (there are plastic shields for the sink and toilet), and storage is crammed into every square foot of available space.

Tiny homes mimic boats in another way, too: they're mobile. Shafer's Tumbleweed Homes come with wheels attached. If you get tired of living in Oregon, you can pack up your home—literally—and set up shop in Nevada tomorrow. In the FAQ section of Shafer's website, there's even a whimsical question: can someone steal my house? His answer: "Never say never. But the trailers do come with locks, so that someone can’t attach the hitch to their truck."

Shafer envisions a time not too far off when his buildings are prefabricated and sold at outlets around the country. It's a plausible scenario. If you can sell storage sheds this way, why not tiny homes?

Our challenged economy may help Shafer's dream come true. If there were ever a time to go tiny, that time would appear to be now, with real estate values in the tank and people struggling mightily to get by. The notion of actually being able to pay their bills appeals to lots of people, and if they can do their part for climate change too, so much the better. College students, intentional communities, retirees, and people on a budget are among the prospective purchasers. The market will never be, ahem, huge, but it's a niche with real potential.

Maybe Randy Newman will write a song about it: you don't have to be a short person to live in a tiny home.