Dec. 29, 2010  -- Out in the desert near Taos, N.M., they're building houses out of garbage.

Using old tires packed with dirt, trashed appliances, and discarded bottles and cans -- the stuff that stays in landfills forever -- architect Mike Reynolds and his crew are turning our trash into solar-powered, self-sustaining, energy-efficient houses.

"It's kind of a machine, not a house," Reynolds said. "And it's a machine that involves biology and physics to make it so that the people can NOT need municipal utilities."

He calls his creations "Earthships." They are off-the-grid wonders of physics -- angled south to catch the sun's rays through solar panels on the roof so they remain naturally cool in summer and warm in winter. No heat or air conditioning required, Reynolds said. Earthships hover at about 70 degrees year-round, even when it's below zero in the high-desert winter.

"You just have to orient it right," Reynolds said. "Admit the sun in the winter, because it's low. And block it in the summer, because it's high."

Touring his "model" home, a three-bedroom, two-bath Earthship which Reynolds calls The Phoenix, he points out that Earthships are comfortable on homeowners' wallets as well.

"The total utility bill of this house would be $100 per year to run the propane for the cook stove," Reynolds said. "That's $100 per year total."

Earthships begin with a foundation of old tires, about one thousand per house, each individually packed solid with dirt so they're firm as bricks. Reynolds said he "contrived" the use of tires just to recycle them at first. "But now, as an architect, engineer, contractor, builder," he adds, "I could not dream up a better way to build. If somebody gave me $30 million to invent the best building block, I'd invent the tire."

The tires are stacked high and cemented with desert mud, interspersed with aluminum cans, to form walls. The recycled cans create an irregular surface to hold the next course of mud, Reynolds said. Walls are then built to form rooms, just like a regular house -- living room, bedrooms, kitchen, and baths. Rainwater is captured and used -- and re-used. What looks like stained glass is actually the bottoms of plastic bottles and cans, added to let in light and give interest to the walls.

Saving on Utility Bills

On the roof of The Phoenix, there are cisterns to collect and hold rainwater, and solar panels, in addition to decorative green and gold scalloping along the roofline, which gives the house a whimsical look. Those, Reynolds points out, are junked avocado and gold kitchen appliances -- refrigerators, stoves, dishwashers -- from the '70s and '80s, cut into pieces to decorate the homes.

"Every dump is just full of them, so we harvest all those baked-enamel panels," Reynolds said.

But are owners living a rustic lifestyle inside their Earthship? Not unless they want to. In his showplace, The Phoenix, Reynolds has a flat screen TV, a fireplace with a waterfall and wi-fi. There's also a stocked fishpond, and an attached greenhouse for home-grown fruits and vegetables.

The Thorne family from upstate New York drove four days in an RV to come stay in The Phoenix. "I want to bring this back to the East Coast," Bruce Thorne said, as his wife Lita exclaimed over the "green" utilities and the stained glass-like plastic and metal cans decorating the walls.

Addressing People's Needs

Earthships aren't cheap -- they cost about the same to build as a traditional house. They range from about $100,000 for smaller models, to $1.5 million for the Phoenix. (Reynolds admits he priced it high, primarily because he's ambivalent about selling). But many owners, like Alix and David Henry, save money by doing some or most of their own construction. The Henrys outgrew their one-bedroom earthship when daughter Helen was born. They've added on to make room for their larger family.

Like Mike Reynolds, Alix Henry is an architect. She said her parents used to think she was crazy for living in an Earthship -- until utility costs skyrocketed.

"My mom actually commented about what a good position we're in," Alix Henry said, "because we don't have any utility (payments) and we don't have a mortgage, so a lot of what's going on in the world is not affecting us."

If Mike Reynolds has his way, whole of subdivisions these unusual structures would be built all across the United States and around the world. They're already in Europe, in other cities across the United States, on the Caribbean island of Bonaire, and, most recently, in earthquake-ravaged Haiti, providing an efficient way of recycling the rubble there. Reynolds and his team go back to Haiti in January 2011 to install systems in the house they built earlier this year.

In response to those who view these unusual and unconventional homes as strange, Reynolds points to that $100 a year utility bill, as well as all the junk salvaged from landfills that go into creating Earthships.

"We're addressing the garbage issue, we're addressing the water issue, we're addressing the energy issue, heating and cooling, housing, and food," Reynolds said. "All of the things that people need, we're addressing them now."

ABC News' Charles Herman contributed to this report.