A man named Simon Dale has actually built a Tolkien-style hobbit-hole to live in with his family.
See
http://www.simondale.net/house/ and
http://www.dailymail.co.uk/news/arti...ust-3-000.html .
Well actually this smial is not dug into the ground but is built up from inexpensive material with a layer of earth laid over it.