An Etsy seller has built a series of Bag End children’s playhouses:
This Hobbit Hole playhouse is 12′ wide, has a maximum interior height of 6’3″ and about 50 square feet of floor space. Comes painted as shown. Comes with a set of plexiglass and screen windows. Has a pressure treated floor system and all cedar framing. Floor is urethane-treated sanded plywood.
The real expense is likely excavation.
(Hat tip to io9.)