My Perfect Mortgage
Exploring Whether a Tiny House Is in Your Future
6 minute read
January 18, 2018

If you spend much time watching TV, you’re probably aware of the rising trend in programs showcasing the virtues of the tiny home. It’s even possible to conclude that it’s a full-blown trend, set to revolutionize the housing market. Maybe you've even contemplated a tiny home in your future.

How big is the tiny home movement? Is it perhaps more hype than reality? Let’s do a bit of a drill down, and see what we come up with.

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What Exactly is a Tiny House?

The website The Tiny Life describes a tiny home as being between 100 and 400 square feet. This compares to an average of 2,600+ square feet for the typical American home.

How common are tiny homes? According to the National Association of Realtors Home Buyer and Seller
Generational Trends Report 2017
, less than 1% of all homes purchased are 1,000 square feet or less:

Now a tiny home is defined as 400 square feet or less. Since the NAR statistic above indicates that less than 1% of all homes are 1,000 square feet or less, we can presume that the number of actual tiny homes is some small fraction of 1%.

It would seem that tiny homes are gathering exaggerated attention, considering how unusual it is for people actually to buy them.

That said, let’s look at the benefits and burdens of a tiny home.

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The Benefits of a Tiny House

Even if you think that tiny homes are a rotten idea, they undoubtedly have some obvious benefits.

Lower Cost of Housing

It’s difficult to get statistics on the average cost of a tiny home. Part of that is because there are so many variables. Some of those variables include:

  • The size of the home
  • Location of the property
  • Permanent home or “on wheels”
  • Self-built or contractor built
  • The wide range of options included
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According to the website Tiny House Blog, the cost can be as low as $500 for what is essentially a shack, or as much is $70,000 for a well-located, custom contractor built home.

That’s a pretty big cost spread. But it’s still only a fraction of the US national median price of $375,700, a market dominated by single-family detached homes.

It looks like you could pay about 10% of the cost of an average home for a fairly well-built tiny home. That can lower your overall housing costs by about 90% across-the-board.

That’s the primary attraction of a tiny home.

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A Simpler Life

The most basic feature of a tiny home is its small size. That means you will have less home to maintain, and far fewer possessions. After all, limited space means limited possessions. If you can stand the self-denial, the net result will certainly be a simpler life. In the complex nature of life in the 21st century, many people consider a simpler life to be a virtue worth pursuing.

A More Ecologically Friendly “Footprint”

Smaller homes mean less of everything. That includes energy usage, like home heating, hot water, and electricity. A tiny home will also take up less space. Those features are decidedly more environmentally-friendly than the typical detached suburban homestead.

Tiny Homes are Mobile - Sometimes

Many tiny homes are built on wheels. This effectively makes them mobile homes. The advantage is that if you have to move, you can take your home with you. It can avoid the need to sell the home and buy a new one, and even moving furniture. It’s a real opportunity to travel light in life.

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It Can Serve as an Inexpensive Second Home

This can be even more important if your primary residence is an apartment. A tiny home can give you an opportunity to own a property in an area with recreational amenities. This could be near a lake, the ocean, a mountain resort, or even a theme park. It can be an inexpensive way to own a vacation home.

The Burdens of a Tiny House

All those benefits aside, tiny homes to certain definite limits.

Tiny Homes Only Work for Small Households

Tiny homes work best for single people and married couples. It can be very difficult to accommodate any more than two people. A third member might necessitate a second bedroom, and even a larger kitchen and bathroom. At that point, you might be getting beyond the basic concept of a tiny home.

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Space is ALWAYS an Issue

Even for singles and couples, space can be a problem in a tiny home. It’s essentially a matter of fitting several rooms of possessions into what is a one-room setting. Tiny homes make very economical use of space. There may be a primary room, which serves as living room, dining room, and a minimal kitchen. The bedroom may be a loft above that room. There will be little space for storage, or for any luxury possessions.

Limited Investment Value

Tiny homes are typically custom endeavors. Since the home is so small and must make trade-offs, it’s uniquely built for the initial owner(s). Selling a tiny home can be problematic. Unless you can find a buyer whose living accommodations match yours exactly, you may not even be able to sell the home.

That seemingly small investment of $30,000 could prove to be an illusion upon resale.

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Location and Zoning

Whether justified or not, tiny homes are not welcome in most neighborhoods. At a minimum, they’re seen as potentially detracting from local property values. Taxing authorities may not be so accommodating either. After all, a tiny home doesn’t generate the tax revenue of a typical single-family detached home. And if the home has wheels, it can’t even be taxed as real estate.

In most cases, a tiny home must be constructed on a sliver of a large piece of property owned by a family member. Other times, it must be constructed in remote rural areas. The more desirable a location is, the less likely you are to see tiny homes. Zoning laws usually prohibit homes being built below certain minimum square footage.

In the end, you may have a brilliant design for a tiny home, but be unable to find a place to locate it.

It’s Probably Only Temporary

Because they are small and remotely located, it’s almost guaranteed that you will need to move at some point. You’ll either have to follow a job or to buy a larger home to accommodate a growing household.

Unfortunately, tiny homes don’t fill the role traditionally provided by starter homes. They generally lack the quality of enabling the owner to build up equity. This will work against efforts to trade-up when the need arrives. And it will – sooner or later.

What are your thoughts? Do you think that tiny homes are a serious future trend? Or do you think that it’s mostly a fad, that’s more cool than real?

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