Are Tiny Homes a Better Option During a Hot Housing Market?
The hot housing market of the past few years still shows no sign of cooling. With traditional homeownership out of reach for many Americans and inflation on the rise, could tiny homes fill the gap?
The easy answer: it depends.
Tiny homes do offer a significantly lower price tag compared to a full-sized home. In fact, CNBC mentions that a tiny home costs about 87% less than a traditional house. For home buyers on a budget, a tiny home can help to not only lower the purchase cost, but also the total cost of ownership. In times of inflation, saving money at every turn matters.
Here are some things to consider when vetting a tiny home investment.
The Current State of Tiny Home Prices
Inflation continues to affect nearly every aspect of daily life, including new home construction. The costs of building a new tiny home have risen, too — labor, building materials, and land have all skyrocketed in recent months.
However, tiny homes remain a more cost-efficient alternative to building or buying a larger home. Last year, the median cost of a tiny home was around $60,000. By comparison, the median home price for traditional homes across the US was about $284,057, this does not include buying and prepping land the home would be on.
For buyers, this can mean either getting a smaller home at an attractive price point or having more money to put into finer aspects of your living environment — or in some cases, both. Spending less on the home itself could mean having more money to spend on more land or land located in a desirable area, as well as higher-quality building materials and appliances.
Demand for Tiny Houses is Rising
We first saw the rise of the tiny home trend back in 2008, when the housing and financial crisis left consumers with fewer options for quality housing. Tiny homes were viewed as an affordable alternative when traditional housing was out of reach.
Many home buyers are finding themselves in a similar situation today, where traditional housing is out of reach. Rental rates and home prices have both climbed substantially, pushing consumers to seek alternatives for housing.
Currently, tiny homes are as popular as they’ve ever been. Part of the surge in popularity is being driven by the increase in remote work. As more people are presented with greater flexibility in where they can live without the confines of a physical workplace, they’re turning to tiny homes to reduce their total cost of living.
Tiny homes cost more per square foot to build compared to a traditional home ($300 per square foot compared to $150 per square foot, respectively). But they still clock in on a very budget-friendly level. In our current time of inflation, a tiny home can be a highly feasible option to make homeownership a less costly reality.
At Utopian Villas, we build tiny luxury homes. Contact us today and let’s start building your dream!