Tiny Homes: Fad or Forever?

Everyone is talking about tiny homes these days and they have certainly grown in popularity.  The question is, are tiny homes the wave of the future?

Not so fast. There are a lot of challenges to creating and maintaining interest in tiny homes.  First, you have the challenge of zoning. Getting municipalities to adjust their zoning is a big challenge. Most ordinances were created back in the 1950’s and have not been re-done, only amended. They clearly weren’t designed for this type of home. Even if you get smaller lot sizes to accommodate a tiny home the EPA, county government, and other ordinances may conflict or prohibit that lot sizing. 

If it becomes feasible to appease all the requirements, the cost to develop those lots may make owing a tiny home prohibitive for a buyer. As a local builder in Waukesha, we know that currently over $55,000 from the cost of a lot is due to local, state, and federal regulations! Most buyers willing to live in a tiny home probably would not want to pay that high of a premium to live on one of those lots. 

If you go to trade shows you will see people flocking around tiny home displays. Builders who have built them, and market them, get lots of curious people checking them out and asking a lot of questions, but seldom do these inquires lead to purchases. 

The idea of a tiny home is great; some of the designs we have seen are certainly creative. It really seems like the best use for a tiny home would be as a second home or vacation home. If you have acreage in an area without zoning or building restrictions, a tiny home would be ideal for a get away. If you are expecting someone to live in tight corridors for more than a few years, that would be a stretch. You certainly wouldn’t want to raise a family in a home like that. These types of homes might make a great bachelor pad or be suitable for someone who works and travels a lot and doesn’t want an apartment, but there just doesn’t seem to be a mass market for every day buyers. 

Most importantly, don’t forget the culture of our country. Americans like big. How many smart cars do you see on the roads today verses just a few years ago, when they first came out? Hardly any. Today you still see tons of big pickup trucks, SUVs, and vans driving down the road.  Remember, the home industry closely follows the auto industry. Typically, home building is a few years behind the innovations in the auto industry. That trend is not a good sign for the long-term future of tiny homes.

With all that being said, the average size of a new home will decline in the next few years. In the 2000’s the average new home was 2,200 sq. ft. Today it has ballooned to nearly 2,600 sq. ft. and is starting to go down, due to affordability issues. 

So, while tiny homes are a fascinating segment of the market, I wouldn’t go all in on seeing them take over the country. 

A study by NAHB in 2015 indicated $84,671 from cost of a new home was due to local, state, and federal regulations. 2/3 of that cost was included in land development.