Remember when tiny houses were all the rage? Wait . . . they still are. People everywhere (especially millennials and older baby boomers) seem to be fascinated by the idea of downsizing their lives, responsibilities, debt and reliance on a normal nine-to-five.
But is going tiny really worth it?
What Are Tiny Homes?
Tiny homes are homes that are . . . well, tiny. Tiny homes can come in all shapes and sizes, built from a kit or from the ground up. Some are even customized RVs, school buses or trailers. But remember, they are small. These homes are anywhere from 100 to 400 square feet. Some even go up to 600 square feet (but true tiny house fanatics might not think that’s small enough to be considered tiny).
Tiny homes aren’t a new idea. People have been living in small spaces for a number of reasons since the beginning of time. But the tiny house movement you see today is here and going strong. Whether you consider yourself a minimalist or just someone who doesn’t like a lot of stuff, this type of living situation might pique your interest.
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Listen: You either love the idea of a tiny home or you hate it. If you’re young, have a wandering spirit, and just want a little adventure in your life without being attached to a hefty mortgage, you probably love the idea. And if the idea of not being able to sit up in bed makes you claustrophobic, you’ll hate it.
How Much Do Tiny Homes Cost?
It depends. If you want your tiny house to be unique and customized to your lifestyle, you’ll have to get some help. And unless you know how to build a tiny house yourself, that help comes with a pretty high price tag. But if you don’t mind turning a rectangle box into a home, then a tiny house kit could be up your alley.
Just like with any home, you get what you pay for. And the price? It all depends on what you’re paying for. HomeAdvisor has the median price of a tiny home coming in at $45,000.1 In comparison, the median price for a full-sized home in the United States is $340,000.2 But most tiny homes start at around $8,000 and can go upward of $150,000 or more.3
Why Are Tiny Homes So Expensive?
Many tiny homes can be so expensive because they’ve been customized and personalized to every whim and whimsy of the homeowner. So if you want your tiny home to have an outdoor theater, rooftop patio, butcher block countertops and a granite tiled rain shower . . . you’re going to be paying top dollar. Not only that but if you want to make the most of your space (and you do), you’ll want to build your house in a way that is multifunctional. Maybe the bookcase doubles as the stairs you climb to get to your loft. Or maybe it conveniently pulls out into a desk space for all of your work-from-home needs. The possibilities are endless.
But if you’re looking for a run-of-the-mill tiny space that gives you a place to rest your head (and save money on a mortgage), you can save quite a bit of money with a tiny home kit. But remember, the kit doesn’t always include necessities like doors or windows. Yup—those are extra.
What many tiny homeowners don’t realize is that there’s more to the cost than just the building process and materials. They change drastically depending on your choice of foundation. Remember, you have to think about where you’re going to build (or park) your home (and how much it costs to buy or rent a lot of land)—not to mention including the cost of permits and licenses from the state and city you’ll be parked, a trailer for traveling or moving your home, fuel, and a vehicle with enough horsepower to lug it around.
Resale Value of Tiny Homes
Tiny homes differ from regular homes in that they don’t appreciate in value over the years. Surprised? Don’t be. If your tiny home is built on wheels, then you can bet it’ll depreciate at the same rate as an RV or truck. As for the rest of the tiny homes, not only are you looking for a very specific buyer, you’re also going to have to sell that buyer on the customizations and style of house that you chose for yourself. The multipurpose spaces you thought were a no-brainer for your lifestyle may not work for someone else and their particular lifestyle. Yup—that special closet you made for your handbell collection may be worthless to someone who doesn’t give a rip about tiny musical bells.
In a nutshell, resale value for tiny homes isn’t that great. If you spent a chunk of money personalizing your tiny home, consider it a family heirloom once you outgrow your tiny house lifestyle. Maybe it becomes an office, in-law quarters or a future getaway spot for your family. But if you’re hoping to make your investment back plus extra . . . keep dreaming. The average resale value of a tiny house hits close to $60,000.4 In that case, it’s often cheaper and easier for someone to start from scratch than to buy your customized home from you.
Many tiny homeowners see their tiny homes as a way to own a home without having to pay out the wazoo for a mortgage. Not only that but they also consider it to be a better purchase than renting someone else’s home or an apartment.
Do Tiny Homes Depreciate in Value?
They sure do. Like we said before, the market for tiny homes is a lot smaller than the market for full-sized family homes. If your tiny home is built to sit on wheels, it will depreciate in value just like the truck you pull it with. Even if your tiny house is built on a foundation, it still won’t increase much in value because the value is determined by the demand in the marketplace. So unless you’ve built your tiny house on the most desirable piece of land in the United States with a crazy amazing view, you’re probably not going to be seeing your home value go up over the years. Bummer.
But when it comes to tiny homeownership, people aren’t really looking to build equity. They’re looking for adventure, freedom from a large mortgage, and the opportunity to live life a little differently than the rest of us.
Are Tiny Homes Worth the Investment?
Nope. Especially not if you’re thinking of purchasing a tiny home as a long-term investment. But if you’re absolutely sold on living small and going tiny, you do you—but don’t expect any returns on your investment.
If you’re in need of a place to live but aren’t ready to buy a house, that’s okay! Remember: Renting isn’t bad, especially if you’re working on revamping your finances from the ground up. We know it’s hard to stomach the idea of “throwing away money,” but renting a home or apartment for a season might be your best option.
And if you’re looking for a tiny home because you believe in minimalism, living small, or traveling—that’s okay too. But don’t be surprised if the investment you make in your tiny home isn’t so tiny. There’s a lot of hassle that comes with tiny home living. Before you spend that hard-earned money on building your tiny abode, make sure you’re up for the challenges it will inevitably bring. And don’t forget: The investment you’re making at this point is more about the lifestyle than the money you’ll make at resale.
Not sure if you should go tiny? It’s time to talk with a pro. Contact one of our Endorsed Local Providers. We’ll match you up with a local real estate pro in your area who will give you solid homeownership advice with your specific needs in mind. Find a pro here.