Why the tiny-house market is getting bigger

·5 min read

According to the U.S. Census Bureau, the median size of a single-family house in 2020, the most up-to-date survey year, is 2,261 square feet. For many Americans, a home of that size is out of their price range, simply too large for their needs, or entails a bigger carbon footprint than they want...enter the tiny house.

This Town at Trilith tiny house has a sleek, modern kitchen with downsized appliances.
This Town at Trilith tiny house has a sleek, modern kitchen with downsized appliances. (Photo courtesy of Town at Trilith)

According to the 2018 International Residential Code, a tiny house is a "dwelling unit with a maximum of 400 square feet of floor area, excluding lofts”; however, most people in the industry consider homes up to 1,000 square feet “tiny.” Some are built on a trailer base, so they can be moved from place to place, while others are constructed on a traditional foundation.

For some, they are the perfect answer to the housing shortage, though they don’t fully address the underlying market forces driving up home prices in cities across America — such as strict zoning laws, or skyrocketing demand.

Many economists predict, according to iProperty Management, that the tiny-house market will grow robustly in the near future — they cite a 6.25% projected market growth rate. According to sources like Realtor.com, a top reason for the expansion is that COVID-19 has sent many city dwellers to the suburbs or the country; as well, tiny homes use only about 7% of the energy that a traditional house does, according to the iProperty Management report.

This accessory dwelling unit (ADU) is a 600-square-foot one-bedroom built by Maxable in La Mesa, California.
This accessory dwelling unit (ADU) is a 600-square-foot one-bedroom built by Maxable in La Mesa, California. (Photo courtesy of Maxable)

According to a December 2020 Fidelity National Financial survey cited in Business Insider, 56% of the 2,006 respondents reported they would consider living in a tiny home, and those who don’t yet own a home — 86% — were much more likely to choose a small home for their first purchase.

"We have seen demands for tiny homes increase in the last six months,” says Volodymyr Barabakh, co-founder and project director of Chicago-based Fortress Home. “The lumber shortage is putting larger homes out of reach of first-time home buyers. Tiny homes offer a more affordable solution, particularly to those who want to build rather than buy.”

For existing homeowners, adding a tiny home to their property can also help them create equity. Caitlin Bigelow is the CEO of Maxable, a California company that builds small homes on existing house lots, and, she says, her business “is exploding.” Bigelow explains, “We’ve seen housing prices skyrocket over the past year, and this has made people more confident about adding another structure, because you know you’ll get your money back and you can tap into home equity. Many people are seeing that there is no place to buy or rent and that these small houses — some call them ‘granny flats’ — are a good investment for their families.”

The living area of this 550-square-foot Town at Trilith home makes the most of its space.
The living area of this 550-square-foot Town at Trilith home makes the most of its space. (Photo courtesy of Town at Trilith)

Of course, there are downsides and challenges to tiny living. First off, relationships need to be strong to thrive in a home less than a quarter of the size of the average American home. “Living in a tiny house forced my husband and me to get physically, as well as emotionally, closer,” said Kerri Fivecoat-Campbell, author of the book "Living Large in our Little House: Thriving in 480 Square Feet with Six Dogs, a Husband and One Remote."

“It drew us closer to each other. You don’t realize how much time you could be spending with each other but aren’t due to technology, but living in a tiny house changes all that,” she said to Yahoo Finance.

She also has some advice for others who are thinking about going small, as she went from a 1,200-square-foot home in Kansas City to her 480-square-foot one on Bull Shoals Lake in Arkansas: “Be ruthless about getting rid of stuff. You not only have to love it, it should also serve a purpose; you can always take digital pictures of things. Most importantly, be prepared for a big adventure!”

This marble-accented kitchen is in a 600-square-foot home built by Maxable in California.
This marble-accented kitchen is in a 600-square-foot home built by Maxable in California. (Photo courtesy of Maxable)

Beyond sharing a micro-bathroom with your significant others and doing a very thorough purge of your belongings, there are logistical hurdles when downsizing: It’s illegal to park a tiny house on wheels in many states, though an increasing number of communities are giving the OK to tiny builds. The most tiny-friendly states in the country, zoning-wise, are Colorado, Maine, Michigan, Nebraska, Nevada, North Carolina, North Dakota, South Dakota, and Texas, according to iProperty Management’s report. In places where a tiny house can be built on its own piece of land, it must have all of the amenities of a traditional dwelling unit — multiple egresses in case of a fire, for example — to be legal as a permanent residence.

One trend in the tiny-house market is professional builders creating clusters of the Lilliputian living spaces. Rob Parker is the president of the Town at Trilith, a tiny-house village adjacent to the Atlanta-area studios where Marvel films, among others, are shot. 

He says his company has been hit hard by the labor and building-material shortage, explaining, “It’s taking us about 30 more days to build a home and 30% more in materials. Demand is high, supply is low.” 

He breaks down the numbers, saying, “The second round of tiny homes we built sold for $250,000 to $275,000 for 550 square feet. They cost us about $200,000 to build, so we aren’t doing any pre-sales from now on, we’re waiting until they are three-quarters built to preserve our profit in this volatile construction period.” On the plus side, he says, “Every single home we’ve built has sold. We’re finding that young people and empty nesters want the same thing—a well-made home that fosters great human relationships.”

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting