How Much Are Tiny Homes Really Worth? Boom Amid Inflation
With inflation and higher prices when buying a home, many people are choosing to live in tiny homes. How much are tiny homes really worth?
As the affordability of home ownership has become out of reach for many people, the popularity of tiny homes is increasing. The tiny homes market is expected to grow by $4,171.33 million by 2027, a 2022 study found.
But is tiny home living an affordable way to live? How much are tiny homes, and are they cheaper to live in than an apartment? Keep reading to find out how much tiny homes are worth.
What are tiny homes?
A home has to be under 450 square feet to be considered a tiny home. That's considerably smaller than the average single-family home at 2,273 square feet. It’s closer in size to a studio apartment, which is about 500–600 square feet on average.
Tiny homes can be built on wheels to make them portable or on a foundation. Similar to a studio apartment, a tiny home's bedroom, living room, and kitchen are all located in one living space.
Are tiny homes actually cheaper?
Whether a tiny home is cheaper than a traditional home depends on how you look at it. The overall cost of a tiny home is less expensive. On average, tiny homes cost between $30,000 and $60,000. However, the price per square foot for a tiny house is higher at $300 per square foot. A traditional home costs between $100 and $200 per square foot, according to New Home Source. So, you may get more for your money with a traditional home.
Prebuilt tiny homes and tiny homes built on foundations typically cost more than those that are custom-built and on wheels. Other factors that impact the cost of a tiny home include the building materials used, the building permits needed, and the costs associated with access to utilities like water, sewer/septic, and electricity.
In what states are tiny homes legal?
Although tiny homes are legal in all U.S. states, some states have specific rules and requirements for tiny home living. For example, in Wilmington, N.C., tiny homes must be at least 150 square feet for a single occupant and must add 100 square feet for each additional occupant, reports Tiny House Design. Strict laws regarding tiny homes in New York, West Virginia, North Dakota, Alaska, and Wisconsin may make it hard to live the tiny home lifestyle affordably there.
What are the disadvantages of a tiny home?
Besides the obvious drawback of having limited living space, tiny homes have other disadvantages. You most likely won’t be able to get a mortgage to finance your tiny home because the minimum home loan usually starts at $50,000, and many lenders require that a home be built on a permanent foundation. So, you’ll need cash in hand or a personal loan, which may have a higher interest rate than a mortgage offers, to purchase or build a tiny home.
If you decide to sell your tiny home, you may not be happy with the return on your investment. Tiny houses on wheels typically depreciate in value like a car or RV does. Meanwhile, a traditional home can appreciate in a strong market.
Is it cheaper to live in a tiny home or an apartment?
If you have the money to buy a tiny home upfront, it may be cheaper than renting a studio apartment. For example, according to Rent.com, the average rent for a studio apartment in Madison, Wisc., is $1,187, which is a 3 percent increase over last year.