Seems Americans are drawn to the extreme. Take a normal Buick and modify it till it’s only 2 inches off the ground; why? Take a normal Dodge pickup and jack it up so high you literally need a step ladder to get in it; why? It’s classic American ingenuity and curiosity. Why leave a tried and tested product alone when you can change it. Which brings me to my question: Is a tiny house right for anyone?
Like it or not television plays a huge role in shaping our lives and the tiny home trend that has swept the home improvement channels is an example. It’s a fun journey watching the home be designed and built, a little cheesy sometimes, but interesting. But… at the end of the day the mobile tiny home is just that … a home which requires running water, plumbing, electricity and appliances. You’ll still need a place to park it in order to live in it.
Let’s examine the reality of tiny houses:
Ask any experienced real estate agent and most will tell you the tiny house thing is a fad, just like platform sneakers and leopard jackets were once popular. This portion of the real estate market is untested and is mainly buoyed by the intense TV exposure. One aspect of tiny house living is the appealing idea of downsizing, simplifying and reducing your financial burden, but is tiny the way to go?
Sound Financial Investment?
Location, location, location is the real estate mantra and what better way to relocate to a better location than to live in a portable house. The problem is locations are hard to find. Where are you going to find a location within a city or town which allow zoning for the tiny house? Possibly in a mobile home park, but other than that you’ll have to purchase property to live on and acquiring utilities can be very expensive. That’s a huge investment.
Secondly, real estate value is based on supply and demand. Because the number of people willing to purchase a tiny home is … well, tiny. There is a large supply and very limited demand. If this lifestyle is still appealing, go for it. Just be prepared for an extended on-the-market period when you decide to sell.
What’s the Market?
The vast majority of tiny homes can only accommodate one or two full time residents and for a short period, perhaps a child. There is no room to accommodate any overnight guests, which eliminates any potential buyer who likes to entertain, which is a huge section of the population. This factor also excludes the possibly of buying a tiny home for a vacation get away as most vacations are geared to family and friends exploits, and the available room for even temporary living is just not there.
It’s true real estate markets change, trends come and go, but the average American consumer when deciding on buying a home, is interested in buying a place the family can grow into and can be held as a long term investment, building equity. The tiny home offers immediate constraints, a huge lifestyle change and the long term outlook is untested, thus an unknown.
The concept of downsizing is appealing, it’s like getting naked and running through a field of lilies. Problem is as you run you realize there are thorn bushes and rocks in the same field and suddenly clothes and shoes seem like a good idea again. Bottom line; the place is too darn small. Let’s face it, Americans like Stuff. We are always collecting stuff and this stuff gets stored in the garage or the basement, but a tiny house has neither.
Think about it. No option to expand, no where to store your new hobby stuff much alone your old hobby stuff. What about the cat and dog? Where do you put the litter box and dogs don’t like being confined even in a fancy cage. Lawn mower, garden tools, snow shovel?
There is always trade offs. If you live in a great climate, like San Diego, California, the idea of opening your tiny house to the great outdoors will greatly expand the feeling of roominess. A deck will open another living space.
Mobility is a very minute factor in buying a tiny house, as it’s doubtful you’ll ever see tiny houses zooming up and down the highway. No, the main reason for downsizing is a financial one, to save money. However, in the overall picture, you most likely won’t save any money and in fact may spend more.
Look at it this way. You buy a used car which sells at the car lot for $10,000, for $500. You have made a fantastic financial deal. However, the car will need a new motor because the current one is locked up. The brakes are shot and while you’re there you’ll need four new tires. You don’t have the skills to perform the repairs so you’ll have to pay to have it performed. Suddenly you have $12,000 in maintenance costs plus the original $500 you paid for the car. You now have paid $12,500 for a $10,000 car.
You could be facing a similar scenario when buying a tiny house. You have no storage space so you’ll have to rent a storage locker. This expense plus the time and aggravation of having to go get anything bigger than a toothbrush, adds up. Want to throw a birthday party in February in Michigan, go rent a venue. Out of town family coming in for a wedding … go rent a motel. The list goes on.
The Final Dagger
You have reviewed all the options, gave consideration to the drastic life-style change, gotten rid of everything except the shirt on your back. You are going to buy a tiny house no matter what because you can build it for $50,000 in a real estate market where a normal house costs $175,000. Congratulations, that’s great.
Then suddenly it ain’t so great. You go to the lender for a mortgage loan and are told lenders have minimum square foot requirements before they will lend money. You must pay cash for your tiny home. No problem, you have $50,000 extra lying around or uncle Joe will lend you the money. Great, problem solved. Temporarily. What about when you want to sell? Your buyer will also have to pay cash for the property. With that stipulation you have whittled your potential buyer market to literally zero.
In case you haven’t figured it out, in my opinion, Is a Tiny House Right for Anyone? No. It is a poor financial choice both current and future. It may be different if you could buy one for ten or twelve thousand dollars, but these babies can get as high as a $100,000. Again, in my opinion tiny house living is more like tiny house purgatory.
Still tempted to try the lifestyle? Just can’t resist the urge to explore an alternative life style? There’s nothing wrong with that. It’s the American way … pioneering, exploring the great plains, deep oceans and outer space. However, may I offer an alternative choice.
Recreational vehicles, campers whatever label you know them by are an excellent choice to try the new life style. They are designed by professionals, incorporating clever storage usage and luxury accommodations. They have a long history of tested standards. And perhaps the biggest factor … they have an established resale value and a large pool of potential buyers.
Buy a used, but good condition recreational vehicle, live in it for a predetermined amount of time, be careful to live in the exact conditions a tiny house offers, and if you haven’t gone stir crazy by claustrophobia, sell it (which you can) and buy a tiny house. My money says you may sell the RV, but I doubt you’ll be reinvesting in a tiny house.