Is it time to get tiny?
- Tiny houses have become extremely popular, especially with millennials.
- Paying for a tiny house is different from using a traditional mortgage to finance a home.
- Tiny homes often cost less per month, saving owners money.
Tiny houses have been a big hit in recent years. There are TV shows about designing and building tiny homes, and even some dedicated to everyday people trying to find their perfect tiny home. The tiny house lifestyle is all about downsizing and settling for less, while spending far less on housing costs. So it’s not so shocking that the average American has less cash on hand than the average small homeowner.
What’s a tiny house, anyway?
A tiny house is exactly what it sounds like: a much smaller than average house. According to US Census data, the average size of a newly built US home in 2021 was 2,356 square feet. Compare that to the average size of a small home: between 100 and 400 square feet. Small homes get bigger and a home up to 1,000 square feet could be classified as “tiny”, but less is more in the tiny house movement. It’s really about doing a lot in a smaller space. Spend some time on the internet researching tiny homes and you’ll find some beautiful examples that look like high-end homes, in miniature.
What kind of people live there?
Tiny house living appeals to a lot of people, but like so many major trends of the past decade, millennials are leading the charge. Many of my generation have been left out of the traditional real estate market, and since we have lower net worth than older people due to a variety of financial factors, it’s easy to see why buying a tiny house for so much less. silver is attractive to people in their thirties. But 30-somethings aren’t the only Americans shrinking their acreage; baby boomers are also fans of tiny houses. When they reach retirement age, many see the value of reducing the amount of home they have to take care of (and pay for). Plus, Tiny Houses can even be mobile, so if you’re nearing retirement and dreaming of traveling across the country, a Tiny House on Wheels might be right for you, too.
Why are the finances of small owners different?
Paying for a tiny house can be very different from a traditional 30-year fixed rate mortgage (which has become as American as apple pie). In fact, traditional mortgage lenders generally won’t work with aspiring small home owners at all, leaving them to seek out personal loans or manufacturer loans. The average price to build a tiny house is just $68,000, and truly savvy DIYers can spend a lot less than that to build their miniature dream home. You can get recycled or sometimes free materials or buy tiny home kits, and there are plenty of resources to help you achieve this lifestyle. If you’re already skilled enough in the building trades, you might have what it takes to build one yourself.
Compare that $68,000 (since this is an average number and not a median, most small homeowners probably spend less) to $407,600. According to the National Association of Realtors, that was the median sale price for an existing US home in May 2022. Now, I bet you’re really starting to see the financial appeal of a tiny home!
Due to the considerably lower costs to build and maintain a small home (for example, housing expenses can be much lower when you have less square footage to heat and cool and less maintenance to perform on a brand new and very small house), small owners save a lot of money compared to those who live in more traditional housing. In fact, 55% of them have more savings than the average American, 89% have less credit card debt and 60% live without any credit card debt. Tiny house living can be a gateway to more financial freedom.
Should you buy a Tiny House?
Tiny house living isn’t for everyone. There are financial issues with tiny homes that go beyond lower purchase costs, including the cost of appliances often custom-made to fit into a tiny home, transportation of the home (if it is intended to be mobile) and the cost of land. put the house. But if you have a dynamic mind, have saved up money for a house, and want to forgo the traditional mortgage route (and maybe save some money on your monthly housing costs), a tiny house might well fit. for you.