Tiny homes have been swiftly gaining popularity over the last 10 years. And the trend shows no sign of stopping. TV shows like “Tiny House, Big Living,” “Tiny House Nation” and “Tiny House Hunters” have fascinated audiences with the joys of tiny homeownership and the many benefits of living the small-home way of life.
The increased interest in tiny homes began in 2009 when the recession decimated the financial lives of many Americans. Many families lost their homes after losing their jobs as and being unable to find other work for an extended period of time due to stagnated growth.
Homeowners are realizing that bigger isn’t always better. Tiny homeowners benefit from reduced debt, freeing them to pay down other debts or save for purchases that would be out of reach. Instead of taking out a mortgage for a $300,000 house with more room than is needed, owners can take out a loan or pay in cash anywhere from $10k to over $100,000. Online lenders such as Backed and SunTrust are getting in on the trend and marketing to those looking to purchase a tiny home.
While interest in tiny homes will likely continue and increase, the real estate and mortgage industries are trying to catch up. Currently, mortgage lenders don’t issue mortgages for tiny homes. Tiny home companies may offer to finance but many prefer to be paid in cash or to have the owner pay with a bank loan.
Another problem with the sudden fascination and sales increase in tiny homes are land costs. High land costs, especially near metropolitan areas, limits resale value. Building permits and zoning regulations are fitted for large-scale construction, giving them the benefit of a lower cost for material and labor. This can increase the building costs of a tiny home significantly. Tiny homeowners may benefit from leasing land that is outside of major metropolitan areas or by leasing RV lots. Many RV lots can be leased for under $300 per month.
Trends in simple and streamlined living are more than likely here to stay. Although zoning laws, building permits, land cost and takes may stifle the proliferation of tiny homes in the near future, the public interest in the trend will continue as more people consider the economic benefits of living smaller.
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