Even without rising inflation, the cost of housing continues to go up, year after year, for most Americans. The so-called American dream of homeownership seems well out of reach for many, especially the younger generations. Tiny homes may be the answer.
The cost of housing ranks as the largest monthly expense. and it’s not just the rent or mortgage, but also property taxes, insurance, utility bills, repairs, maintenance, and various other expenses.
While not for everyone, tiny home living has drastically cut these costs for millions of Americans, and the homes’ popularity only continues to grow. A tiny house is a dwelling with a maximum of 400 square feet of floor area, about the size of a standard two-car garage, according to the 2018 International Residential Code.
In a 2020 survey by Fidelity National Financial subsidiary IPX1031, 56% of Americans said they would consider living in a tiny home.
Additionally, 72% of respondents indicated they would consider using a tiny home as an investment property. These are surprisingly high numbers of people interested in the merits of tiny homes, but perhaps less so when you consider the fast-growing Airbnb market and how popular tiny homes are on that platform and VRBO.
Young renters also account for the growing interest in tiny homes. In addition to lowering their monthly housing expenses, many young adults haven’t yet accumulated a lot of furniture or other material possessions that make tiny home living impossible.
Even during the pandemic, tiny home living continued to be popular despite the potential problems of working from home in close proximity to other household members and being confined to home for long periods.
While many Americans are trying to cut housing costs by relocating to cheaper parts of the US or leaving the country altogether, tiny homes tend to be popular in more desirable states where housing costs in sought-after areas are sky-high. According to Business Insider, the top states for tiny home ownership are California, Florida, Colorado, and Texas.
Tiny homes are, of course, most practical for small households, such as child-free couples or single people. But that doesn’t mean tiny home living has to be isolating. Tiny home communities are becoming more common across the country, providing highly affordable community living.
Does Tiny Home Living Really Save Money?
Deciding whether or not to pursue tiny home living is a complex choice. While saving money is a welcome and sometimes necessary side effect, most tiny home dwellers have chosen the lifestyle for sustainability, minimalism, and simplicity. There’s usually a good reason for choosing tiny home living over other ways to cut bills, such as living with family or finding multiple roommates.
National Debt Relief confirms that tiny home living saves people a lot of money. However, there are other important factors to take into account. While you can build tiny homes for less than $10,000, the cost per square foot is actually higher, on average than building a traditional home.
The savings don’t end with the construction or purchase of a tiny home, though. Property taxes and insurance are generally based on the value of your home, and utility bills tend to depend on its size and energy efficiency. Tiny homes are built to be energy efficient; often with off-the-grid living in mind.
According to Tiny Living, tiny home dwellers are slightly more likely to have savings in the bank than the average person. They’re also more likely to own their home outright. As many as 89% have less credit card debt than the average person, and 65% of them carry no credit card debt at all.
It is, however, essential to be aware that there are other reasons that tiny home dwellers may be financially better off than those in traditional homes. As already mentioned, they are less likely to have children, and some are already retired, possibly with significant retirement savings.
Interestingly, Tiny Living also reports that tiny home dwellers are twice as likely as the general population to have a Master’s Degree. They also earn a slightly higher salary than the average worker.
Should You Move Into a Tiny Home?
Whether or not you should move into a tiny home depends on several factors, most of which are not financial. Tiny living is a lifestyle choice that can save you money. But it is very much a lifestyle choice. The most important thing to consider is whether you’ll actually enjoy tiny living and whether it aligns with your values.
If the answer to that is yes, then it might well be right for you. At least for a while. and during that time, all other things being equal, you will most likely save a significant chunk of money over living in a traditional home.