EP 116: Tiny vs. Small: Navigating the Evolving Landscape of Alternative Housing
Welcome to the Less House More Moola podcast, where we delve into the nuances of alternative housing and financial resilience through smart housing choices. In this episode, Laura Lynch, CFP® ABFP™ AAMS®, explores the distinctions between "tiny" and "small" residential units, shedding light on the legal complexities, market dynamics, and future possibilities within this evolving industry.
Understanding Tiny Homes: Intentional Living in 399 Sq Ft or Less
For many, the term "tiny house" conjures images of compact living, typically defined as 399 square feet or less. However, as Laura emphasizes, "tiny" transcends mere square footage; it embodies an intentional choice to prioritize space, reduce living costs, and align housing with a desired lifestyle. It's about intentionality more than strict dimensions.
The Legal Labyrinth of Tiny Homes on Wheels and Foundations
The legal landscape surrounding tiny homes is remarkably intricate. Whether on wheels or a permanent foundation, tiny houses face a myriad of local rules, ordinances, and zoning regulations that vary significantly from one municipality to another. This grassroots effort to legalize tiny homes is an ongoing battle, with advocates tirelessly working to create provisions that accommodate these smaller dwellings. The challenge lies in the diverse needs and existing infrastructure of each jurisdiction, making it a complex endeavor to navigate the permitting and placement of a tiny home.
The Rise of Small Residential Units: A Middle Ground Solution
While tiny homes offer a compelling solution for many, the reality is that not everyone desires or can comfortably live in less than 400 square feet. This is where the concept of "small residential units" emerges as a crucial middle ground. These homes typically range from 400 to 800 square feet, bridging the gap between tiny houses and the increasingly large, profit-driven homes built by conventional builders.
Why Small Homes Are Gaining Traction: Affordability and Demand
The demand for smaller homes is growing significantly, largely driven by affordability issues in the current housing market. With average home prices soaring and interest rates remaining high, a large segment of the population is priced out of traditional homeownership. Builders, focused on maximizing profit margins, often construct larger homes for wealthier demographics, leaving a significant gap for average income earners seeking more affordable and manageable housing options. Small homes offer a solution for downsizers, first-time homebuyers, and those simply seeking a more intentional and less burdensome living situation.
The Cost Equation: Small Homes vs. Traditional Builds
It's important to understand the cost dynamics of small homes. While seemingly smaller, they still require the same expensive mechanicals and infrastructure as larger homes (kitchens, hot water heaters, HVAC systems). This can lead to a higher per-square-foot price compared to larger homes, which benefit from economies of scale on raw materials like flooring and framing. The challenge lies in balancing the desire for more space with the potential for a higher unit cost, pushing the boundaries of what is considered "affordable" in this new category.
Small Homes: Benefits Beyond Square Footage
Despite the pricing considerations, small homes offer undeniable advantages:
Lower Overall Cost: Even with a higher per-square-foot price, the total cost of a small home is generally lower than a traditional large home.
Faster Payoff Potential: A smaller mortgage can be paid off more quickly, leading to greater financial freedom.
Reduced Maintenance: Less space translates to less to clean, repair, and maintain.
Lower Taxes and Utilities: Smaller footprints often result in reduced property taxes and lower utility bills.
Increased Flexibility: The extra space (compared to a tiny home) allows for guest bedrooms, dedicated home offices, or other functional areas that enhance lifestyle.
Mobility and Placement: Key Considerations for Small Homes
Unlike many tiny homes, small residential units are typically on permanent foundations, limiting their mobility. This means they are best suited for individuals or families who desire to remain in one location. Their permanent nature, however, could potentially open doors to more viable funding and mortgage options, especially if they become integrated into the broader residential building code.
The Future of Housing: Breaking Down Barriers for Smaller Living
The ongoing discussions and grassroots efforts to define and legalize small residential units are promising. The housing industry, affordable housing advocates, and potential homeowners are all calling for more diverse and accessible housing options. While navigating the existing rules and regulations can be challenging and requires a proactive approach, the growing demand for small homes suggests a shift in the market.
For those contemplating a move towards smaller living, whether it's a tiny home or a small residential unit, there are always creative ways to work within existing systems. As Laura aptly puts it, "We get to pick our hard." The future of housing appears to be moving towards embracing smaller, more intentional living spaces, offering more choices and solutions for a wider range of people.
Ready to Explore Your Small Home Options?
Considering a move to a tiny or small home? The journey can be complex, but you don't have to navigate it alone. We're here to help you understand the legalities, financial implications, and lifestyle adjustments involved.
Book a call today to discuss your housing goals and discover how a smaller, more intentional living space can lead to greater financial resilience and a life you love.
Resources mentioned
Laura Lynch: LinkedIn
Takeaways from the episode
“There is a growing demand for smaller homes in the market.”
“The future of small residential units looks promising with increasing interest.”
“Understanding local zoning and building codes is crucial.”
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