What are the pros and cons of moving into a tiny home?
Q: We’re thinking of moving into a tiny house, something with about 500 to 750 square feet. This is much smaller than our current home but more suited to our needs. What are some of the pros and cons to consider before buying?
A: The term “tiny house” is somewhat broad. We can be talking about a home on wheels, a home not on wheels or living space that’s part of an existing house. Some homes can be as small as 200 square feet or so. Small homes are usually separate, but there are a growing number of tiny home communities.
It might seem as though a tiny home will be attractive for the economics — less space should equal less cost. However, it may also be true that the cost per square foot is higher than with a traditional home. The reason is that a disproportionate percentage of a small home is devoted to kitchens and bathrooms, areas with high costs to equip and install.
Rather than tiny houses, what you might be looking for is an ADU or accessory dwelling unit. These are increasingly common, sometimes part of an existing home and sometimes separate, sometimes known as granny flats, in-law suites, English basements, casitas, etc.
ADUS are not common, but they’re not especially rare either. A 2020 study by Freddie Mac identified about 1.4 million ADUS nationwide, a number that will surely grow.
The new interest in ADUS reflects several trends:
A single-family home on a quarter-acre lot is increasingly seen as an inefficient use of land, especially in high-cost metro cores and suburbs.
People are living longer. An ADU allows families to live closer together but not on top of one another.
Zoning laws are changing to make ADU construction easier. New Hampshire has been a leader in the field. In 2016 it passed legislation to allow ADUS of up to 750 square feet “as a matter of right.”
Builders see ADUS as a new market. According to the National Association of Home Builders, in the first quarter of 2019, “one-fifth of remodelers undertook projects that created an ADU by converting an existing space over the past 12 months, and close to that percentage created an ADU by building a new addition.”
However, for all the good news on the ADU front, several issues remain.
First, as with any new construction, zoning rules and building codes must be followed. Such guidelines can vary enormously by location. For instance, think of lot setbacks and parking requirements. Be sure to get professional help understanding the rules and guidelines if you want to build.
Second, if an ADU is added to a property, it will mean higher property taxes to account for the additional value represented by the new construction.
Third, it’s tough to find small mortgage loans for a stand-alone property. The better approach might be to get a second loan or a home equity line of credit (HELOC) on an existing property. Speak with lenders for details.