4 Reasons Why Tiny Homes are Big Trouble

Posted by on Tuesday, April 4th, 2017 at 8:35am.

  

In today’s society, there is huge fascination with tiny homes.  Scan the program listings and you’ll see shows galore about how to build, decorate and economize by purchasing a tiny home.  As in, living quarters in 300 or 200 square-feet or less with running water, heat and a place to sleep.  Is less really more?

A tiny home by other name is a trailer and for full-time living they are highly impractical.  Building or buying a tiny home may be good fodder for reality TV but to live in… permanently? 

It makes you wonder how long this trend is going to last.  From a home investment point of view what is the return on your home-buying dollar?

Here are things to remember as you think through your next move:

Tiny Homes are Just Trendy

Water beds used to be a trend but how many people do you know still have one?  When’s the last time you saw a waterbed store?  Tiny homes are hot right now but the fad is likely to go the way of the leisure suit.  We like to be voyeurs and see how other people do it, but the cameras stop rolling when the new home owner takes possession and you don’t see how the rest of their life goes.  It’s an unproven market.  The fascination with this is pure fantasy where people overwhelmed by life feel they can simplify things and be happier with no financial stress and less stuff.  The hype generated by TV may be causing “artificial interest” and if the desire to live small truly persists, you can certainly purchase a micro-condo and enjoy that minimal lifestyle in something that can actually be called real estate.

Who Will Buy When its Time to Sell

There are some homes that are just tough to sell.  Homes on a busy road.  Homes backing onto a highway.  Oh yes, and homes that shake every time you sneeze.  Your tiny home may cost $20,000 to build but real estate is predicated on supply and demand and there just isn’t market demand now for the tiny group of people who are seriously into tiny homes. It’s a niche home for a lifestyle that not many people can sustain.

There is an exception to this, and that’s if your tiny home is on a wonderful piece of property where you can build a larger, permanent residence.  Then you have potential and potential is marketable.  A tiny home on a property this can be a guest house or an escape room.

Unless your tiny home is your forever home, don’t count on seeing much of your money back when it’s time to sell it.

Cute and Cozy but Confining

Getting rid of possessions that do nothing but weigh you down is an attractive concept.  How long after you move into your tiny home will you start accumulating stuff again.  Adequate storage is a chronic issue and one of the must-haves when people start looking for a new home.

Even if you’re not a collector of “stuff”, what if you take up a hobby or you need to fix your car?  What if you think you might like a cat – where goes the litter box go?  What if your mother needs to move in?

A tiny home might seem like a great idea if you live in Florida or Arizona but try spending a Canadian winter in one.  We think not.

You’re not Really Saving Money

Apart from lightening the load and easing your mind, downsizing is supposed to be more cost efficient.  Is that the case with your little home on wheels?  What if you need to rent a storage unit for your Christmas decorations and Hallowe’en supplies or out of season clothes.  Think of the costs of going back and forth to your storage unit.  What if you’re throwing an anniversary party for your sister – do you rent a venue or party room?

Aside from that, it’s very difficult to get financing for a tiny home.  If you’re renting the land upon which your tiny home will rest, you’ll never get a mortgage because a mortgage is based on real estate. Tiny homes just aren’t real estate.

 

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