Tiny vs. Small: Navigating the Evolving Landscape of Alternative Housing

In this episode, Laura Lynch discusses the evolving landscape of tiny and small homes, emphasizing the importance of intentional living and the legal complexities surrounding these housing options. She explores the demand for smaller homes as a solution to affordability issues in the housing market, while also addressing the challenges and opportunities presented by small residential units. The conversation highlights the need for creative living solutions and the potential for a shift in the housing industry towards more accessible options for a wider range of buyers.

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Transcript

Laura Lynch, CFP® ABFP™ AAMS® (00:54)
Hey there, welcome to Less House More Moola podcast, it's Laura. I wanted to talk a little bit about small and small as compared to tiny. We're gonna get into some of the legalization pieces of

choosing.

an alternative home that is tiny or small and kind of compare and contrast these two concepts because there's some changes that are afoot and I thought you would want to know about it. So if you haven't yet encountered the idea of a small residential unit,

We just touched on it briefly in the Zach Giffin and John Weisbarth episode. And it's something that is increasingly being discussed. There is some controversy or debate around the concept and the motivations behind it. But as I like you, I'm just a home dweller.

and trying to figure out how to create the most resilience and financial security through my housing choices, I think that this is worth talking about.

So, I mean, the reality is that not everybody wants to live in 399 Sq ft or less square feet. This is the current,

technical definition of what a tiny house is.

I, from the very beginning of my work in the tiny home world have really considered tiny more of a intentional choice in terms of choosing something different than the largest house you can afford in order to be more intentional about your space, about your cost of living and about the life that you want for yourself. So to me, tiny equals intentionality more so than square feet.

But nonetheless, within the building industry, there is some bifurcation between things that are 399 Sq ft Sq ft or less and things that are over 399 Sq ft Sq ft.

Now, one of the reasons that this has so much legal complexity when one tries to put a 399 Sq ft square foot or less home on say a piece of land or in a community or in a backyard is that there are so many layers of rules and considerations things to think about.

And so the industry of, builders, the industry associations, ⁓ advocates have been really working on a grassroots effort to municipality by municipality, create provisions or rules or.

ordinances that allow for 399 Sq ft or less square foot homes to be allowed.

There is another further

split between those that are on wheels and those that aren't on wheels. So some places will allow a 399 Sq ft or less house if it's on a permanent foundation. Other areas allow the 399 Sq ft or less home if it's on wheels. Each municipality, each jurisdiction that has rules and enforces those rules has the ability to kind of write

the rules that meet the needs of their population and their services and utilities. So it

very complex to understand and peel back all the layers of the rules when it comes to choosing a what we technically call a tiny home these days.

So there is some movement towards larger, shall we say tiny homes, things that are somewhere in between the 399 Sq ft or less and the typical American home that's being built these days.

as perhaps I've touched on before, builders who build homes are really trying to maximize their profit margin. They're trying to build the right square footage that gets them the price point that allows them as a business to create the most profit.

And so they build homes that frankly are larger than what some folks would want. There are calls from many directions asking for smaller homes.

A huge part of it is about affordability. When we can't afford the home that's being built because it is too large and expensive, then there is a huge segment of the population that's underserved from a housing perspective. There are so many people that would otherwise like to own a home, but they can't afford where we are in the housing market in terms of price.

plus interest rate.

But builders by and large keep building these larger and larger homes therefore pushing up market meaning that they are constantly building homes for wealthier and wealthier people instead of for the average person.

As I've mentioned probably before, average

home price currently sits at around $430,000. Interest rates remain high. Therefore, you have to have a six figure household income in order to purchase the typical home. Metro areas largely are more than the typical average price. So

Builders are building homes for people that have six figure or larger household incomes.

So where is that middle ground? So if the 399 Sq ft or less is not legal everywhere, and maybe it's not suited for everyone in terms of family size or wanting to have a guest bedroom as an example, then where is that middle ground?

The middle ground lies between the 399 Sq ft and the larger homes that are being built today. So middle ground may look like townhomes or condos. It may look like some of the smaller homes that are being built, though a small percentage of all the homes that are being built.

And so there is a growing request within

within the country, the potential home buyers or potential downsizers looking for something in between.

I live in 308 square feet myself.

The property that we have in Colorado has a cabin that is 640 square feet. And I love 300. I probably like 600 better in terms of two people and three dogs. It's also allows us to have someone staying with us. So it allows that guest or a family member.

to stay for maybe not forever, but it just provides some extra space there. So I think that, you know, a 399 Sq ft tiny house with a first floor guest bedroom is one thing that really perhaps appeals to me. So when we look at homes that are a little bit

bigger, but not getting into a 2000 square foot house. There are modular, so offsite built options that are coming to the market. You could obviously hire someone to build you a 600 square foot house these days.

challenge

there is the fact that you are still going to be like a tiny home, including all of the higher priced points of a home into a smaller package. So therefore the per square foot price there is going to be larger. So if we think about a 2000 square foot house, we're going to pack in a kitchen and a hot water heater and air conditioning and heat and all the things.

but a lot of that square footage is just, you know, flooring and two by fours and insulation and roofing.

So once you get outside of the expensive mechanicals and infrastructure, maybe the per square foot price of the build goes down as you get into a and larger package, as long as you're not adding a second kitchen or a second AC unit. Right. So it's, there's some economies of scale there in terms of building larger homes, because it's not the same per square foot price, because you're not having to put in

all of those higher cost items over and over again, you're just expanding the footprint. So when we build say a six or seven or eight hundred square foot house and we still have all of those expensive mechanicals.

and expensive, heating and air conditioning, all of those things there, and we still have to hire the same number of contractors in terms of all the different trades, then it can be a little bit more pricey on a square foot basis. So there's some awareness that needs to happen there. And we're kind of accustomed to where the price points are on tiny homes. And so if we start looking at more square footage, certainly the price is going to go up.

And so then it starts to get into that. How affordable is it really?

If it's midpoint between, not a three 99 square foot house and it's not a 2000 square foot house, but the price is leaning upward into a larger home price. Then where's the market for that? Are people willing to pay that extra square foot price? So a lot of questions as the industry evolves and as smaller homes, maybe start to present themselves as

options. But for us who live or want to live in a small or alternative living space, smaller is still better in many ways. It is still a lower cost. is still able to be paid off potentially faster. It is less to maintain. It is less to have to pay for from a tax perspective.

less utilities, all of these things are still really beneficial.

And if we can add a little bit of value in terms of having, for example, a guest bed or whatever the extra space is, a work office, right? A work office would be something that I would love to have added onto my tiny house, which we're working of course on in our studio building. But these are important aspects, I would say of the general lifestyle that folks are looking for.

So this small home, is currently being called small residential unit is showing up in the discussion around tiny homes.

earlier in this episode, I just was breaking out some of the layers of legalization complexity when it comes to a 399 Sq ft or less, what we call a tiny home. And so when we get into maybe a small home, so four, five, six, seven, 800 square feet, then some of those legal complexities still exist. Certainly you're not going to find a 600 square foot home riding around on wheels.

So, this would be something put on foundation. But nonetheless, jurisdictions, have minimum square footage requirements that may be more than that small home package.

So this is a really key piece is you have to understand what are the rules on the land that you're considering. Small homes likely aren't showing up in tiny home communities either because they would be more of a permanent placement. ⁓

Small homes are not going to allow you to travel around the country and see all the states that maybe you're interested in and then decide on where you want to settle permanently. So small homes have limitations. are essentially a big home, just in a smaller package in terms of how they operate and how they are connected to utilities and how they affect your mobility. So

Small homes really only serve the folks who want to be sitting in one place with their home.

but they do have the advantages of having a little bit more space. therefore having a little bit more flexibility about use of space. So this is an interesting solution that is showing up, but perhaps currently with no less or easier solution, though perhaps the funding or the lending or, you know, mortgage might potentially

become more viable with small homes being that they are not going to be on wheels or temporary in any way and if the IRC work that's working on building code standards ends up in the residential building code then it would be easier for the typical residential industry to

embrace small homes and create the typical pathway like a single family residence. So if you're sitting out there really thinking about, I'd like to go tiny, but I'm not really sure that I can do 399 or less square feet. I really need

a couple of things that I can't get in tiny homes. And by the way, I am comfortable with, building and sitting in one place and I am willing to pay a little bit more to have a little bit more square footage, but I just simply don't want the 2000 square foot home, for example, that it might be worth staying in touch with what's going on in the small residential unit, small home market.

If small homes were to come to market, if builders started to build them as an example, I think we would see a lot of demand for them, both from downsizers, first time home buyers, and lots of people in between. And so it'll be interesting to keep an eye on this and see what happens in terms of demand for any small homes that are built.

In the meantime, of course, there are all kinds of other options available, all kinds of creative alternative living solutions that we can explore and that can be stepping stones in a way, or can be long-term solutions with a little bit more adaptation. Of course, I live in this 300 square feet, but I'm working on a workspace building with greenhouse that will expand the total footprint beyond

the 300 square feet and will give me some space both for guests and for working. So there are all kinds of ways to work within the infrastructure, work within the parameters, work within the rules, work within the systems that exist. We don't have to feel stagnated or stuck.

There are ways to creatively work within the world that exists around us. And of course it'll be hard, but we get to pick our hard. So if living in a smaller space is something that interests you and you would like potentially more than, 300 square feet, of course there are ways to work around that. But it is interesting that

the housing industry, the affordable housing advocacy world. Everybody is calling for small homes. Everybody's calling for small homes. So it'll be good to see small homes show up and see how that folks are getting on board with that concept and maybe breaking down barriers to something that is a little bit smaller.

So in previous episodes, I did a breakdown zoning versus building codes. We've talked about all the legalization, but let's be frank, it's confusing and it varies from place to place. And some places have rules but don't actually follow the rules or enforce the rules. That's what's going on where I am. So you have to kind of dig.

beneath the surface and maybe not take no for an answer and do things that are unconventional with a little bit of bravery. If you need support with that, that's why I'm here. So I am excited to continue to follow what's going on in the small home world and keeping my fingers crossed for more solutions for more people. Thanks for being with me this week. Come back next week.