In 2018, the national median household income was $61,372. The general rule for the ratio of income to house price is roughly 2.6 times annual income. So a median income earner should be able to afford a $159,567 house. If they could find one. According to Zillow, the median price of homes listed in May 2019 in the United States is $289,900.
Of course, incomes and housing prices differ from state to state, neighborhood to neighborhood. But, woe to those living on a median salary in Los Angeles, California: it would take nearly 10 years to purchase a home there.
Affordable housing is an issue in nearly every state. While incomes are higher in large cities like Los Angeles, New York, Boston, D.C., the cost of everything including housing is also higher. Some places are betting on modular residential products to not only accommodate the need for housing but to meet the need for affordable housing. And, it turns out there are companies making prefabricated homes in one- and two-bedroom styles that come in at the affordable price:
- HIVE, in Minneapolis, Minnesota, has its modular B-Line series designed for urban infill lots as small as 40′ x 100′ (with no alley access). According to the website, “These homes give the feeling of large living on a narrow footprint.” The “small-modern” versions can be purchased for $143,000 to $216,000. They’re 990 s.f., 2-bedroom, 1-bathroom, 1-story homes.
- GreenPod Development, in Port Townsend, Washington, designs “healthy, sustainable modular and site-built homes.” GPD creates traditional, modern and custom homes made of completed modules. One traditional example is the Camano-pod. Price: $125,000; Square footage: 731 sf; Bedrooms: 1; Bathrooms: 1; single story. The one-bedroom Waterhaus, 450 sf; is highly energy efficient and built with chemical-free materials and costs approximately $150,000.
- BluHomes, in Waltham, Massachusetts, and Vallejo, California, is dedicated to creating sustainable homes. Its smallest offering is the Origin, which comes in studio, one- and two-bedroom options. The 595-square foot, one-bedroom one-bathroom is priced at $155,000.
While the prices may be “affordable,” home buyers would have to also purchase land, deal with permitting fees and any necessary site prep. Depending on the company, building costs may be included. And, buyers need to understand that the price per square foot of a tiny home can be higher than that of a traditional, larger home because everything required has to be squeezed into a smaller space. Then, of course, higher quality materials boosts the price.
Buyers interested in these small houses, might consider a tiny home community. Two new developments in highly desirable Austin, Texas — median home value $346,800 — are taking that gamble.
Constellation ATX is offering “micro estates” in its 6.2-acre community of more than 80 homes just 10 miles south of downtown Austin. Kasita and i.m.home are building the environmentally friendly houses (up to 400 square feet) – these are not mobile homes — for purchase. Kasita’s starter model is $150,000; i.m.home’s $139,000. Homeowners will lease a lot (up to 99 years) — from $725 to $1050 a month including HOA fees, trash, recycling and property taxes on the land.
The second community, Stage Coach, will open in the nearby suburb of Kyle, Texas. It has room for 400 tiny homes. Kasita will also be building homes for this community as will Sprout Tiny Homes.
Tiny Dwelling Co. is the developer for both of these communities. It has partnered with a mortgage company to offer 30-year financing plans.
The draw is not only the lower prices to live near an expensive city, but the communal feel and the amenities offered. These are gated communities with jogging trails, bike racks, pool and clubhouse, multi-use wellness spaces, BBQ areas, outdoor fire pits, rooftop decks, laundry, storage. It’s kind of a horizontal take on high-rise living — a big lifestyle on a small scale that will hopefully appeal to buyers. Both communities are leasing up now.
Although tiny homes may be a niche market, ResearchAndMarket.com forecasts it to grow globally at a compound annual growth rate of 6.99% between 2018 and 2022. There are dozens of tiny home designers, manufacturers and builders based in every state, and as the two largest population cohorts — retiring boomers and younger (Millennial), first-time buyers — seek to find homes, tiny might just be the answer.