State of the Tiny Home Market

(Yearend 2022)

You may recall the HGTV and Netflix shows featuring families selling 90% of their belongings, transforming a school bus into bedrooms, then traveling the country in their new home on wheels. You may recall seeing various social media posts featuring van makeovers and DIY tiny trailer home builds.

Was it just a fad? What are we talking here for potential? How many people actually want to and do live in a tiny home? How viable is this for me to invest?

Globally, the tiny home market is projected to increase by $3.57 billion from 2021 to 2026, per a Technavio forecast.

IXP1031 “surveyed 2,000 Americans across the country to find out how likely they would be to live in a tiny home and what amenities they would like to have in a tiny home”. Read on to be energized on how your tiny home vision can come to life and key features to consider. 

While you may be able to guess some key traits that make tiny homes most appealing, it’s interesting, and welcoming, to see how high the interest and potential is. 

Highlights:

• Tiny homes are appealing for first-time home buyers; 79% would buy over a traditional starter home

• 72% would buy for investment property

• Popular settings are rural locations

• Attractive traits include affordability, efficiency, eco-friendly and minimalism

• Tiny homes price per square foot is often more than average home size price per square foot.

For IPX1031’s full survey findings, check it out here. 

Home costs. Tiny houses are recognized as the most affordable housing option and are especially preferred by millennials and boomers . At the end of 2022, the average traditional home sale price peaked at $552,600. Compare that to most tiny homes going for under $150,00, and even lower for some variations like tiny homes on wheels for well under $80,000.

While overall price tag for a smaller dwelling is a stark contrast versus its traditional counterpart, expect price per square footage may not be attractive. Economies of scale at play here.

Take a look at US states where tiny homes are most and least affordable compared to full-size homes:

Tiny homeowner.

• 40% of tiny home owners are over the age of 50

• 55% are women

• 55% of tiny house owners have more savings than the average American

• The majority of tiny home dwellers live alone or with one other person

Investment potential. Tiny home have not only gained popularity for long term home ownership, but are also gaining popularity within the vacation rental market.

Challenges.

• Rising building costs

• Lack of privacy and small spaces are not for everyone

• Lack of standardization across countries, states, cities, and counties.

  • building standards are a work in progress

  • zoning regulations vary and can change in short order

  • financing options don’t always line up nicely with the variety of tiny dwellings, such as a tiny home on wheels

Market direction. Where is the market going from here?

Increasing traction for smaller dwellings is on the horizon. Rises in materials cost, inflation, and density are key variables that continue to drive interest in tiny home building and living.