From Novelty to Necessity: The Growing Tiny Home Movement

Visual Capitalist  |

By Katie Jones

Visualizing the Rise of Tiny Homes

Born out of the desire for a simpler, more affordable way of life, the tiny home movement has spread at a furious pace—with the global market estimated to grow by a CAGR of almost 7%, adding nearly $5.2 billion in market size by 2022.

Given the economic pressures of today’s world, these alternative housing solutions have become not only a viable option for many people, but a vital one.

Today’s infographic from Calculator.me illustrates how the tiny home market got so big, and how it fares against traditional housing when it comes to providing environmentally friendly and affordable options.

How Did Tiny Homes Get So Big?

It was not until the 2009 recession hit the U.S. that tiny homes became more of a realistic option, as the benefits of downscaling became more apparent.

From then on, three things propelled the popularity of tiny homes: rising house costs, shrinking incomes, and a greater consideration for the environment.

Today, 63% of U.S. millennials would consider living in a tiny home. However, the need to go tiny is not only confined to millennials, as 40% of tiny home owners are over fifty years old.

Tiny Vs. Traditional

According to the infographic, a home is considered tiny (or micro) when it is between 80-400ft², and is at least 8ft in height.

Tiny homes also come with a tiny pricetag, costing just $23,000 on average to build—meaning tiny homes are almost ⅒ the price of traditional homes.

MetricTiny HomesTraditional Homes
U.S. Median Cost$59,884$312,800
Average Cost To Build$23,000$206,132
Home Ownership78% own their home65% own their home
Mortgage32% have a mortgage64.1% have a mortgage
Credit Card Debt40% have credit card debt37% have credit card debt

Other benefits of tiny home living include:

  • Avoiding mortgage debt
  • Less maintenance required
  • Allows for a more flexible lifestyle

Further, tiny homes are providing people with alternative solutions for more sustainable living.

An Environmentally Friendly Way of Living

Certain models of tiny homes use energy from solar panels—presenting ample opportunities for an independent off-grid lifestyle. Moreover, research from Virginia Tech shows that living in tiny homes reduces energy consumption by up to 45%.

Using less energy can also be attributed to tiny homeowners using the space outside as an extension of their home. In fact, when there is usable space available outdoors, tiny home living may not seem as drastic in comparison to living in a traditional home.

Room For Improvement

There are however, some challenges for those who are considering this way of life. Zoning laws and building codes in the U.S. can be restrictive, with some states more supportive of the idea than others.

Despite these barriers, there are numerous organizations and initiatives that have been created in order to eliminate the pain points that come with tiny homes, and legitimize the industry.

Not Just a Passing Trend

With the promising trajectory of tiny homes, it is inevitable that the interest from global retailers continues to grow.

Japanese minimalist company, Muji, released their own tiny homes in 2017, costing $26,000 on average. At just under 107.6 ft², these tiny homes are prefabricated, meaning they are constructed in a factory off-site.

Amazon also recently announced their foray into the tiny home space, with dozens of models available on their website—delivering new homes right to their customers’ front doors.

The Future Comes in All Shapes and Sizes

Beyond the typical tiny home formats we see entering the market en masse, there are other alternatives which will become more readily available to consumers, including:

  • Traditional modular homes
  • Shipping containers
  • 3D printed houses
  • Recreational vehicles

It is also worth pointing out that tiny homes and these alternative models don’t have to be restricted to under 400 ft². Flat packs and do-it-yourself tiny homes can be as big as 1,000 ft², with some of the largest models housing up to 24 people.

It is clear that the tiny home movement is not just about going back to basics, but rather, about making home ownership a reality for everyone—potentially disrupting the current housing market in the process.

The question is not if tiny homes will become the new normal, but when.

___

Equities Contributor: Visual Capitalist

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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