Sunday, May 4, 2014

Obstacles to Building Tiny Houses

Cottage or tiny house where Chekho wrote "The Sea Gull."
A tiny house may not be as economical as proponents envision. It may be cost-effective if you build in rural areas but in urban or suburban areas may cost $200,000 or more. It perhaps may be impossible to build in some areas.


The burst of the housing bubble was a primary contributor to the Global Financial Crisis of 2007-2008. Many people found themselves unemployed, forced into foreclosure, or unable to pay their rent. The era of supersized lifestyles and large homes ended and people affected by the crisis scrambled to downsize or find alternate housing.

As a result, the small or tiny house movement came into being. It has garnered media attention: ten one-hour episodes
of Tiny House Nation will air in July 2014.

The major selling points of the movement are low cost to purchase or build a home, ease of building your own home, living simply and inexpensively through greater efficiency, and reduction of operating costs in home ownership.

However, there are obstacles to building your own small or tiny house.

There are zoning laws, safety, and sanitation regulations that cannot be avoided

Unlike rural areas, zoning laws in urban and suburban areas can be a significant obstacle. For example, in my town, to build a home you must have a minimum lot size of 40,000 square feet (almost an acre), and there are size regulations for the house itself.

Here is a summary of safety and sanitation codes in my state of Massachusetts. In other parts of the country, except, perhaps, in rural areas, you will find similar standards.

The cost of land will add significant cost to the purchase your tiny house

A Tiny House costs from $10,000 to $80,000. But, where I live, an acre of land cost hundreds of thousands of dollars. There are other costs. For example a septic system, acquiring and connecting a safe water supply, electrical hookups, and property taxes.

You may have difficulty obtaining a mortgage for your tiny house

The Tiny House Blog reports that finding a mortgage for under $100,000 may be difficult.
Many lenders will not consider small loans because of lower-valued collateral and difficulty in reselling a home in the case of foreclosure; the tiny house market represents only one percent of all real estate transactions, and so lenders are not convinced a tiny house will retain or build equity.

Some people with pristine credit may be able to acquire an unsecured loan, however it’s always desirable to obtain a mortgage because interest rates are tax deductible and mortgages offer longer terms and lower interest rates.

Therefore, a tiny house may not be as economical as proponents envision. It may be cost-effective if you build in rural areas but to build in urban or suburban areas may cost $200,000 or more. It perhaps even may be impossible to build in some areas.

Although a tiny house may be a satisfactory lifestyle for some, it’s not a viable long-term solution for those who enjoy entertaining or plan to raise a family in the future.

Copyright © 2014 Horatio Green

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