Tiny Homes May Not Be as Cost-Effective as You Think

Accessory dwelling units spiked in popularity during the height of the pandemic for their flexibility and affordability features, but reports show these tiny homes can be quite costly. Defined as homes with less than 600 square feet, tiny homes are roughly eight times smaller than the average single-family home. They even cost 87% less than a typical home, averaging $52,000, but the cost per square foot is where it gets tricky. Buyers typically pay 62% more per square foot for tiny homes, reports CNBC. Utility hookups and local zoning laws can add more to the price tag too.

“If your house is located off-grid – meaning there’s no access to utility sources – you may need to collect rainwater or dig a well, use solar panels and install a septic system. All of these will add to the cost of a tiny home build,” added Kupriyanov.

So where do you get the biggest bang for your buck on a tiny home? They’re cheapest in North Dakota ($28,000) overall, but if you’re going by square foot, homes in Arkansas are cheapest. Hawaii, which is one of the most expensive housing markets in the U.S., also has the most expensive tiny real estate, with an average price tag over $149,000 or $490 per square foot.

When it comes to tiny home affordability, North Dakota, New Hampshire and New Jersey rank at the top. Tiny homes there cost less than half the average annual household income. Tiny homes are least affordable in Hawaii, Montana and New Mexico.

Potential buyers of tiny homes also need to consider the cost of insuring their tiny investments. And that differs by region as well.

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