Archive for millenials

Are Tiny Houses an Answer for Cash-Strapped Buyers?

Tiny homes as starters

A 20% down payment on a $250,000 house is $50,000, a sum that many middle-class Americans can’t fathom ever saving up. Even a 10% down payment is a hard-to-imagine $25,000. As a result, many Americans feel trapped in rentals, unable to purchase a home because they can’t afford the process.

Some are beginning to advocate tiny houses as a solution to the problem. Tiny homes are 500 square feet or less, and often cost less than $75,000. This can be a great option for those who are starting out – young professionals, singles, and newly married couples who want a place of their own but haven’t saved the huge down payment.

As a Realtor®, you may want to consider advocating tiny houses for millennials in your area. It’s a great way to reach a young crowd who doesn’t see home ownership in traditional ways, and it’s a niche that many Realtors® haven’t touched.

Benefits of a Tiny Starter House

A tiny house offers home ownership in a much smaller footprint than a regular home. They are often mobile, appealing to young people’s desire to move and travel without being “tied down” to a traditional home. And, the expenses can be far less than owning a traditional home, which frees people to save more money toward a traditional down payment, if that’s what they’re aiming for.

For millennials who are concerned about their environmental impact, a tiny house will be an easier sell. They can have a much smaller carbon footprint and can often choose how many modern amenities are included in their home. In fact, some tiny homes are completely off-the-grid, allowing homeowners to live not only more green, but more economically as well.

While a certain type of person enjoys tiny home living long-term, many others do not. As a Realtor®, you can offer the idea of a tiny starter home as a way to begin ownership while maintaining mobility and saving up for a regular home. There are many difficulties in tiny house living that will make a regular home more attractive after a short time. When they are ready to move up to a traditional home, you can be there to help.

Pye Parson is a Realtor® who lives in a tiny home herself, and has positioned herself as a sustainable living expert in Birmingham, Alabama. She says that she herself has discovered that material things weigh her down, and complicate her lifestyle. She enjoys finding her clients affordable, sustainable housing in a space that often compares favorably with the square footage of an apartment. She realizes clients don’t often view a tiny home as a “forever” home, but rather as a starting point in building equity and saving for a traditional home.

Difficulties of a Tiny Starter House

Obviously, a tiny starter house is not for everyone. Someone who is well-off or has significant savings will be in a good position to buy a regular home. Some Americans see the size of their house as a point of pride, and won’t be interested in tiny houses even as a starter. And others have families that make it very difficult – tiny home living beyond two people can be a major stressor.

Many tiny houses are similar in size, or a little smaller, than an apartment. This can make living with pets or children very difficult. In addition, tiny home security is extremely important – a tiny home on a trailer needs wheel locks and a hitch lock to avoid someone simply pulling it away in the middle of the night.

Living in a tiny house also means not having many possessions. Even an apartment generally has more storage than the typical tiny home, although someone planning to move up to a regular home in a few years may be able to afford a storage unit in the meantime. Some people don’t mind that everything in a tiny house must have multiple purposes, but for some the minimalism is very challenging.

Entertaining can be difficult or impossible in a tiny home. While I find that many people strongly overestimate the amount of entertaining they will be doing in their home, it’s still a factor for many buyers. Finally, depending on the desired amenities, a tiny home can become expensive. One buyer described the extra cost of putting $20,000 solar panels on the home, excavating the building site (a wooded area), roofing, and framing. She suggested tiny home builders double the cost of the kit to take additional factors into account.

Having a tiny home isn’t for everyone, but it can be a great starter option for singles or young professionals who struggle to save up for a traditional home. As a Realtor®, you can learn about the zoning and building requirements and position yourself as a tiny home expert, in addition to selling regular homes. This will allow you to help out lower-end buyers while building a relationship to allow you to be the one they call when they’re ready to upgrade.

Would you consider selling tiny homes as a starter? Why or why not? Share in the comments!