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Tiny houses: Big future, or big hype?

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Advocates and cities see challenges and opportunities in tiny homes’ path to the mainstream

“Of course, ‘tiny home’ is a term that has no meaning.”

Dan George Dobrowolski firmly believes that the best spaces are small spaces. Owner of Escape Tiny Homes, a Wisconsin-based tiny home manufacturer located in Rice Lake—in the sparsely populated northwest corner of the state—Dobrowolski started building small homes 25 years ago.

Dobrowolski has never understood the trend toward excessive suburban homes, the hubris of building a “palace of Versailles with 80 percent wasted space.” That’s one of the reasons he began to build smaller decades ago, creating a business that now cranks out hundreds of homes a year.

He’s also never understood why people write off tiny homes as a fad. Of course, on one level, he understands: HGTV shows, the pull of twee cabin for Brooklyn millennials, the explosion of builders jumping on the bandwagon of an emerging trend (“three guys in the backyard trying to toss these things together”).

The Vista model tiny home by Escape.
Escape

But he thinks there’s so much more to tiny homes than a lifestyle choice. With today’s economic pressures, this is a market ready to explode. As one of the nation’s larger tiny home builders, Escape has seen business grow by roughly 200 percent the last few years, with plans to add two more factories to eventually ramp up production to thousands of units a year.

“Nobody has a fix on this,” he says. “Whatever measuring stick people are trying to use, they don’t get it.”

Who buys the units? Because Escape regularly ships all over the county, it seems to be everybody. The owner of the San Antonio Spurs ordered one for his property in Hawaii, and single mothers are buying them for downtown Detroit. Customers use them as accessory dwelling units and Airbnb rentals, as vacation homes and rooms for Grandma. They’ve had conversations about turning tiny homes into mobile showrooms and libraries. As Dobrowolski says, “that’s the full spectrum.”

If you base the growth of the tiny home phenomenon on social media presence and stories written, it might seem like Dobrowolski’s vision—a niche market poised to invade the mainstream—is already coming true. But what about the real growth of the tiny home industry—the numbers, dollars, and legal decisions that may decide if it remains a fad or truly becomes a source of permanent housing and a savior for the social ills it has been sold as a salve against (living beyond our means, out-of-control housing costs, society’s technological overload)? In discussions with manufacturers, advocates, and local officials, tiny homes definitely have outsized potential. But in many cases, they still seem to be running on an outsized amount of hype.

Robin Butler, president, CEO and cofounder of the National Organization of Alternative Housing, put the situation into perspective, especially given how tiny homes can seem ubiquitous on social media and in television, yet harder to locate on the ground.

“There’s a certain romance to the industry,” says Butler. “There’s romance in downsizing, saying you built a house exactly the way you want. Most people have seen tiny homes on HGTV. They haven’t seen one in person, but they know what it is.”

Like many industry advocates, Butler is passionate about the possibilities of tiny homes, and wants to help cities see their potential. Not many have seen the light.

“They’re everywhere across the nation, and a lot of municipalities are trying and wanting to do tiny houses,” he says. “But cities don’t know what the heck to do with these things.”

Dobrowolski’s point about definition is an important one. For the most part, tiny homes have no fixed, separate legal definition, which has made zoning and city regulations, as well as financing, sizable barriers to the industry’s growth.

Tiny homes are often defined by what they’re not. They’re a very affordable means of homeownership at a time when costs have skyrocketed—the median sale price of a new home in the U.S. in May 2017 was $345,800, according to census data—and the size of a typical home has ballooned, even as family size has decreased. The average size of a new single-family home—1,660 square feet in 1973—approached 2,600 square feet in 2015, a 64 percent gain in just over 40 years. Even at the high end of the tiny home market, which ranges from $10,000 DIY jobs to decked-out $100,000 models, the savings are substantial.

Most define the tiny home as a building between 100 and 400 square feet (Curbed counts everything under 500 square feet), and many of them are portable. The admittedly loose definition, and the lack of longstanding professional organizations that track and measure manufacturing and sales figures, makes it difficult to nail down hard facts about just how large the industry is. None of the sources we asked had definitive stats on annual sales.

Mike Schmidt is business development director for the Tiny Home Industry Association, an advocacy group that aims to create sustainable, adaptable codes for the creation of tiny home communities, develop sustainable building regulations, and encourage municipalities to adapt creative zoning and ordinance policies for tiny homes. He wants to be a clearinghouse for both the DIY and professional builders.

Schmidt believes this is the perfect time for the industry, since two demographic waves are crashing: Baby boomers want to downsize and retire, and millennials want homes and flexible living without debt. (Both of these demographics are also fueling boom times for the RV industry, which is seeing record sales.)

He’s seen annual sales estimates as high as 5,000, but he’s done his own rough sales approximations and puts things a bit lower. He believes there are about 85 to 90 “known,” established tiny home developers in the United States, who each build roughly 10 or more homes annually, as well as a much larger subset of DIY builders, about 150 to 200, with a more limited, erratic output based on opportunities and capital resources. He estimates that last year, just 2,000 tiny homes were sold.

Customers buy tiny homes for many reasons, says Schmidt: To achieve a mobile lifestyle, to create units to rent, to build as accessory-dwelling units (additional buildings built next to existing homes as a way to add space), and to generate affordable housing for municipalities, as well as housing for the homeless.

But many in the industry say the overwhelming reason is cost. Construction consultant Chris Galusha is president of the American Tiny House Association, which represents 300 to 400 members, mostly from the DIY side of the industry. Most of the people who reach out to his organization for help aren’t financially well off, and see tiny homes as a way to fulfill their hope of owning a home. Some aren’t buying into the model of larger, more expensive homes, and others are retirees who want to keep their costs low while living on a fixed income. Most, though, approach him for economic reasons.

“I don’t get emails from people saying they want to save the planet,” he says. “They say they’re tired of [renting], and it’s all they can afford. I live on the western edge of the Dallas-Fort Worth metroplex, and there isn’t a home for sale in my area under $250,000. When a living wage is considered $12.50 an hour, you’ll never buy a home. You’ll be renting forever.”

Galusha feels the tiny house industry can make a great pitch for cities. People can live the minimalist lifestyle they chose, and cities increase their housing stock and add economic activity. It increases the tax base and makes more low-income housing available. Over the next few years, he sees more and more cities and counties recognizing these advantages and becoming tiny home-friendly.

In the meantime, however, cities, for the most part, don’t seem to share the same optimism. It boils down to the question of definition. As far as cities are concerned, tiny homes on wheels are recreational vehicles, which fall under existing rules and regulations (you need to register it in-state and figure out where you can park). A tiny house on a foundation, normally considered an accessory dwelling unit, becomes more complicated, as does the idea of a stand-alone tiny home as a permanent place of residency.

Since they’re usually portable, small, and don’t always have the same certifications as traditional housing, they create a mess when it comes to zoning rules and building codes. Most building codes accept any buildings over 70 square feet, but zoning codes in many areas prohibit anything smaller than 1,000 square feet.

In most rural areas outside of city limits, as long as you have the appropriate sanitation and septic permits, and ones for any well you might be drilling, you’re allowed to park and settle in peace. But zoning and regulations become a much more complicated question in cities. Is it habitable? Can mobile structures rest on city property? Does it work as an accessory dwelling unit? How can cities tax these things? For all of the excitement that tiny homes have generated, regulations continue to be complicated at best, and restrictive at worst.

Creating building standards appears to be the easiest issue to solve. Many builders already follow the Recreational Vehicle Industry Association rules, an established and long-recognized standard. But it can get tricky when tiny homes try to go permanent. Butler, with the National Organization of Alternative Housing, created a certification standard for tiny homes that builds upon those used by the RV industry, adding additional tiny house guidelines from IRC (International Residential Code). It’s still gaining acceptance, but it shows a roadmap to creating tiny homes suitable for full-time living by inspecting to universal home-building standards.

The larger issue by far for those who want to use tiny homes in cities—or as ways to create additional affordable housing—is zoning. Even many places that have been heralded for being progressive about allowing tiny homes haven’t seen significant new additions of this type of housing.

A city official in Pleasant Grove, Utah, which voted to allow tiny homes last fall, said the new standards only allow the structures to be used as accessory dwelling units, with a limit of one per household. She said she wasn’t sure any new tiny homes had been added. Jamon Scott, owner of Tiny Villa, a local developer trying to build tiny home communities in that area, says that as far as cities in the area are concerned, “the government hasn’t gotten to that point.“ Seattle and Portland, considered tiny house-friendly, don’t allow tiny homes on permanent foundations to be the primary units on lots.

The Spur, Texas Tiny Home resolution

Fresno, California, was celebrated for passing a “groundbreaking” tiny house ordinance, the first in the nation, according to the city’s mayor, Ashley Swearengin. The ordinance allowed tiny homes on wheels as permanent second dwellings. But Bonique Emerson, the city’s planning manager, said last week that while her office has approved second units, a recent state bulletin from the California Department of Housing and Community Development implies that tiny homes on wheels can’t be used for permanent dwellings in the state, leading to regulatory confusion. In Sonoma County, Jay Shafer, a long-time tiny house advocate, announced plans to establish Four Lights, a tiny home village. But according to city officials, they can’t comment on the project because they’re received no application, no details, and have “nothing to provide feedback on.”

Spur, Texas, has promoted itself as the nation’s first tiny house-friendly city. Located an hour east of Lubbock, on flat farmland surrounded by cotton fields, the town of 1,200 passed a rule against minimum size for houses on foundations, paving the way for owners to use tiny homes as stand-alone permanent dwellings.

According to developer Danny Schallenberg, who helped push for the rules, he’s been advocating for these kinds of changes since 2004, looking for a city that might allow him to develop a tiny home community. When he discovered Spur was having a debate about housing and zoning rules, he became an advocate, taking four trips to meet with the city council and helping the new ordinance pass. Three years later, he says cities are coming to him.

“I’ve been laughed at, cussed at, and screamed at,” he says. “And that’s not happening anymore. I’m in high demand.”

As Schallenberg continues to advocate in other cities—especially Texas communities such as Abilene and Amarillo—Spur still appears to be more optimistic opportunity than true model for tiny home advocates. Initially, after the rule change, the city sold all 75 tax-delinquent lots starting at $500 a piece to those wanting to build tiny homes, and Schallenberg has visions of a 22-unit subdivision of miniature homes. But so far, just 12 of the units have been occupied, according to city officials, and after locals objected to some of the most unorthodox housing designs, such as straw homes and underground dugouts, passed another ordinance last March requiring all designs be submitted for approval and hooked up to sewer, water, and electric.

Spur offers plenty of advantages: small-town way of life, low cost of living, cheap water and sewer hookups. But the area isn’t exactly booming with new jobs to attract younger residents, and financing for these homes is still difficult to arrange.

“People are just watching and waiting to see how Spur pans out,” Schallenberg says. “It works here in Spur because land is cheaper, water and sewer hookups are cheap, and it’s affordable, small-town America. Larger towns have more regulations and higher costs. These things have to change if you want to make it happen.”

A cabin for two at Getaway’s New York location in the Catskill Mountains.
Dylan Engels

Tiny homes speak to a desire to simplify, downsize, and achieve the American dream, despite today’s strong financial headwinds. Will cities begin to allow more flexibility and help turn the market for these homes into a mainstream concern? There are signs that smaller dwellings have gained more acceptance: Fannie Mae and Freddie Mac may soon experiment with a loan program that provides more accessible financing to those seeking smaller, nontraditional homes. And high-design accessory dwelling units have been recognized for great design by the AIA, suggesting these types of additions may be shedding their dowdy “granny flat” or “in-law units” stereotypes.

And, arguably one of the hottest names in finding new markets for smaller dwellings just received a multimillion-dollar vote of confidence from the market. Getaway, the startup and resort concept created by Harvard grads that sends millennials into tiny homes in the woods near Boston and New York City to disconnect and recharge, just benefited from a $15 million funding round earlier this year.

According to CEO and founder Jon Staff, he’s met with some of the same questions about tiny homes from city and municipal officials, though they’ve successfully worked with local officials.

“Everybody has heard of tiny houses: You’ll go to a planning meeting and end up in lots of meetings about how you define the space,” he says. “It’s not a layup, it takes work and planning, but so far, so good. No major delays or problems.”

Staff says Getaway is poised to expand—he wouldn’t specify, but the company announced earlier it wanted to be in 30 additional markets by 2020. It’s arguably one of the most successful businesses associated with tiny homes… but Staff says that’s not what it’s about.

“I separate Getaway from the tiny house movement,” he says. “It’s a way to disconnect from technology and find nature.”

It’s all a matter of definition.