As U.S. housing prices went through the roof in 2021, Business Insider reports that home prices will continue to rise this year. Fannie Mae predicts a 7.6 percent increase. It will be 17.3 percent lower than the increase in 2021, but it is still much higher than the average rate of increase from 2012 to 2019, which was 5.4 percent.
Prices will still be beyond the reach of many, especially because the 30-year fixed-rate mortgage increased to 3.56 percent in the week of January 21. According to Freddie Mac, this is the highest rate since March 2020. With inflation, interest rates are predicted to increase further this year.
According to the U.S. Census Bureau, the national median price for a home as 2021 ended was $416,900. In November last year, CNBC reported that housing prices had outpaced the growth of wages because the price of a house must not be more than 2.5 times a buyer’s annual salary.
Following that rule, a buyer in 2021 needed an annual salary of $166,760 to afford the median price of a house. The median household income in the U.S. last year was only $69,178, though. In 2022, with higher home prices, prospective buyers will also need to have a much higher income. Those who are planning to buy their first home will most likely be priced out of the market.
The Tiny House Solution
Affordability is one of the major reasons that is driving the popularity of the Tiny House Movement in the U.S. A tiny house that ranges from 100 to 400 square feet can cost as low as $30,000 to as high as $150,000, depending on the materials used and the features added. Even at the high end, it is still more affordable than buying a house.
That cost does not include the cost of land, though. Owners of tiny homes usually already own a piece of land in which to build, build on the backyard of family members, or rent land space in tiny house communities or recreational vehicle (RV) parks. The latter is a common option because many tiny houses are built on trailer beds and can be pulled by trucks to travel. At the Orlando Lakefront tiny house on wheels community, monthly parking costs $450 to $650. This includes a free hookup to the water and sewer system and a paid electricity connection.
Unfortunately, it is not possible to get a mortgage for most tiny houses. To qualify for an FHA loan, you must own the lot you will build on, the home must not be less than 400 square feet, it must have a concrete foundation, and it must follow building codes. If you can squeeze in these requirements, you can get a mortgage. Otherwise, you will need to get an unsecured personal loan that has a shorter term and higher interest. Most people opt to first save up to use cash. This frees them from housing debt.
Regulations regarding tiny homes vary widely across states and municipalities. Before considering one, it is important to find out from the municipality what is allowed or not. Some have size requirements and prefer tiny houses built on wheels or a concrete foundation. Others have zoning limitations. The states that are most welcoming to tiny homes are California, Florida, Colorado, Texas, Oregon, Washington, Arizona, North Carolina, New York, and Utah.
Tiny House Sustainability
Because of their size, tiny houses have a small carbon footprint. Fewer materials are used in construction. Owners can also choose to push sustainability further by using eco-friendly or previously owned materials. Furthermore, solar panels can be used as a power source. In regions with a high amount of rainfall, a water catchment system can supply water for flushing and watering plants.
It is important for a tiny house to have adequate insulation and to be properly sealed to control the temperature in both hot and cold weather. A small heater and air conditioner will suffice. Proper ventilation will prevent the growth of mold and mildew and will let out the heat and smoke from cooking. A portable residential air purifier will keep the indoor environment clean and will add protection against Covid-19.
People who choose tiny home living have chosen a minimalist lifestyle. Because of the lack of space and storage, they only own what they need. There is no room for excess. Maintenance is also easy.
To transition to such a home, one must streamline their belongings and live with much less. For those who have embraced the philosophy, this is not restrictive. They find out that because the things they retain have been carefully curated, they now value these more. Surrounded only by things that have meaning in their lives, they find that every day is richer.