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  • Writer's pictureDigs & Abode

Can't Buy a Home?...Prefab Homes & Container Homes Might Be The Answer

Updated: Nov 2, 2023

Is Prefab Homes, Container Homes and Tiny Homes an Affordable Housing Solution?

container home prefab homes

Table of Contents

  • Prefab Homes Are Affordable Alternatives

  • How a Prefab Home Will Save Money

  • Pros of Prefab Home Living

  • Cons of Smaller Home Living

In this article we'll interchange, tiny, prefab homes, and container homes as the same. As we're comparing alternative living options vs traditional home buying/building.

The US has long grappled with a housing affordability crisis, but the recent surge in home prices and mortgage rates has sent this issue to new heights. The median home price of $412,500 recorded in September 2023 hovers near record highs seen in mid-2022, according to Redfin data. And with another planned increase of interest rates in December (allegedy) where do we turn to realize the dream of owning a home?

A recent report from Redfin found the average homebuyer needs an income of nearly $115,000 to afford a median priced home as of August 2023. That's roughly $40,000 more than the average American makes, according to the Redfin report, citing U.S. Census data from 2022, the most recent year for which annual income data is available.

While some homebuyers are choosing to wait on the sidelines in hopes that prices or mortgage rates will come down soon, many buyers are finding creative solutions to combat the housing affordability crisis. One of those solutions is thinking small with tiny homes.

Why Smaller Homes Are Affordable Alternatives

Tiny homes became popular over the last 10 years as the minimalist movement picked up steam. These homes, which usually describe dwellings under 400 square feet but can encompass homes up to 650 square feet, offer a smaller footprint for a fraction of the price.

There are a wide variety of tiny home styles, from prefab buildings, portable tiny homes and container houses all the way to custom-built luxury tiny homes. Along with this variety comes a range of price tags for building, owning and maintaining a tiny home.

The average tiny home can cost anywhere from $30,000 to $70,000 in 2023, depending on the size and design, according to a report from Home Guide. That's 83% less than the median home price today and a more affordable entry point than most larger, traditional homes.

How a Tiny Home Will Save Money

Stefanie Mortensen, an HR manager who lived outside of Washington D.C., decided to buy a tiny home in Tampa, Florida, this year to reduce her cost of living and save money. The median home price in Alexandria, Virginia, where Mortensen called home prior to going tiny, was $630,000 in March 2023.

"Buying a house was out of my price range in northern Virginia and the cost for my tiny home in The Oaks is much less than what I was paying for rent up north," says Mortensen.

Mortensen had been watching tiny home development communities closely for years, but the pandemic allowed her to pursue this reality thanks to remote work. She purchased a tiny home in Escape Tampa Bay's The Oaks community for $159,000, which is around $470,000 less than she would have paid in Alexandria for a similarly sized home.

Moving to an area with a more affordable housing market offered her big savings, but going tiny helped her save even more. Being smaller, there was less cost to furnish the home and there is less space to heat and cool, leading to lower utility bills. Property taxes are often a lot cheaper, too.

"My monthly fees include the house payment and HOA fee, which covers landscaping, septic, water, trash removal and other shared utilities for the park, along with my lot lease. In total, it's around $150 less than my monthly rent in Alexandria," Mortensen says. "My electric bill was cut in half. I also spent less furnishing the home buying furniture with dual purposes, like a couch with built-in storage."

Pros of Small Home Living

The most obvious pro to tiny home living is the lower cost of purchasing, building or maintaining the home, compared with larger homes.

  • Tiny homes are cheaper to build or buy.

  • Utility costs are lower thanks to smaller square footage.

  • It costs less to furnish the home.

  • Property taxes are lower.

Cons of Small Home Living

Tiny living can offer huge savings but there are downsides that come along with living small.

  • There is less living space.

  • Lack of storage means you may need to rent a storage unit.

  • Not every community allows tiny homes due to zoning restrictions.

  • You need to purchase land at an additional cost.

  • If you live in a tiny home community, there are additional monthly and annual fees.

  • It may be tricky to get property insurance.

Tiny homes are an affordable housing option, but they don't come without some trade-offs. But if you're searching for a solution to the incredible swell of house prices, and interest rates, going prefab, tiny or container may be a good option.

If you are considering going tiny, it's important If you are considering going tiny, it's important to weigh the pros and cons carefully.

On the one hand, tiny homes offer significant financial savings. They are cheaper to purchase, build, and maintain than traditional homes. They also have lower utility bills and property taxes.

On the other hand, tiny homes offer less living space and storage. They can also be difficult to find land for or get insurance for. Additionally, not every community allows tiny homes.

Ultimately, the decision of whether or not to go smaller is a personal one. If you are looking for an affordable way to live, these homes are a great option to consider. However, it's important to make sure that this is right for you before making a commitment.

Here are some additional things to consider when making your decision:

  • Your lifestyle: Do you need a lot of space for work or hobbies? Do you have pets or children? If so, tiny living may not be the right fit for you.

  • Your location: Some communities are more welcoming to tiny homes than others. Do some research to see if tiny homes are allowed in the areas where you want to live.

  • Your budget: Tiny homes are generally more affordable than traditional homes, but there are still costs associated with building, purchasing, and maintaining them. Make sure you have a realistic budget in mind before getting started.

If you are still unsure whether or not smaller living is right for you, there are a few things you can do to learn more. You can visit small home communities, read books and articles about tiny living, and talk to people who live in these style of homes. You can also rent one for a short period of time to see if you like it.

Going small is a big decision, but it can be a great way to save money and live a more sustainable lifestyle. If you are considering it, be sure to do your research and make sure it's the right decision for you.

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