It is a key question in any transaction of value. Will the property I’m about to spend a lot of money on find buyers if and when the time comes to sell?
Part of the promise when buying a house of any type is that you will be able to sell it afterwards, preferably for a good profit.
Is this the case with tiny houses however? Let’s find out.
Are tiny houses easy to sell?
This question depends on where you are and what time you are reading this. For instance in 2021, the US is experiencing a major housing boom. In some cities and states, houses are receiving tens of offers, and are ending up being sold for much more than the listing price.
This is the case across a wide range of properties, and tiny homes have not being left behind.
According to a March 2021 report by Technavio, the global tiny homes market is expected to grow by USD 3.33 billion from 2021 to 2025. Most of this growth will happen in North America.
There may have never been a better time to make an investment in a tiny home.
Driving this growth is increased adoption and acceptance of tiny homes, particularly by local authorities, to house their homeless populations in tiny homes. The city of Los Angeles is in particular leading these efforts, by building several tiny home villages that have even been hailed as a model for the rest of the country.
Another big driver is the growing movement by millenials and Gen Z to live such forms of sustainable lifestyle. The ability to work remotely has obviously accelerated that.
What is the resale value of a tiny house?
The sale of new tiny houses is on the rise, but does that go hand in hand with their resale.
It is good to note that a tiny house investment vs a regular home investment is not exactly an apples to apples comparison. This is particularly true when the tiny house is on wheels.
As we have discussed in a previous article, it is not the house that appreciates, but rather the land on which it sits. This is true for all types of properties.
In fact, if the house’s value is calculated independent of the land, you will have a depreciation.
For a regular house, this is usually not a problem. But it is a big problem for tiny homes.
Why a tiny home value may go down
Most tiny homes are built not as permanent housing, but as structures that can be moved around easily and on demand. This can either be in the form of trailers (wheels), or as a quickly disassemblable unit.
Towards this end, many tiny homes are delinked from the land on which they stand. It could be a long-term rental, or a short-term parking space. Either way, the value of the land in no ways affects the value of the tiny home. An appreciation of the land does not translate to an appreciation of the tiny home.
On the contrary, the tiny house depreciates based on expected wear and tear arising from its usage.
For this reason, the resale value of a tiny house will be significantly lower than the purchase price. RVs and other mobile homes are particularly big casualties, since they are constantly adding mileage to the car/home.
In conclusion, we are at a time when tiny houses have never been easier to sell. While this is very beneficial to builders however, it may not be useful to tiny home owners seeking to resell theirs.
The fact that many types of tiny homes are not treated the same way as regular homes means that most buyers will take a hit in the market.