The Tiny House movement has been anything but tiny in recent years. Minimal homes continue to grow across the United States, offering more significant opportunities for homeowners and landlords. Even TV shows like Netflix's "Tiny House Nation" and HGTV's "Tiny House, Big Living" have brought this minimalist lifestyle into the spotlight.

But even though these adorable dwellings come with a smaller footprint, fewer materials, and the promise of affordability, do they actually have a smaller price tag? Let’s find out. 

What Is a Tiny House?

Tiny houses are, um, well… tiny. These dainty structures typically range from 100 to 400 square feet, a noticeable difference from the average 2,227 American home. Tiny houses come in different shapes and sizes, often a do-it-yourself model built from kits or constructed from scratch—with many people converting them from RVs, school buses, and shipping containers. However, plenty of builders are now starting to scale new tiny home models. 

The one thing they all have in common is their compact size. Despite their unique shapes and materials, tiny houses rarely exceed 500 square feet.

Tiny homes are ideal for those who like to keep things minimal or just want to live in a small, cozy space. And so far, it is multi-generational, catching on with MillennialsGen X, and other homeowners alike.

The Clara” / Wyatt Komarin + Addison Godine + Rachel Moranis
Area: 160 ft²

Why Tiny Homes?

According to this recent New York Times article Are Tiny Homes a Solution to the Housing Crisis, there is a 1.5 million deficit in the number of new homes needed to make housing relatively affordable in the United States. Plus, just 42% of new and existing homes are attainable for the typical American household, a post-Great Recession low.

This deficit means that for us to create enough homes for everyone, it’s time to get creative. As more builders adapt to the tiny home market, opportunities for accessory units in backyards, trimmed-down primary homes, and even scaled-down factory-built structures will arise.

While this reduction in square footage may not be everyone’s cup of tea, the option for homeowners to downsize, reduce debt, or break free from the traditional American dream is appealing to many.

Plus, if we learned anything from our recent glance at 2023 Real Estate Trends, many Americans are shifting away from larger urban cities and moving towards smaller, suburban towns. 

This luxury tiny house community is surprising everyone (Arizona)

How Much Does a Tiny House Cost?

It’s typically cheaper to build a tiny house than it is to buy one premade but don’t let the upfront costs confuse you. It’s always a good idea to consult a professional before building your home yourself since a small mistake could cost extra time and money. 

The Do-It-Yourself Option

Building a tiny house on your own can be an exciting journey for the adventurous and may be the most affordable. Depending on materials, design, appliances, etc., the DIY option will typically run anywhere from $30,000 to $60,000. You can find tiny home kits from major retailers like Home Depot or more luxurious tiny house options for $100,000 and up.

Simply put, the average cost of a tiny home is $400 per square foot, compared to the traditional home’s $150 per square foot. However, it’s important to consider that the overall cost of materials should be significantly less than a conventional home, and the costs of heating and cooling the unit will likely be much lower.

When preparing for a tiny house project, it's essential to consider the following factors in addition to the construction costs:

1. Location: Find out where you plan to build your home and what piece of land it will occupy.

2. Permits and Zoning Compliance: Talk with your local municipality to determine the permits, zoning, and other requirements to build and operate a tiny home in your city. A building permit typically averages around $1,380 nationally. 

3. Land Preparation: Make sure your land is large enough for the footprint of your home and has any necessary utilities you plan to connect.

4. Insurance Coverage: Explore homeowner’s insurance options to cover your property in an emergency.

5. Ongoing Maintenance: Plan how often you’ll need to replace or maintain areas of your home, including the roof and appliances inside. Your home’s needs will vary greatly depending on the type of build.

One other item to consider is storage. Do you own anything that won’t fit inside a tiny home? Decide whether you’d like to pay to store these items in a private unit or if you prefer to donate or sell your extra stuff.

The Pre-Built Option

Not quite ready to build from scratch? No worries, there's a whole world of pre-built tiny homes out there waiting to be discovered. With prefabricated tiny home companies peppered all over the nation—many even delivering at no extra cost—you can skip the hammer and nails for now. But to own one of these move-in-ready beauties, you might be looking at spending upwards of $100,000, especially if you're eyeing something extra luxurious.

Or you might get lucky and find a pre-loved tiny home. Now that minimal housing has become more mainstream, your options for finding a used tiny house have increased.

To find your tiny dream home, start with a local search or check out sites like Tiny House Listings for a broader view. Happy tiny house hunting!

Elsewhere Cabin A
Georgetown, Texas
Size: 160 ft²

Pros of Investing in a Tiny Home

Beyond the perks of having your own tiny space, renting out a tiny house can be a great investment for an investor looking for lower taxes, less maintenance, and getting in on a high-demand area. With their growing popularity and flexibility, tiny houses offer a unique opportunity to diversify your portfolio and attract new renters. 

Here are the top five benefits of investing in a tiny house:

1. Fewer Start-up Costs: Since many tiny homes are more affordable to build than traditional homes, you can get into renting sooner rather than later.

2. Increased Demand: The popularity of tiny houses is rising, and it's predicted to grow by 57% in North America from 2022 to 2027. It’s not too late for landlords and real estate investors to jump on this trend, and they’ll likely have a high occupancy rate.

3. Lower Maintenance: Tiny houses are much easier to maintain than traditional homes, saving property owners time and money on regular maintenance and repairs.

4. Increased Energy Efficiency: Tiny houses require less energy to heat and cool than traditional single-family homes, which likely means lower utility bills for tenants.

5. Flexible Location: Tiny homes can fit in smaller land areas, giving potential landlords more options to build their rental. 

Cons of Tiny Home Investing

While tiny homes can be an excellent investment, it’s a good idea to consider the downsides before taking the leap. Let’s go over them below:

1. Limited Storage Space: Some tenants may need help adapting to a smaller living area with limited storage. Even if you have accurately described the size of your tiny house in your listing and your tenants were initially excited, some may ultimately decide it isn’t for them.

2. Tighter House Regulations: Tiny homes are not allowed in every city and state due to house regulations. Make sure to research your local laws and regulations before investing.

3. Market and Rental Uncertainty: While many people are interested in minimalist homes, the tiny home market is less popular than the traditional home market. It’s also important to understand rental prices will vary drastically depending on the location. You may need to research and test different price listings to determine your rental’s sweet spot.

Just For Fun: Average Price Per Square Foot in America

According to the Home Size Index of 2022, Colorado Springs, Colorado, takes the crown for the largest average home size—with 2,760 average square feet and an average home cost of $213.79 per square foot. Surprisingly, Honolulu, Hawaii, has the smallest average home size at 825 square feet and a whopping $863.07 per square foot. 

Which begs the question: which homes are the most expensive per square foot? New York City has the nation's highest cost per square foot, boasting an average of $1,519.57 per square foot.


Tiny homes are an exciting option for many families looking to get into the real estate market on a budget. If you’re ready to take the leap into a simpler lifestyle, make sure to consider all of the responsibilities, permits, costs, and everything else involved to set you and your new home up for success.

When you feel ready to manage your tiny home rental (or traditional home rental), take action and start organizing your portfolio with TenantCloud’s robust features.