Your Survival Guy has been talking about the benefits of living small and saving big for years. Now, the “tiny home” has caught on as an accessory. It’s no surprise when so many young people are still living with their parents, and so many adults are taking in their elderly parents to care for them. Having a second mini-home on the property gives everyone the privacy they want with a bill they can afford. The Wall Street Journal’s Nicole Friedman reports:
The latest amenity for homeowners is another, smaller home.
These add-ons are known as accessory dwelling units. They can be free-standing miniature homes as small as a studio apartment and tucked away in a backyard. They can reside above a garage or in a basement and extend to more than 2,000 square feet.
ADUs are growing in popularity as states encourage their construction through zoning changes and homeowners seek ways to lower their housing costs by renting out these units. The typical cost to construct one is around $100,000, according to building-permit data company Builty.
“It’s gone from a small niche in the market to really a much more impactful part of new housing,” said Scott Wild, senior vice president of consulting at John Burns Research and Consulting. “Municipalities love it, existing homeowners love it, developers love it.”
Now, more home builders are starting to offer ADUs as amenities. In Alpine Springs, a new-home community in Saratoga Springs, Utah, half of the 16 homes sold include an ADU in the basement at an added price of $35,000 to $70,000, said Chris Bley, chief investment officer at investment firm IHP Capital Partners.
A Freddie Mac study in 2020 identified 1.4 million single-family U.S. homes with ADUs, though the actual number could be higher. ADUs are difficult to track on a national basis, in part because they can be described in a variety of ways, such as casita, backyard cottage or garage conversion. Some homeowners also build them without permits.
The proliferation of ADUs comes as homeowners and renters around the U.S. are grappling with a shortage of housing and high home prices. Adding housing units on existing lots is seen by policy makers as a quick way to increase housing supply. California, Oregon, Maine and other states passed laws in recent years to encourage ADU construction.
Action Line: If you’re choosing to escape the city to live small, cheap, and safe in America, maybe a tiny home is the answer for you. Living small is one way to save til it hurts. Invest the savings for later in life. In the meantime, try to avoid the big mistakes. Download my special report: Top 10 Investing Mistakes to Avoid today.
