Here's Why Tiny Homes Are More Popular Than Ever

The kiddos can't afford to buy traditional homes. Enter tiny homes.

Housing is expensive in America. Like, really expensive. In June, home prices were up 11.2% compared to last year, selling for a median price of $428,379, according to Redfin. That's rough -- and it explains why most Americans spend over 50% of their income on housing.

Enter tiny homes. They're green, trendy, and affordable. Approximately 63% of millennials would consider buying a tiny house, according to a 2022 analysis conducted by Technovio. It's no surprise: Tiny homes are more popular than ever. The global tiny home market is expected to grow by about 4% in 2022, with most of that concentrated in the U.S. The market is expected to hit $4.7 billion in global revenue by 2026.

The benefits of owning a tiny home are massive -- er, tiny. Here's why.

Tiny homes are good for wallets

The costs of a traditional home can crush bank accounts between hefty down payments, high monthly mortgage payments, property taxes, and maintenance costs. Consider that the median American mortgage payment alone is $1,100 -- then add maintenance, home insurance, and everything else on top of that.

Tiny home expenses are featherlight by comparison. For one thing, they're tiny, averaging between 100 and 400 square feet. Compare that to the average Californian home, which measures 1,625 square feet. It's no wonder tiny homeowners are so financially stable. And that tiny square footage comes with some tiny benefits. For instance:

• Tiny price tags. The median price for a professionally constructed tiny house (around 206 square feet) is about $60,000, according to The Spruce.
• Tiny monthly costs. Total monthly housing costs can be as low as $600 and rarely exceed $1,000, according to Business Insider. This includes utilities and the cost of renting a plot of land. However, it does not include monthly loan payments for those who financed the purchase of their tiny home.

There are plenty of places to find affordable tiny homes for sale. Start by shopping around a bit if you're on the fence about purchasing a tiny home. Or join the tiny house DIY community and build your own for cheap.

Tiny homes are customizable

As tiny homes surge in popularity, so does demand for greater customizability. Boxabl, which built Elon Musk's tiny home, builds modular homes that can be mixed and matched, stacked on top of each other like lego bricks, and combined to your heart's content.

Thanks to advances in technology, vendors are increasingly able to customize tiny homes' size, color, shape, and add-on features. For example, tiny home manufacturer American Tiny House offers optional solar add-ons for customers who want to conserve energy or go off-grid. Green energy options are especially important to younger homebuyers, who are more likely to prioritize shrinking their environmental footprints. On average, a tiny house produces about 30% less CO2 yearly than the average house -- catnip for the eco-conscious millennial.

Do your research

Tiny homes offer a cornucopia of fresh housing options. They're relatively cheap, customizable, and becoming more widely available. If you're interested in purchasing a tiny home, remember to check out land prices in your desired area: Unlike traditional homes, professionally built tiny homes typically don't come with land. Financing a tiny home also requires a bit of extra legwork on the part of the homebuyer. You probably won't be able to get a mortgage, since most lenders require a high minimum loan amount and a home that is on a permanent foundation. To finance a tiny home, you'll want to turn to an RV loan or personal loan. The homebuilder may offer you financing through a third-party lender, but you should explore your options to find the best possible loan terms.

If you're worried about missing out on the tiny home trend, don't be. So long as traditional homes continue to skyrocket in price, tiny homes will be here to stay. And buyers new to the homebuying market will continue to look toward the tiny home market as the path to financial freedom.