Tiny Homes: A Solution to Our Affordable Housing Crisis?

Less expensive, less permitting but still a lot of hurdles to clear

By The Hinesburg Affordable Housing Committee

One third of all Hinesburg households, half of all renters, are burdened by housing costs that consume 30 percent or more of their income.

A major reason Hinesburg, and, in fact, much of the country, has an affordable housing crisis is that new housing has become very expensive to build. Compounding this problem, the housing we already have is not well matched to the housing we need. In Chittenden County, 70 percent of households are small (one or two people), yet only 40 percent of homes have two bedrooms or less. In Hinesburg, this figure is a stark 30 percent. As a result, as the Hinesburg Housing Needs Assessment observes, “many small households are paying for more space than they truly need.”

We need more housing, especially more housing that is smaller and less expensive to build than we are used to. Some smaller, less expensive housing, such as mobile and pre-fab homes, have long been a significant part of housing in America and Hinesburg. To meet the current crises, however, there is an explosion of new approaches to housing, including a wide range of “Tiny Homes.” They can be made out of shipping containers, DIY kits, refurbished buses; they can be fixed on foundations, built on wheels, added to existing buildings, or even off the grid. The variety is enormous and growing.

Can Tiny Homes be a solution to our affordable housing crisis? Yes, for some people, but there are limitations.

With an average home cost in Hinesburg of well over $550,000 to build or buy, yes, Tiny Homes can definitely be cheaper, even genuinely affordable. You can find some to buy online in Vermont for as little as $25,500 for a 150 sq. ft. refurbished bus, or up to $125,000 for something bigger and fancier. You can have new ones built for $30-$60,000, or more. Many Tiny Homes are custom built and can be very ingenious, convenient, and beautiful, like mini ships on land. But there are catches.

The above Tiny Home prices do not include the land. Developable land in Hinesburg is often not easy to find and sometimes not cheap. Installing a permanent Tiny Home requires electrical hookups and state-compliant water and septic systems, also maybe not cheap. In Hinesburg, as in most Vermont towns, the same building and zoning codes apply to Tiny Homes as any new construction. Codes in some towns require all homes to have at least one room with a minimum of 120 sq. ft., which may exclude some Tiny Homes. Hinesburg’s codes do not, which theoretically, makes Hinesburg Tiny Home friendly. Nonetheless, other than a few ADUs that may fit the definition of a permanent Tiny Home, the town does not currently have any.

Another potential obstacle to erecting a Tiny Home is financing. Despite the increasing popularity of Tiny Homes, conventional mortgage financing for them is still hard to find. Without financing, having to foot the full price of purchasing the home, finding land to put it on, installing utilities, and meeting zoning requirements up front, may exceed the downpayment on a regular home. At least there wouldn’t be a mortgage to pay.

That said, more options for financing are becoming available. Fannie Mae is expanding options for financing manufactured homes, which may later extend to other alternative housing. Caroline Carpenter, President and CEO of National Bank of Middlebury, also a member of the HAHC, offers that her bank does “mortgage lending outside the secondary market (in-house lending) and can offer options [for Tiny Homes].” Given that total costs of a Tiny Home are almost certainly far less than on a regular home, even with a higher interest rate, no down payment, and shorter term, mortgage payments on a Tiny Home would likely be significantly lower than on a regular one. Homes First, a nonprofit that promotes Tiny Homes in Addison County, offers an example of a possible Tiny Home mortgage circa May 2024:

Purchase Price: $65,000
Loan: $65,000
Term: 15 years
APR: 7.5 percent
Payment: $602.56/month

The final limitation on Tiny Homes as a solution to our affordable housing crisis is that not everyone at all phases of life would want to live in that small a space. In 2017, Nick Kierstead, an arborist serving Hinesburg and beyond, built himself a Tiny Home from scratch. With a 16’ trailer as a mobile foundation, solar panels, a wood stove, and town water and electricity he could hook up to at a friend’s, it was cheap, very cheap. For a couple of years, he lived a particular 200 sq. ft. dream – alone. After two years, “I was ready for more space,” he says, especially with love in his life and thoughts of starting a family. “In Vermont it can be especially hard because of the cold. With so much time indoors, it can get claustrophobic.”

Despite all these challenges, Tiny Homes have their charms and advantages and are becoming increasingly popular, especially in Vermont. They may be particularly well suited for a certain time in one’s life. They can meet the demand for smaller, more affordable housing. And as more are built, more will become available for secondary purchase, presumably at a price that remains affordable to most.

The decision to enter the Tiny Home world is complicated and the landscape is changing rapidly. The advice heard from all quarters is to do your homework before putting any money down:

• Contact the town Planning and Zoning Department to learn the local rules. In Hinesburg, our town planner is Zachary Nersinger.

• Contact any possible lenders to see if financing is available.

• Talk to lots of builders. There are local builders and Tiny Home specialists that work nationwide. The options are varied and increasing all the time.

• Try living in one for a little while. See how you like the lifestyle – in practice. There are plenty of short-term rentals available.