Amid covid pandemic housing boom, demand for small spaces grows too

The pandemic sent many Americans dreaming of more space and scurrying to find it. Sales of large homes are booming. So too are tiny ones.

These dwellings often measure no more than 350 square feet, or barely bigger than a standard hotel room. They are built mostly in suburban backyards or converted garages on the West Coast, where new laws designed to ease the region's housing shortage have encouraged their construction.

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But they are also for sale or rent in rural Maine and Vermont. They have been popping up in Wyoming, Alaska, Georgia and Texas. Florida city officials have proposed zoning changes to allow them.

While tracking all these mini-houses across the U.S. is difficult, listings that include either tiny homes or other types of guest apartments have increased 8.6% a year on average over the last decade, according to a July study from Freddie Mac. There are now more than 1.4 million homes that share a lot with one of these units.

The high cost of housing is one factor. The median price paid for a home by a first-time buyer is around $266,500, according to the National Association of Realtors, which is out of reach for many younger owners. Tiny homes can be rented for about the price of a traditional apartment unit of the same size. For tiny homeowners, the units generate income or serve as guest homes. Owners often rent them out to college students or offer them to elderly family members, so they can stay nearby.

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The pandemic is creating more uses. Some people are constructing them as a backyard office while working from home. Others are building tiny homes on undeveloped lots where one might expect to find a traditional-sized home, either for use as a primary residence or vacation home.

These homes go up fast; eight weeks is a typical length of time to build. Builders usually incorporate materials that align with the main house, as zoning rules tend to require. The price of construction varies by region, but in the Los Angeles area, for example, converting a garage to a so-called accessory dwelling unit starts at around $100,000.

Tiny home tenants are often young professionals who prefer the autonomy and privacy of having their own building and sometimes a little outdoor space.

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Kelly Samuels, a 28-year-old teacher, has lived in four tiny-home guesthouses. "I've never been interested in having people living above me or below me," she said. Her most recent rental, a two-room home in Encino, Calif., is roomier than most at 560 square feet. It has a full kitchen with steel appliances, wrought-iron cabinet handles and French doors. Ms. Samuels works in the bedroom, while her boyfriend works from the kitchen-living room area. The $1,900 a month rent is comparable to similarly-sized apartments in the area.

One of the keys to a peaceful tiny home life, Ms. Samuels said, is staying on good terms with the neighbors. "The people that live in the main house kind of make or break the place," she said.

New laws relaxing regulations on tiny home construction in West Coast states such as California and Oregon have helped ignite a construction frenzy of these homes.

"People are at home, spending more time at home, looking around their house and thinking, 'I've got this thing I've been wanting to do forever, '" said Paul Dashevsky, founder of GreatBuildz. The company connects homeowners with tiny home contractors and has seen a huge upswing in business during the pandemic.

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As home prices rise, more new home buyers see adding a tiny home as a way to help finance their home purchase.

Cheap borrowing costs are also fueling the boom. Many homeowners are taking advantage of record low interest rates to refinance and use extra cash to build a tiny home, said Freddie Zamani. He founded tiny-home construction company EcoSmart Builders RE Inc., which builds the homes starting at around $95,000.

Ruth Washington, a retiring nurse in Los Angeles, hopes the tiny home she built by converting her 500-square-foot garage will be an affordable alternative for senior citizens who cannot pay for a typical Southern California retirement home. As part of the rental price, she would also offer some nursing services to the couple.

"I thought with this I could probably get a senior, a husband and wife, and make their lives a little bit easier," she said.