Tiny House Movement: Making Market Opportunities

The tiny house movement has taken the suburban dream, flipped it, bent it, upended it and created a whole new approach to everyday living. With that change in approach comes the emergence of a whole new financial model—altering the way income is apportioned and household priorities arranged for those who move into this type of home. And whenever there is such a fundamental change to a consumer’s life and preferences, openings are made in the industries which meet the needs of such consumers. The movement involves the construction of homes that are typically between 100 and 500 square feet in size and are often placed on wheels so that they can be transported wherever their owners travel. The movement is also chiseling new niches in various industries that can meet the needs of this subculture. (For related reading, see: Should You Buy or Build a Home?)

While the shift to tiny houses so far involves a relatively small subculture, all indications point to the fact that the trend of building tiny homes is gaining momentum. Thus, the industries and individuals poised to profit should take note if the numbers of people ready to make the switch to a tiny home continue to swell. Two groups in particular are being drawn into the movement: Millennials, who have very little funds and are saddled with college loans; and Baby Boomers, who are trying to stretch their pension by finding affordable homes. (For more, see: How Baby Boomers Will Change the Way Others Retire.)

New Markets

To begin with, a market is opening up for the construction and retrofitting of such homes. While many tiny house homeowners have chosen to build their homes themselves, many still seek construction advice and purchase construction plans. Companies such as Tumbleweed Tiny House Company and Tiny Home Builders are meeting those needs, but homeowners are seeking evermore innovative and environmentally sustainable ways to design their home, thus creating a market for those willing to bring new ideas and approaches to tiny house construction. 

One such company, Eco Cabins, known as a “prominent leader in the manufacturing housing sector,” is said to be a “new iteration” of what its founders have been doing in “factory-built sales for years," but with an offering that is "tailored to the smaller, simpler, sustainable, smarter living, paradigm shift.” Its president and CEO, Darin Zaruba, has noted in an interview with one blog writer that “there is a significant group that doesn’t want to build themselves.” And so Eco Cabins is “gearing up to provide products for them at a very reasonable price.” He mentioned that they also have some products “in the works to help the DIY market as well.” These, he said, “include custom trailers with walls and roofs already set to the DIYers' specs, using stronger, lighter and recycled materials.” (For more, see: FHA Loans: An Option for Manufactured Homes, Too.)

In fact, beyond the actual manufacturing of homes, which typically cost between $10,000 and $40,000 to build (with the average cost of a home being just $23,000), there will be an ever-expanding market for home décor and furniture that meet the specific dimensions and unique requirements of a tiny home. Tiny home owners require furniture of innovative design that is multi-purpose (capable of being transformed into several pieces, with multiple functions) and maximizes the use of every bit of space. This again creates a niche in the market for designers and carpenters willing to meet this need.

Those wishing to market to tiny house residents should also note two lifestyle approaches that have been observed. Firstly, many are environmentally conscious. In fact, it’s been noted that the movement “began as an effort by a small group of individuals to shrink their carbon footprint.” Such individuals are thus, more often than not, seeking to build their homes using reclaimed wood and re-purposed furniture, and are installing solar panels and using composting toilets. This expands the demand for such eco-friendly fixtures for the home—creating an opening for those wishing to sell or manufacture such products. (For more, see article: Building Green for Your House And Wallet.)

Secondly, oddly enough, the tiny house movement introduces a new luxury sub-culture within the lifestyles of the typical demographic groups drawn to tiny homes. Those in tiny houses are often well-educated (with many being artists and writers, and the majority of those surveyed saying they had at least some college education), with cultured tastes, who are seeking to live simpler lives. Spending less on typical household expenses, however, increases their disposable income—making them able to spend on certain luxury goods such as food, décor and vacations that they otherwise would not be able to afford.

The tiny home owners profiled by the media include writers, folk musicians and teachers who purchase gourmet foods, and who, because the square footage of their homes are so tiny, are able to splurge on the installation of stained-glass windows, wooden floors, cathedral ceilings, and modern electronics. Some tiny home owners are even investing in financial products they would otherwise not have had the funds to acquire. So, as ironic as it may seem, the tiny house movement might be opening niche markets in the luxury goods sector, and in the banking industry for unique savings and investment accounts (even though mortgages might be impacted negatively by the movement, since it has been reported that 68% of tiny house owners do not have a mortgage). (For related reading, see article: Find Your Niche Market.)

Real Estate Opportunities

The tiny house movement has also opened up opportunities in real estate, for individuals looking to generate additional income for themselves. Instead of purchasing property, many tiny homeowners rent land, and some landowners have been able to make easy profits by renting out small sections of their property to a number of tiny homeowners. Another option for revenue-generation is the construction and sale/rent of tiny houses. The time it takes to construct a tiny home would be short, when compared with the construction period for an average-sized house. Also, those who rent land to tiny home owners can be assured that the water and electricity usage by such home owners are comparatively low, since these homes are small and are usually energy-efficient. (For more, see: 8 Energy-Efficient Home Design Ideas to Invest In.)

The Bottom Line

This article just scratches the surface of all the ways in which the tiny house movement could alter the landscape for real estate, home-ownership and personal financing schemes. Its implications extend into zoning laws, possible options for dealing with the homeless, and the very culture around us.  If this movement continues to gain momentum, it could be a real game-changer.