Why the US should be more excited about tiny homes

• Tiny homes are popping up more and more around the US, particularly in California backyards.
• Housing experts tout them as a possible solution to the US housing shortage.
• While there is a lot of interest in tiny homes, it's too early to measure their success.

Katie Sandoval-Clark, a nonprofit leader and mother of two, built a bungalow in her parents' backyard so she could afford to raise her children in the Bay Area.  

Blue Wells, a former corporate executive battling cancer, moved to a 600-square-foot house in a South Carolina tiny home village and felt more free than he ever had living in his 3,500-square-foot home.

The Randolphs own a business in New Hampshire, and are building a tiny home village to provide affordable housing to their employees and entice young people to set down roots.  

If you've ever had a conversation about what can be done to make housing more affordable, you have probably heard of tiny homes. They're dotting backyards in San Diego, Denver, and Portland. Cities like Indianapolis and Austin are using them as temporary shelters for homeless residents. Amazon has several listed for brave DIYers.  

Tiny homes, generally defined as homes under 1,000 square feet — compared with the typical US home size of 2,500 square feet — are a growing market for those seeking affordability, community, and simplicity. Tiny homes — and accessory dwelling units, their slightly larger counterpart — are being eyed as a solution to the country's housing shortage.

Tiny homes are cheaper to build and buy than the typical home, but an uneven patchwork of zoning regulations impedes widespread use. Since there are limited mortgages for manufactured housing, they can be harder to finance than a typical house, Zillow economist Skylar Olsen told Insider.

But, while it may not be a magic pill, they are a very important tool in eliminating single-family zoning — local laws that limit the amount of housing — a key reason why there is such a shortage, Zack Giffin, a tiny home carpenter and the host of  "Tiny House Nation," told Insider. 

"Single-family zoning is really impacting the potential for upward mobility, which is essentially the American dream," Giffin said. "If you're a patriotic American, and you believe that with hard work and dedication, you can pull yourself up by your bootstraps, single-family zoning is the biggest prohibitor to that process."

Tiny homes are "a spear point against the armor" to these restrictions, he added. 

California is a possible blueprint for the rest of the nation  

The US is short 3.8 million homes and prices remain competitive. Tiny homes pose a possible solution, experts say. 

They can be built on a plot that already has another house on it, if local zoning allows. They require less materials. They can easily be built in a factory and trucked to their final location, a process called prefabricated or modular construction that cuts the overall price by up to 20%.

Consumers can buy them for as little as $10,000 per unit, or for over $350,000 per unit, like this backyard flat a San Diego family installed. 

California offers a snapshot of the housing issues the country is facing in terms of affordability and availability. The typical California home cost $796,700 in June, according to Redfin, more than double the US average of $383,000. And, an estimated 172,000 people — the largest state total in the US — are homeless there. 

The Golden State's laws and zoning regulations on ADUs can be a blueprint for other states considering zoning laws like these, Muhammad Alameldin, a policy associate at the University of California-Berkeley's Terner Center for Housing Innovation, told Insider. 

California's recent legislation around ADUs are like "training wheels," that can offer a roadmap to remove restrictions on building more homes, he said.

Since 2018, some 60,000 ADUs — a house or apartment that's up to 1,200-square-feet built on property that was previously zoned for a single unit — have been approved after new laws allow homeowners to build units in their backyards. Many ADUs are considered tiny homes. They now make up 20% of new units built, data from the state's Department of Housing shows. 

Removing "barriers," like single-family zoning is one way the state can allow more housing, Gov. Gavin Newsom said in 2019. 

With the widespread adoption of ADUs, up to 1.5 million more homes can be built in California, according to University of California-Berkeley's Terner Center for Housing Innovation, which studies housing and policy. 

San Jose homeowner Joyce Higashi is one of the thousands of Californians who has built a tiny home in her backyard. She rents out her 500-square-foot abode for $3,000 per month to traveling nurses. 

While California was rolling back restrictions, her friend told her about an ADU company that was using prefabricated construction. "At first, I wasn't interested. In my mind, prefab meant mobile home, and I did not want a mobile home in my backyard," she told Insider previously. But as soon as she walked in she was taken aback at how luxe, spacious and modern the unit was, she said. Higashi loves renting out her ADU, as well as the mission of ADUs, she said. 

Now, she speaks at ADU networking events, attends ADU installations, and connects with people who are in the ADU business. She thinks that ADUs can provide homeowners with additional income, and give elderly parents a spot to age in place — near their children. 

Tiny home villages for the homeless

Tiny homes have also been posed as a solution for the homelessness crisis, which affects over 580,000 Americans.

These tiny home structures are cheaper and easier to build than traditional temporary housing, and they usually provide houseless people with a room of their own. 

Tiny home villages are being built around the country, like in California, where Gov. Newsom allocated $30 million for 1,200 of them. 

Nonprofits have been building tiny home villages for homeless veterans, too. In Washington D.C., a bipartisan bill in Congress would allocate $100 million to building more of these villages for homeless veterans over the next five years.  

Other states are using tiny homes to help formerly incarcerated people. A New Jersey nonprofit built a tiny-home community for people recently released from incarceration, hoping they will better integrate participants back into society.

There's more work to be done

Still, with all of this progress, tiny homes are a long way from easing the effects of a decade-long housing shortage. 

For one, there is the issue of scale. While some big cities and states have relaxed their stringent single-family zoning policies, many places in the country effectively ban the construction of units like ADUs, the Terner Center's Alameldin said. 

"It's our localities' first attempt at trying to solve the housing crisis," Alameldin said, speaking of California. "Everything that we will learn from legalizing its use we can use for other types of housing." 

In the meantime, advocates believe that tiny homes will become an increasingly popular way to provide more housing, especially as lack of affordability starts to shake communities throughout the country. 

Just ask Katie Sandoval-Clark, who split the cost of a $1.4 million home and a $325,000 ADU. It's let her mother, Barbara Clark, keep costs down in retirement and spend more time with her young grandchildren, while allowing Sandoval-Clark to remain in the Bay Area.

"Our options would be totally different," she previously told Insider. "This has allowed us to pursue what we really want to do."