As an appraiser, you come across a variety of properties with distinctive features. With 1970’s homes there was shag carpeting and wood paneling. Jump to the 1990’s and light wood and brass were prevalent. So, what’s to come? With the millennial generation entering a time in their lives to start building or buying homes, we can take a look at their interests and lifestyles to see what kinds of properties will be hot, and start to predict the effect this will have on valuing properties.
Tiny And Simple
Millennials may not be opting for those finished basements, extra bedrooms and bathrooms, or swimming pools. They’re looking more towards open floor plans and simplicity. Take the tiny house. A home is considered a “tiny house” if it is under or around 400 square feet, or roughly the size of a small apartment. Take that space and turn it into a free-standing home. While people you know may not be looking to actually build a tiny house, the ideologies behind it are becoming appealing to many. Why?
- A smaller, more simple homes means saving money on bills and construction. To buy a tiny home could mean about $25,000 to $35,000. However to actually construct one can vary quite a bit—from a couple grand to over$100,000–but with such a broad range, there’s a home for nearly anyone’s wallet size. Same goes for monthly bills. Some tiny house homeowners are able to make their homes completely self-sustaining with little to no bills to pay. Others pay from $30 to a couple hundred a month.
- The square footage and open floor plan allows more focus on life than the upkeep of their home. When you have less space, you’ll have less stuff! The tiny home movement also coincides with the idea of minimalism. The mentality of building or owning a smaller living space usually means less distraction on the nonessentials, ergo less is more!
- Tiny houses leave less of a carbon footprint, or negative environmental impact. Since you’re already making a conscious effort to live smaller, might as well give back to the environment too! Besides the fact that smaller homes take up less space than a normal 2,600 sq ft home, some homeowners will add in additional features to be more eco-friendly. These additions include: using sustainable/recycling building materials, compost toilets, solar-based electricity, and installing larger windows to utilize sunlight instead of light bulbs.
- Some homes are mobile, which means millennials can literally travel in the comfort of their own home. Noticing a theme here? The great outdoors is a staple for millennials or home buyers looking at these types of houses. Why not combine your love of traveling and your love of creature comforts into one package?
How Should Appraisers Tackle This Trend?
First of all, depending on where your based out of, different states and cities have different regulations, market demands, and lending rules for tiny homes. In some cities in states like Colorado and North Carolina, are allowing more loose regulations for tiny homes to grow in the housing market while other states require modifications or the owner to register their home as an RV rather than a “real home”. If this happens, just remember legally you cannot appraise them.
Secondly, as you could guess tiny homes are problematic for zoning regulations across the United States. Change in law regulation is happening, but it’s hot and cold as stated earlier. Never mind the fact too that some eager want-to-be homeowners will look to the internet and buy pre-made “tiny house kits” to build their own houses from literally the ground up. The best way to tackle (or appraise) this trend is to keep up with your local and state regulations as well as how and where these tiny houses were built. Lastly, keeping your eye on the market around you and making note if the tiny house movement is growing your region’s real estate market.