Rather than feeling the excitement and anticipation of buying a new house, many are instead feeling anxiety, worried if they can afford a new home as the cost to buy a new house continues to rise. In housing markets all around the country, and specifically in areas like San Francisco and New York City, affordable housing is scarce, leading home buyers to look for more economical alternatives.
This means less traditional home options have seen a reemergence in the housing market, sparking new interest in manufactured housing, concrete structures, and the ever-trendy tiny home.
To Build or Not to Build
Manufactured housing and concrete structures have fluctuated in popularity over the years, but are currently seeing a resurgence as rising housing prices reach untenable levels, housing inventory remains low, and new construction costs are now reaching record highs.
The cost to construct a manufactured home falls well below the cost to purchase or build a new home, especially as the price of building materials continues to climb. For instance, lumber prices were around $700 per thousand board-feet this past January. However, by May, the cost for lumber jumped to $1,400 — double the price.
A site-build home, on average, costs around $114 per square foot compared to a manufactured home which costs, on average, only $55 per square foot.
For families and first-time home buyers on a budget, shelling out around $70,000 for a manufactured home versus over $300,000 for a traditional home is a hard option to ignore. And while there has been a certain stigma around the idea and quality of manufactured homes, companies are working hard to change perception, providing high-end manufactured options and building with quality materials and craftsmanship; the low-cost comes from efficient processes and economies of scale, not poor quality.
Although manufactured housing still only makes up a small fraction of home purchases, new manufactured housing is seeing a spike in growth around the country with Nebraska, Massachusetts, New Mexico, and New Jersey leading the way.
Non-Conventional Housing is on the Rise
When first introduced, the allure of the tiny home captivated many, leading to several HGTV shows dedicated to the tiny home trend. But since housing costs skyrocketed and the pandemic hit, tiny homes were no longer simply in vogue or a fad. For many, tiny homes were the ideal affordable solution to purchasing a new home while being able to social distance and relocate to any remote piece of land.
The median price of a tiny home spans from $30,000 to $60,000 compared to a traditional home which costs hundreds of thousands of dollars.
According to a survey by Fidelity National Financial, 79% said that they could afford a tiny home, while only 53% said they would be able to purchase a traditional home.
In the same survey, 86% reported they would consider purchasing a tiny home as their first home. So while tiny homes rarely extend beyond 400 square feet, for many new home buyers, tiny homes are starting to feel like the perfect fit.
Going beyond the initial low cost of purchasing a tiny home, the biggest benefits of a 400-square-foot residence are the reduced energy bills and lower maintenance and repair costs. For example, if your tiny home needs a new roof or new windows, the cost dramatically decreases compared to a traditional 2,000 square-foot home.
Many also buy their tiny home outright, meaning there’s no mortgage and no debt. Insurance and taxes tend to be significantly lower as well. And not to mention, because tiny homes are mobile, if you don’t like your neighbors or if there’s a wildfire in the area, you can simply pick up and relocate somewhere else.
Innovations in Construction
Again, as builders see rising costs for conventional construction materials such as steel, aluminum, lumber, drywall, and copper, building traditional homes is expensive. However, with new 3D technology and innovation, the way homes are built is completely changing.
Companies SQ4D and ICON are using 3D printing technology to build homes, working with a proprietary concrete mixture to create more affordable homes at a faster pace. By using far fewer materials, these 3D homes can be built in less time, saving nearly 10% to 30% in construction costs compared to conventional construction.
With this new technology, SQ4D and ICON are building everything from tiny houses to two-bedroom and four-bedroom homes.
And until the housing market becomes more affordable, we’ll see more and more home buyers seek out these more affordable alternatives to the traditional home.