Why do tiny houses cost so much?

While the amount of money that constitutes ‘so much’ is subjective and influenced by many factors, especially the average cost dynamics and the perspective that is shaped in any particular location, there does seem so to be a pretty routine response from the general public that tiny houses ‘cost too much.’

It is worth noting that we are just a husband and wife who designed and built our own tiny house on weekends, pay check to pay check. While this one off experience does not make us professionals on the topic it did give us useful first hand insight into the process so we want to write a brief post sharing our opinion on the cost of tiny houses; more specifically why there can be such a  difference in cost between one tiny house vs another. [Hint: level of detail, material choice and paying for labor are the big three]. Rather than focus on specific tiny houses and price out all of the individual components to make this point I want to use the stairs in our own tiny house as an example.

BET STAIRS.jpg

They are simple, but functional, right? And maybe you even like the look of them. You read our BLOG POST and saw that we used plywood and MDF. Brilliant, you think; beautiful AND inexpensive. You take a few screen shots and send it to your builder to be incorporated into your tiny house and [s]he tells you that it will be a $1500.00 up charge and will prologue your build time. JUST TO BUILD SOME PLYWOOD STAIRS!?

This is why. Here is the Material list:

$220.00   Four 4×8 sheets of 1/2” thick birch plywood w/ finish veneer

$20.00     One 4×8 sheet of ½” thick MDF (Medium Density Fiberboard)

$40.00     16 hinges

$40.00     8 cabinet handles

$12.00     Paint

$14.00     Screws

$15.00     3-4 bottles of wood glue

$20.00       Misc. (sand paper, Sanding block, glue roller, etc…)

Free         Steel flatbar

Free         Dominos

__________________

Total        +/- $381.00 in materials.

Some of you may already surprised at the cost, but this is the cheap part of the equation. If you haven’t read our recent post detailing how to make our stairs, GO HERE FIRST! (It includes a link to download our stair construction plans for FREE too!)

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Now (after reading our stair construction post) you should have a good idea of how time consuming of a process they were. In fact they took an estimated 72 [wo]man hours of labor from start to finished install, which doesn’t include the amount of time spent allowing the laminations and joints to dry while clamped, during which the project is taking up space in the shop. If you were paying a ‘fair’ wage (let’s use $15.00 per hour for this example) to the employee building these stairs, that would come out to $1,080.00 minimum in labor.

$1,461.00. Does that sound like a lot for some plywood and MDF stairs?

It would likely be even more than that because this doesn’t address that the person capable of making stairs of this detail and precision would be paid more than $15.00 per hour and the cost of labor does not include employee benefits, insurance costs, profit for the business nor the cost of designing and detailing (should the designer be lucky enough to be paid for their work). This discussion also did not factor in the price of 10 clamps (minimum) a table saw, Festool Domino joiner + dominos, drill press and work space if you do not happen to have those things laying around.

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I have seen beautiful tiny houses with a ladder made out of a few 2×4’s and then there is our $1,500.00+ storage stairs, but that is the beauty of tiny houses as well as the point of this post. They can be whatever you want them to be.  There are many different ways to achieve the same goal and just as many different reasons for doing so.

You can decide that it ‘defeats the purpose’ of a tiny house and that is your prerogative but that opinion goes no further than your own personal interests, necessities and goals. We are just trying to help illustrate why there is such a difference in price range from one home to another, especially between a d.i.y. build vs a pro-build.

Our stairs cost us $380.00 or so to make and our house cost us $30,000.00 total to build. That is purely material cost as we did all of the labor ourselves. Day after day people stumble upon our 8 MINUTE TIME-LAPSE CONSTRUCTION VIDEO or FINISHED PHOTOS and half of them say that ‘it’s amazing what can be built for $30,000.00’ while the other half are appalled that anyone would sink $30,000.00 into a ‘glorified trailer.’

Did you know that it cost $500.00 to have our front stairs literally bent out of a single piece of steel plate? Did you know that the four light fixtures on our cable light system cost $200.00 [each] or that our front door with internal retractable blinds cost almost $800.00.  We choose a $200.00 shower door over the $3.00 shower curtain and the $1,300.00 composting toilet model over the cheaper, less functional options. The difference in costs also go well beyond what is visible. We used the $30.00 per sheet sanded face plywood for our interior paneling instead of the only slightly thinner $10.00 per sheet 5 mm floor underlayment and used rigid foam board insulation throughout our entire build.

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I could go on and on about what we spent and you could think to yourself how much cheaper you could do it for; and once again, that is the point of this article. While we have reasons for each personal decision in our own home, one can make different choices to reduce the cost of their tiny house. In fact I am constantly telling people that I am confident that they could take our plans and build a similar tiny home for closer to $20,000.00 just by choosing different materials and level of detailing. And of course there are plenty of stories about sub-10k builds completed by dedicated individuals putting in the extra time and effort to incorporate a substantial amount of salvaged materials.

I reached out to Jimmie Stoltzfus, co-owner and builder at Liberation Tiny Homes in Lancaster, PA because I have followed their progress with admiration since they began building tiny houses a couple years back. I also think their business is a pretty fair representation of what many tiny house companies look like right now and wanted to get some perspective from an actual builder about other ‘hidden’ costs that I may not have addressed.

What I found is that the costs associated with running a [tiny house] construction business are actually far from ‘hidden’ yet seem to be completely overlooked by the throngs of people exclaiming that ‘they cost too much’ and blaming it on ‘greedy builders.’

A brief glance at Jimmie’s custom tiny house operation provides great insight. The company leases a 7,000 sf space for around $2,500.00, allowing them to simultaneously work on two tiny houses at a time inside (and more outside if needed). There are three full time and two part time employees that rely on this job to make a living. After insurance, benefits, taxes, etc…the companies cost per employee climbs above $30.00 per hour. Depending on the size and level of detail it takes between 400-700 hours to complete one of their tiny houses, resulting in labor costs of anywhere between $12,000.00 and $24,400.00. And labor costs can fluctuate much more than material costs he warned; an occurrence that must be factored into final pricing of a tiny house.

There are the less tangible costs associated with the design of the house and the typical construction details used throughout that the builders must become proficient in. followed by the material costs which are much more stable than labor but can vary greatly depending on the client’s choices (like if you requested them to build a replica of our stairs in your build). The cost of the businesses tools and truck(s) for an operation that Jimmie guessed was on the ‘smaller side’ of tiny house companies is estimated at close to $30,000.00. Add to that the $5,000.00-$7,000.00 RVIA certification process that Liberation Tiny Homes is undergoing and one can begin to understand the investment that goes into a small tiny house company and the beautiful product they create. And at the end of the year one can only hope they turn a profit to be able to repair tools, hire additional staff, and perhaps even grow…

I think the most interesting part of my conversation with Jimmie was the topic of ‘browsing visits’ and requests for free advice. He explained that they have a lot of people drop in with hopes of seeing a tiny house after stumbling upon an episode of Tiny House Nation while others will call Liberation Tiny Homes to ask for advice about their personal d.i.y. tiny house build. While he was quick to say that of course they love to chat about tiny houses and show off their product, it does become an uncompensated time sink for a small company that cannot afford a full time sales staff.

My goal in reaching out to Jimmie was not to crunch numbers (although I really appreciated his transparency) but rather to remind us all that this is pretty simple business like many others. And these [tiny] houses are not all that different from normal houses with many of the same amenities. What is eliminated is the inexpensive square footage; the empty space composed of little more than dry wall and carpet. After having designed and built a tiny house from scratch with my wife and experiencing the process and cost first hand I am honestly impressed anyone can produce a quality custom tiny house in the $50,000.00 price range and still make enough to make the effort worth it.

And for what it’s worth I think the cost of tiny houses will continue to rise, not because of the popularity of the ‘movement’ but because of the addition of regulation that is already in the works. Mandated certifications, increased regulations, required inspections and more knowledgeable construction practices to meet all of the aforementioned items all cost (more) money; costs that will be passed onto the consumer. It will be interesting to see if these circumstances push more people to consider a d.i.y tiny house build to bi-pass what they may feel is increasingly prohibitive cost and bureaucracy or if d.i.y. tiny houses will begin to diminish with the emergence of so many professional builders combined with the increasing availability of financing to buy a tiny house.

I encourage you to stop over to Liberation Tiny Home’s website and BROWSE THEIR PAST PROJECTS or read their BLOG ENTRIES about the most current projects they have going on. It is also worth checking out their UNIQUE PRICING SCHEDULE in which they offer tiny houses at three different stages of completion with corresponding pricing. The Stage 1 or Stage 2 shells can be a great option for those who want the peace of mind that it is structurally sound but the d.i.y. freedom to finish it how they see fit and take pride in a personal project, not to mention saving some money upfront. They will also begin producing RVIA certified builds at the clients request in the coming months.


 

For those that wonder what building a tiny house looks like, here is our 8 minute time-lapse construction video showing our build from start to finish. Enjoy!

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3 replies »

  1. Thank you for this! The detail in this post is wonderful. I have never once questioned your choices or priorities in your tiny house – I applaud every decision you’ve made! You’ve decided to reduce your housing footprint in exchange for experiences, and you are doing it in style – nothing wrong with that! If you live in that tiny house for 5 years, with a $30k investment, without a conventional house payment, well – I think it’s a pretty smart move financially…that’s less than an average studio apartment in my town. And I’m betting you could recoup most (if not all) of that $30k if you decide to sell it someday. I’ve lived in some fairly unconventional situations myself and I laugh at the people who say, “how could you do that?” (mostly family members…) Not everyone needs 3-bedrooms on an acre to thrive.

    Like

  2. Hello! I’m am converting a shed. I would like to know what materials you used on the interior walls. What paneling and what was it that you used on the seams?

    Like

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