More random Tiny House commentary:
I was interested in figuring out approximately what it would take for owning a Tiny House to be financially competitive with renting. I looked up Bakery Living, and they are asking around $1300/month for "micro" studios that are just over 500 sqft. The assumption I am going to make is that some individuals or couples (not all) would find it equally or more appealing to own a house with fewer internal sqft, but located on a lot where they could get their own garden, porches, and so on that would total considerably more sqft (e.g., the lot they are using in Garfield is about 1100 sqft, so even with the single-story Tiny House design they selected they are going to meet that requirement). Of course it should be noted the Tiny House will come without the common amenities offered in buildings like Bakery Living, and not all people are going to want to trade so much indoor space for outdoor space to begin with, but I think it is fair to assume at least some people would be willing to make those tradeoffs if the financial cost was similar. And, of course, there are Tiny House designs with a lot more sqft than the one they chose--those might increase cost and eat up more outdoor space, but the point is you can contemplate a range of tradeoffs appealing to different people/couples.
I then used this tool to find a break even point:
http://www.trulia.com/rent_vs_buy/
I left the Advanced Settings alone (feel free to refine those if you want to do this yourself--those will also detail how the tool is dealing with taxes, appreciation, cost of capital, utilities, maintenance, and so forth), but I took the anticipated living term down to 3 years and clicked on the "I do not itemize" box. Those both push the comparison to be more favorable for renting, but I think those are more realistic assumptions for the likely market for studios or Tiny Houses.
Anyway, with a target monthly rent of $1300, I get a breakeven with buying at around $160,000. So that is actually a pretty generous budget for this project, particularly if you are imagining doing this at some scale. Incidentally, if you move the anticipated living term out to 4 years, you get a budget of $180,000, and at 5 years it is about $195,000. I still think 3 years is the right number to use, but you can see how this Tiny House approach could appeal even more to individuals or couples with longer anticipated terms, such as empty-nesters. FYI, down to 2 years drops you to $130,000, and 1 year around $85,000, but you are pretty crazy to be looking at buying and selling in only one or two years.
In any event, I believe City Lab is hoping to bring this pilot project in for under $100,000. That would be great according to this analysis, and my suggested takeaway from all this would be that it may not be a great idea to skimp too much on the budget. In particular, I continue to think absolutely nailing the outdoor spaces is going to be key to making this work, and I would personally spend some extra money if necessary to make that happen.
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