If you take a general look at the housing market, you will see it operates quite simply. Young people enter the market and older people exit it. While there are no barriers to older people making a change, the rising cost of homeownership is making it increasingly difficult for young people to enter the market. As house prices rise, so does the amount of a down payment, the size of the income needed to qualify for a mortgage and the monthly cost of the mortgage. The problem compounds when you add in the cost of property taxes, insurance, and utilities. Today’s young people, being juniors in the workforce are not earning enough to meet these demands.
So they rent. But rent continues to increase as well. With a significantly lower entry cost to begin renting, many young people opt to rent, which increases demand. Demand drives price, so rents continue to rise, which decreases the ability to save, and the rent cycle perpetuates.
A lot of today's housing costs are supported by immigrants, new people entering the marketplace with some means to buy homes. But the growing issue of young people entering the marketplace is apparent in the demand for rental units. Where young buyers cannot afford to own, the market will ultimately have to adjust, as older homeowners continue to grow too old to maintain a home. Since taxes, insurance and utilities are fixed, the only way to make housing more affordable is for house prices to fall and fall significantly.
Tiny homes offer young people an affordable type of housing that they can use as a stepping stone into traditional housing. Owning a tiny home is an asset that can be sold when it is no longer required. It stabilized rental costs and allows homeowners to access to more of their income. Finally, the cost of purchasing a financed tiny home is easier to arrange and afford.
Tiny homes have the potential to maintain a vibrant economy by providing this stepping stone into traditional homeownership. Enabling tiny homes is the focus of the Association. When house prices fall, it has a negative effect on the economy. Consumer confidence is lost, resulting in less spending, which causes inflation to set in. By working to help transition people into homes, we hope to help maintain a vibrant and healthy economy.