

Ryann Flanagan is a teacher at a Montessori school in Austin, Texas. She’s 28 and living with her dad to save money while she looks for a place to buy, but “Austin is super expensive”, she says. Driving to work one day she admired a tiny model home tucked below a sprawling oak tree. A colleague recommended she contact James Stinson, the developer of Constellation ATX – a 6.2-acre tiny home community offering long-term leases on “micro-estates”.

“In a micro-estate, you don’t just get your own little yard and your own little house, but you also get a community,” says Stinson. “We want to give people that are traditionally renters an option to come and put down some roots.”

We have an affordability problem. That’s what everyone is trying to solve Andrew Shih

Austin, like many other US cities, is facing an affordable-housing crisis. The city’s median home price is currently $344,300, according to Zillow – up from $207,000 in 2011 – while the median household income hovers at $55,216. Austin’s most recent strategic housing blueprint identified the need for more than 135,000 housing units over the next decade simply to keep pace with population growth. With an estimated 5.6% of Americans currently living in “manufactured housing” – dwellings that are usually referred to as “mobile homes” or “trailers” – it’s clear that nationwide there is a growing issue. “We have an affordability problem,” says Andrew Shih, an Austin-based broker specialising in manufactured home communities, or trailer parks. “That’s what everyone is trying to solve.”

Facebook Twitter Pinterest A Kasita tiny home. Tiny homes are usually under 500 sq ft. Photograph: Kasita Inc.

Ostensibly in answer to this conundrum, tiny home communities – the term “tiny home” usually refers to a home of under 500 sq ft (46 sq m) – are a growing presence in cities across the US. In Arizona, the Vail School District is building one for teachers who otherwise can’t afford to live in Vail, a community 25 miles southeast of Tucson where the median home price is $257,500. In the UK, construction of “micro-homes” smaller than 400 sq ft has more than doubled since 2010 – 8,000 were built in 2016, according to a Which? analysis of Land Registry data.

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Constellation ATX is the first US tiny home community to offer residents a 99-year leasehold estate, a sort of hybrid real estate that falls somewhere between renting and buying and overcomes a common problem associated with tiny homes – namely, where to put them. Austin and many other cities ban accessory dwelling units with wheels or require prohibitively expensive permitting. To ensure compliance, Constellation currently only allows houses from pre-approved suppliers, including Colorado-based Sprout Tiny Homes and Kasita, an Austin-based manufacturer of hi-tech tiny homes with price tags starting at $89,000 (about twice the average cost of a similarly sized traditional manufactured home).

Facebook Twitter Pinterest A mobile home in a California trailer park. An estimated 5.6% of Americans currently live in so called manufactured housing. Photograph: Alamy

At Constellation, residents purchase a site titled as a condominium, with monthly leasehold fees, community rules and bylaws. The leasehold estate fee is pegged at 75% of the Department of Housing and Urban Development’s fair market rent for the area, which essentially offers a form of rent control on land that has spiked in value in recent years. The community is located just south of Austin city limits in an area defined by cookie-cutter housing developments, but Stinson is banking on the neighbourhood around Constellation to attract bars and restaurants.

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Stinson believes Constellation’s biggest selling point is the way it is integrating community into the development, which will include a pool and a 5,500 sq ft clubhouse, a communal kitchen and a rooftop patio. “People are moving to Austin from all over the world. A lot of them don’t know people,” he says. “This is a housing development that is focused around that socialisation aspect as well as the small house aspect.”

This vision meshes with the reasons people give when they buy tiny homes – they want to eschew the material accumulation of things for something sparser and more focused on experiences rather than possessions. But are tiny homes a durable solution to the affordable-housing crisis, or are they a passing trend and simply making a virtue out of necessity?



Facebook Twitter Pinterest One Arizona school district is working with Luxtiny to build tiny homes for its teachers, who otherwise can’t afford to live in the area. Photograph: Courtesy: Luxtiny homes

To start, whether tiny homes are an affordable alternative to traditional homeownership depends in large part on whether people can access low-interest financing to purchase them. Both tiny homes and RVs (recreational vehicles) are usually financed like vehicles, with 10-year terms and interest rates as high as 9%. But in the case of Constellation, Shih says a bank might look at a 99-year land lease and say, “It’s kind of like you own the land, so it’s OK for me to finance [a tiny home] for 30 years.” He adds: “The more financing you can get, the better off you are.”

Buying a tiny home is almost like buying an old car – financially it doesn’t make sense Aaron Berman

Even so, Shih says, Constellation’s monthly leasehold fees – starting at $725 – aren’t all that affordable: trailer parks at comparable distances to downtown Austin charge rents closer to $500 a month. But most tenants at trailer parks are on year-long leases. If the park owner decides to redevelop the land – or to raise rents to keep up with property tax increases – tenants have little option but to move, often at considerable cost.

When Aaron Berman and his wife, Meredith, moved from Denver to Austin, they decided they wanted to live in a tiny home. “We wanted to get out of commercialism, of materialism,” says Berman. So they designed a tiny home and parked it in the backyard of the winery they owned. They loved living there, save for the constant threat of code enforcement – their tiny home was on wheels and prohibited by Austin’s zoning code. “We lived there for two years and then our daughter came along,” says Berman. “My wife said, ‘I can’t do this, I want a real place for her to grow up in.’”

Facebook Twitter Pinterest Constellation ATX says a sense of community is important to its development, which will include a pool, ‘clubhouse’, a communal kitchen, and a rooftop patio. Photograph: Urban Design Group

That’s precisely the concern of James Young, senior managing director at ARA Newmark in Austin. He’s considering developing a tiny home community on a 10-acre parcel of land he owns in south-west Austin after a young couple looking for a place to put their tiny home contacted him about his property. “What we learned is that people don’t currently own a tiny home, but they like the concept,” he says. But he thinks tiny homes are inherently transitional dwellings, where individuals or couples live for three to five years while they save money. “I think it’s going to be handy for people who are looking for a short-term fix to affordability,” he says. “I don’t know how long the demand will last.”

Facebook Twitter Pinterest Constellation ATX developer James Stinson inside a Kasita. The sofa is a pull-out bed, and the steps conceal storage. Photograph: Megan Kimble

The question remains: are tiny homes really all that affordable? Berman doesn’t think so. “It’s almost like buying an old car – financially it doesn’t make sense,” says Berman. “You’re talking about a lot of money, and you’re talking about a small market where you can resell it.” And like a car, a tiny home is a depreciating asset – research shows tiny homes don’t grow in value like traditional homes, in large part because they’re often not attached to land, the most valuable resource in a city like Austin.

Kasita has built units made to be stacked as multifamily dwellings in low- to mid-rise developments on small plots of land, encouraging density in otherwise unaffordable areas. “We’re not going to solve the land issue,” acknowledges Jeff Wilson, the founder of Kasita. That question falls to local and state governments. Austin is currently rewriting its zoning code to encourage density, which could enable homeowners to put tiny homes in unused backyard spaces and rent them out, adding affordable units in desirable areas. The city is also considering putting a $300m housing bond on the ballot in November to fund affordable housing. Some activists would like the bond to fund public land acquisition for future affordable housing developments.

For now, developers like Stinson have to build outside city limits, only exacerbating the city’s sprawl and crowded roads. Constellation itself is fairly dense, with 83 units on 6.2 acres (traditional single-family home developments are about half as dense, with four to 10 units per acre). “The problem with Austin and why it’s so expensive is because the development process takes so long that we could never actually catch up with the demand that’s moving here,” Stinson says.



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Flanagan makes $24,000 a year as a teacher and supplements her income by babysitting on nights and weekends; she plans to take a loan from her retirement plan to put a down payment on a Kasita, financing the rest through a traditional bank loan. If she secures a 30-year mortgage at 5% interest, living in a Kasita at Constellation would cost her about $1,200 a month – competitive with Austin’s average rent for a one-bedroom apartment of $1,139. “It seems like the most reasonable deal I could swing,” she says. “But it will be tight, no matter where I go.” She isn’t concerned about selling her Kasita if she decides to move on. “If I outgrew it, I could Airbnb it,” she says. “They are just so cute.”

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