By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com
Do you think that all tiny homes are affordable? Would you pay $140,000 for a 660 square foot tiny home, governed by an HOA, in San Antonio, Texas? Do you think this it’s a good buy?
In the past several months, I have been researching the rise of tiny home communities in the U.S. This post features a few examples in the state of Texas.
I’ll explain why, in my opinion, purchasing a tiny home as a primary residence, especially a home in a planned community with an HOA, isn’t truly affordable, and why I think it may be an unwise investment.
Elm Trails tiny homes built by Lennar
The location is just outside of San Antonio, TX. There Lennar is in the process of building a 96-lot tiny home community. Elm Trails is one of the many side streets within a large master planned community of not-so-tiny homes.
To give you a better idea of just how small these homes are, I will provide a few details gathered from the Lennar’s home sales website.
Each homesite in Elm Trails is just 20-feet wide. After allowing for 5 foot setbacks, the interior width of each home is only 10 feet. The homes are designed for narrow lots with rooms lined up front to back. The home builder includes a few photos with virtually furnished rooms, to help buyers visualize how to use the space.
Lennar’s Henley model floor plan features 1 bedroom and 2 bathrooms in a two-story home. The first floor has a living room (8’6″ x 10′), a narrow kitchenette with small appliances. There’s barely enough room for a small dining table. Behind the kitchen is the home’s only proper bedroom (8’8″ x 10′), attached to a compact ensuite bathroom.
The second floor consists of a long, narrow open loft that is divided by the stairway and a second bathroom at the rear of the home. Except for the enclosed bathroom, there are no walls, interior doors or closets.
Both of the home’s small bathrooms contain a stand-up shower stall. The first-floor bathroom is designed to accommodate a stacked washer and dryer next to the shower.
A single street in the least desirable location
See the reference links at the end of this post for photos of Elm Trails community, still under construction. You’ll notice that the homes are identical, lined up in a straight row, with concrete parking pads in front of each home’s small front porch.
In my view, it’s a bland neighborhood with zero charm or curb appeal. There’s not a single shade tree. And, given the tiny lot sizes, there’s no room to plant any shade either the front or back yards.
With the homes lined up like army barracks, and only 10 feet between the homes, there’s very little privacy. Community plans apparently don’t include backyard fences or privacy hedges. In fact, Elm Trails has no landscaping whatsoever. As for the views, the tiny homes are in close proximity to several stormwater retention ponds and are dwarfed by an enormous and unsightly electrical tower.
High price per square foot
Back in May 2023, a previous news article about the tiny home community projected that sale prices would range from 160,000 – $170,000 for homes between 325 – 660 square feet. But as of January 2024, there appears to be only one model to choose from (at 660 sq. ft.) and the starting price has dropped to $140,000.
Despite the apparent price reductions, a majority of real estate experts agree that the $211 price per square foot is still way too high.
Nevertheless, Lennar reports that nearly half of their tiny homes are already sold. And that’s mainly because it’s so difficult to find affordable workforce housing in and around San Atonio. Lennar also provides mortgage financing for Elm Trails homes, resulting in monthly payments of approximately $1,000 per month.
Compared to renting, at first glance, it may seem like a bargain to home buyers. But there will be additional housing costs, and those costs aren’t disclosed up front.
What about HOA and CDD fees?
Lennar’s website states that Elm Trails has an HOA with estimated fees of $12.50 per month. That’s the HOA fee before the home is built. I wasn’t able to find any details as to what the HOA will provide for those fees.
From the builder’s website, I was unable to find a link to the Covenants, Conditions and Restrictions for the Elm Trails HOA. The official document is available from Bexar County Records office, but the 80-page Declaration (document number 20220205782) isn’t viewable online. And Bexar Property Records clerk charges $1 per page for a copy.
What’s inside those 80 pages? Well, as they say, the devil is in the details. I would strongly advise any buyer to carefully read and review the Declaration of CC&Rs as well as the developer’s sales contract.
The FAQ on the Lennar’s website indicates that Elm Trails is part of a Community Development District (CDD), which means there will also be CDD fees in addition to regular property taxes.
How much are the CDD fees? How much will the property taxes and HOA fees be after the house is built? Lennar isn’t saying. At least not up front. To gain access to those important details, Lennar wants homebuyers to work with one of the builder’s sales agents.
Unfortunately, sales agents tend to focus on the cost to buy their home, not the real cost to own it.
The big debate: Are Elm Trails $140,000 tiny homes too tiny?
It depends on who you ask. Quite a few commenters on online discussion forums think that 660 square feet is too small for a detached home. That’s about the size of a typical studio or one bedroom apartment. In fact, some real estate industry professionals think that it would have been better for Lennar to create multifamily structures with 4 to 6 units per building.
On the other hand, more than a few affordable housing advocates applaud the first tiny home community built for sale (rather than for rent only) and in the for-profit sector.
I think that, for one person or a couple, 660 feet can be workable with thoughtful design and proportionately sized furniture.
Most people will experience living in a small space at some point in their lives
When my husband and I were married in the 1980s, our first home was a one-bedroom garden apartment located in a rental community on a city bus route. It worked for us when we were young and cash poor. We didn’t have to buy a car, because the grocery store was right across the street.
After about two years, we got a car. Our second home was a second-floor duplex rental apartment with three rooms plus a kitchen and bathroom. The apartment had a washer hook up, but no dryer, so we had to line dry all of our laundry! The duplex apartment offered more privacy than living in the 200-plus unit rental apartment community.
Our landlady was a kindly retired widow who lived on the main level. She charged a reasonable rent that allowed us to save up for a downpayment on our first house, which we purchased four years later. (And at 11% interest!) To be honest, the duplex’s interior was certainly not modern and trendy. We had to use a window air conditioning unit in our bedroom in summertime. We had to work with old kitchen cabinets and appliances. But it was clean and safe, and it served our needs.
Both of our newlywed apartments were around 600-800 square feet. As a rental unit, and because we didn’t have kids yet, the small spaces worked for us. But most people tend to crave a bit more space when they purchase their own home.
It’s not the space, it’s all about the design, inside and out
That said, in my opinion, the small size of a tiny home at Elm Trails is less of an issue than its dysfunctional design, combined with the total lack of curb appeal and architectural value.
And, in agreement with many real estate pros, I think the tiny home’s purchase price per square foot isn’t a good value.
Let’s compare Elm Trails to a few other tiny home communities in Texas.
Tiny home community in Austin houses chronically homeless
Outside of Austin, starting in 2018, a charitable non-profit organization, Mobile Loaves and Fishes (MLF), began building and managing a tiny home village for previously homeless individuals. All of the tiny homes in Community First! Village are strictly for rent, and the emphasis is on creating a true community to support the social, economic and health needs of residents.
With federal subsidies from the federal Department of Housing and Urban Development (HUD), Community First! Village residents pay just $230-$430 per month. About half of the homes are tiny living and sleeping spaces with no indoor kitchen or plumbing. Residents share a communal kitchen, a large building with private toilet and shower stalls, and a community laundromat. The other half of the community consists of RVs, each equipped with their own kitchen and bathroom. The Village currently houses over 200 chronically homeless people, but it’s expanding, and MLF plans to house up to 2,000 within the next few years. (See this video for a tour.)
The Village also includes a small grocery market, an on-site health center, a community garden, and ready access to social supports. MLF even provides job opportunities within the community or, if residents work outside the community, they can easily commute by a city bus that stops the entrance to the Village.
For most residents, MLF provides transitional housing, with the goal of enabling residents to move to more permanent homes.
Workforce housing community in Round Rock
A 20-minute drive from Austin, Mustard Seed Village contains 28 tiny homes with rent capped at $1,375 per month. That’s “affordable” in comparison to the median $2,000 per month rent in Round Rock, according to Redfin.
These are permanent homes build on concrete foundations, all of them rented on a 12-month lease. The rental homes boast 822 square feet, and a smart design that includes 2 bedrooms, 1 bathroom, and an open floor plan that includes a kitchen with full size appliances, including a dishwasher. The homes have central air and heating — no window or wall mounted units. The community itself is compact, but the homes have some curb appeal, with their private front porches, drought tolerant landscaping and a few strategically placed shade trees.
Not surprisingly, all 28 units were rented within two weeks of listing. Most of the units are occupied by couples or two unrelated roommates. These tiny (but not too tiny) rental homes provide sorely needed workforce housing as the tech industry boom creates high demand for housing in Central Texas.
Will $140,000 Lennar built tiny homes retain their value?
The buyer of a home in Elm Trails probably does not need a high level of social supports to deal with a history of chronic homelessness. The homes are marketed to buyers hoping to own property, and to escape from paying rent that continues to increase each year. Most home buyers want to stop paying rent and get in on the ground floor of the housing market.
Here’s the reality. Lennar is selling homes to buyers who are so eager own a home that they are willing to compromise a LOT.
But, in my opinion, Elm Trail’s cookie cutter tiny homes are a bad investment. It’s not just that the homes are unattractive, both inside and out.
The room sizes are impractical for furniture placement, and the homes lack adequate storage space. The builder has made no effort to create an attractive streetscape. Each home will have space to park one vehicle in front of their porch, so the front yard is nonexistent and unwelcoming. Because of the narrow lots and driveways, guest parking will be difficult if not impossible. Street parking is just not feasible.
There’s no indication that these homes are energy efficient — if they were, I assume Lennar would promote it. So, the cost of utilities may be higher than expected, especially since the homes will have no shade and no windbreaks.
Because Elm Trails is yet another developer-controlled HOA, owners will have to deal with unpredictable HOA fee increases and take on other financial risks.
What does the future look like for these Lennar tiny homes?
Based upon a decade of observing the typical life cycle of an “affordable” HOA governed housing community, I’m skeptical of a bright future.
Once the novelty of tiny homeownership wears off, I think most owners will tire of HOA rules and ever-increasing monthly fees. The owners who now reside in their homes will become dissatisfied with limited parking, noise from close neighbors, and the lack of privacy. Young homeowners with growing families will quickly outgrow the space. They won’t be able to add onto the home, due to the small lot and front to back layout, so they will have to move.
Investors love HOAs, because they can acquire voting power in the community for each property they own. That voting power increases their influence over the financial direction of the HOA. Investors don’t live in the community, and they tend to pass on the cost of HOA fees to their tenants. But their interests don’t align with the concerns of owner occupants.
Unfortunately, as a community matures, it’s becoming more common for HOAs (especially condominiums and townhome HOAs) to be controlled by investors that own a majority of the properties in the HOA.
High turnover for tiny homes
For all of these reasons, I think that the majority of current owner-occupants will want to move out and move up within 3 to 5 years.
As the original buyers move on, it’s likely that most of these tiny houses will become rental homes. Either the original owner will keep the tiny home as an income property after moving out, or they will sell the home to an investor planning to rent out the property.
As the tiny homes experience high turnover — and the community experiences lots of wear and tear — property values are likely to stagnate, if not decline. That’s why I believe that, if you’re not earning a net income from the home, it won’t be a good long-term investment.
Source links:
People Are Questioning House Prices in San Antonio Tiny-Home Community (ampproject.org)
Henley New Home Plan in Elm Trails | Lennar
Examples of non-profit charitable group managing tiny house community in Austin and Round Rock, Texas
Mobile Loaves and Fishes Community First
New Affordable Tiny Home Community Near Austin, Texas: Photos (businessinsider.com)
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