We research, you save.
Got Questions On Rates? (855) 610-2972

Small homes—a status symbol of sustainability

The McCottage is replacing the McMansion as a home status symbol as more homeowners look to save money and reduce their impact on the environment.

Some homeowners are taking out a second mortgage to build a small "granny flat" in their backyards. Others are buying land and building a quaint cottage as a primary residence. Whatever the reason, a home of 900 square feet or less is an inexpensive and creative way to add more living space while reducing your carbon footprint at the same time.

"It's a very emphatic statement about how they want to live," says Bruce Parker, owner of Microhouse, a Seattle builder of homes as small as 550 square feet that are constructed by contractors.

What's it going to cost?

Other companies, such as Pacific Modern Homes Inc. (PMHI), sell prefab home kits, such as the "Sonoma" for $17,005. The Sonoma is a 682-square-foot house with framed wall panels in 12-foot sections that's put together like a jigsaw puzzle. Unless you can build it yourself, hiring a contractor will cost about $60,000 and permits from city or county governments can cost anywhere from a few hundred dollars to thousands, says Ken Rader, vice president of marketing at Pacific Modern Homes. Most jurisdictions across the country require a quarter of an acre to build on, Rader says.

"Renovating [an existing home] is harder than putting up one of these things," says Jan Brown, owner of Valubuild, a builder of prefabricated homes.

Brown sells a 768-square-foot home for $23,900 that he says can be built for one-third of the cost of building a home in California, where construction costs are high. Brown says prices for the small home remain cheaper than traditional construction even after $30,000 to $40,000 in interior finishing work is factored in.

Everett Merriam of Nipomo, Calif., a small city near San Luis Obispo, had a 620-square-foot house built behind his house for his 95-year-old dad to live in. Merriam, 71, spent $20,000 on the home from PMHI, an additional $50,000 for a contractor to build it and do the interior work, and about $10,000 on permits. The house has one bedroom, a dining room, kitchen, bathroom and living room.

"He was the one who wanted it in the first place," Merriam says of his dad's wish to live in a separate and smaller house. "We said he could live in our main house -- it wasn't any problem. He wanted his own space."

Merriam says he chose a prefab house because it was a little less expensive than building a home from scratch. He expected the home to go up quicker than the five months it took, but county planners took a long time approving the project, he says.

Small house, so many uses

The small home can be used as a rental property, home office, summer home, guest house or a place for your kids to stay when they return home from college. But small homes are most commonly used by baby boomers who want to build backyard living quarters for their aging parents to live in, Rader says. Others are attracted to small homes simply because they have less money to spend on housing. "The economy is causing people to downsize," Brown says.

For families with children who want their own bedrooms, a small, prefab home is not the answer, says Copeland Casati, founder of GreenModernKits.com, which sells prefab additions and small, sustainable homes with passive solar features such as glass that lets in more sunlight in the winter. When the kids are grown, that's when building a smaller home on another lot makes a lot of sense, Casati says.

"I have seen a swing of ex-McMansion owners actually seeking small-print homes," she says, using a term that describes homes with a small carbon footprint.

Ben Staulcup of Seattle bought a 799-square-foot home from Microhouse to be built behind the 910-square-foot house that he's been living in for five years. The plan is for his father-in-law to live in the smaller home. But he hasn't decided yet when he'll move in, and Staulcup is using the small structure as a vacation rental home, renting it for $800 to $900 per week. The total cost was $150,000, which included extra excavation and foundation work that needed to be done because he lives on a hill.

He and his wife have two children, ages 2 and 4, and they expect to someday add another room to their small house. For now, they like having to do less maintenance and cleaning, along with other benefits of having a small home and small children.

"We like living in a small house," Staulcup says. "It's cozy and you know where everybody is."

Having an extra small house behind the main property is a lot cheaper than paying $3,000 a month for putting an elderly relative in an assisted living complex. The extra home in the backyard eventually can be turned into an office or vacation home that brings in money.

Staulcup, who has lived in his own small home for five years, says a small home really makes you think about how much stuff you own.

"You really don't need that much space, when you think about it," he says.

Related articles :

More help from HSH.com

  • The salary you must earn to buy a home in the 50 largest metros

    Here’s how much salary you would need to earn in order to afford the median-priced home in your metro area.
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve concluded a meeting today, raising the federal funds rate; the target range for the key policy tool is now 1.5 to 1.75 percent.
  • Home price recovery index: Which metros have improved the most, least?

    Have home prices in your area fully recovered from the declines suffered during the Great Recession, or are they still struggling to make it back to the peak it reached before the crisis?
  • How long do I have to own or live in my home to qualify for the capital gains tax exclusion when I sell?

    You can exclude capital gains on the sale of your primary residence if you meet the IRS's ownership and use requirements.
  • 10 metros where a home costs about $1,000/month

    HSH.com identifies 10 metro areas where you can afford the principal, interest, taxes and insurance payments on a median-priced home for only around $1,000 per month.