Answer for "Do Tiny Houses Depreciate?"
A very common real estate question is:Do Tiny Houses depreciate?
Short answer is: yes, tiny houses do depreciate. But let’s explain the “why”s so we get to the bottom of the exceptions.
Because most tiny houses are built on wheels – whether as RVs and motorhomes or as a standard house with a wheeled axis beneath it – they deal with the same logic of automobiles and depreciate because of wear and tear. Mobility is a function of the house, so – with time – its ability to move will get diminished and, naturally, so will its value.
Is there a chance a tiny house on wheels will not depreciate? Yes, but they are - forgive the pun - tiny. Maybe if the Tiny House in question is of a very unique and valuable nature, if the RV is a collectible antique – which, as a whole, is quite difficult to happen – and not only your upkeep of it is superb but the demand for it is high and the supply low… then, blessed be thy heavens, the answer to “Do tiny houses depreciate” becomes not for yours.
One could argue that all houses depreciate over time because all houses suffer from normal wear and tear. That what actually appreciates is the land; not the physical structure of a home. That’s accurate. In a primal rational sense, what drives the prices up and down is the area in which a home is built. This becomes evident when we see two houses that are completely the same - same square footage, number of rooms, materials; everything! - but with different prices, because one is within a high-demand neighborhood and the other within a very non-special one. But the fact is that - while a regular house’s depreciation often becomes overlooked because of the hassle of rebuilding from the ground up is too big - when it comes to Tiny Houses on wheels, the depreciation becomes a factor because to move the home out of the land is very simple. So, to include a tiny home in the mix of what, in reality, is a transaction of land, the home buyer – even the one who’s interested in the fascinating trend of tiny homes – might point out to depreciation of the structure in order to get to a better price in the negotiation.
So; do tiny houses depreciate? Yes, tiny houses depreciate. Like all houses, but people pay attention to their depreciation and not to regular houses’.
Real Estate Tip:
If you don’t care for depreciation, and you’re moving forward with the plan of living in a tiny home; check what states allow tiny houses to see if you’ll need to move or not.
Have a question or comment?
We're here to help.