What the ROAD to Housing Means for Tiny Homes

Interest in tiny homes, typically measuring 400 square feet or less, is growing amid the nation's housing crisis because of their perceived affordability. But many tiny homes are custom-built, making them more expensive than people expect.

But a provision in the recently enacted 21st Century ROAD to Housing law could have big implications for the affordability of tiny homes. The law removes the requirement that manufactured homes have a permanent chassis. By removing this in the U.S. Department of Housing and Urban Development (HUD) code for building manufactured housing, it could allow factory-built construction methods to apply to a wider range of housing types, potentially lowering production costs.

What Planners Need to Know

In a recent paper, Jeffrey Lubell, a senior fellow at the Urban Land Institute's Terwilliger Center for Housing, proposes federal regulatory changes could help tiny homes be produced at scale, reducing costs and expanding their potential as an "ultra low-cost" housing option.

"Tiny homes and very small manufactured … sell for an ultra-low cost, such as $25,000 to $50,000, not counting land — bringing housing within reach of even very low-income households," Lubell writes in the discussion paper. "These homes can be placed as accessory dwelling units (ADUs), on publicly owned land, or in clusters that facilitate low land costs and access to town water/wastewater or a shared septic system. While installing them on a permanent foundation will have a cost, the small footprint helps keep those costs manageable."

Lubell's paper focuses mostly on ways HUD can change its code to make it easier to build to, with the hope that "one or more large manufacturers — such as an existing manufactured housing factory or a tiny home builder that opts to be certified as a manufactured housing factory — will choose this option and generate large volumes of quality homes at low cost that fill a critical need for ultra-low-cost homes," he writes.

Considerations for Planners About Tiny Homes

Removing federal regulatory barriers to the chassis requirement or the ones Lubell proposes to the HUD code is just one piece of the puzzle. "This change opens the door to more manufactured housing options, but we need to evaluate at a state and local level how we treat tiny homes," says Jason Jordan, principal of public affairs at the American Planning Association (APA).

At the local level, planners should consider:

• Updating zoning codes to permit tiny homes where appropriate.
• Allowing tiny homes to be used as ADUs.
• Permitting cottage courts and other developments with multiple small homes on a single site.
• Revising minimum lot-size requirements that may make tiny homes impractical.
• Evaluating minimum floor-area requirements to ensure they don't exclude tiny homes.
• Assessing density, parking and related regulations that may limit small-scale housing options.
• Reviewing wastewater and septic fees to ensure they can be proportioned for small homes with one occupant.

Many of these issues are addressed in the Housing Supply Accelerator Playbook, a partnership between APA and the National League of Cities (NLC) that provides strategies for updating local regulations to support a broader range of housing types.

one year for states to certify changes

Planners should also be aware that the 21st Century ROAD to Housing law's manufactured housing provisions require states to certify within a year that they have amended their regulations to treat manufactured homes without a permanent chassis the same as those with a chassis, including financing, title, insurance, manufacture, sale, taxes, transportation and installation.

"Federal legislation can create opportunities, but planners are the local experts who can help communities take advantage of them," says Jordan. "They have the expertise to help communities understand what these changes mean, identify barriers in local regulations and lead discussions about how to make room for more housing choices."

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