Developers Respond To Austin's Growing Housing Prices With More Tiny Homes

Jan 12, 2018

Part 1 of a two-part series on tiny homes

As Austin’s housing prices continue to climb, developers are tapping into the trend of building tiny homes.

Kasita CEO Martyn Hoffmann says the Austin-based company is hoping to make home-ownership affordable for more residents through its space-saving designs.

Kasita CEO Martyn Hoffmann says the company's homes are designed so people can live comfortably in a small space.
Credit Jorge Sanhueza-Lyon / KUT

“There’s an idea here around how to utilize underused spaces in our communities and create greater housing supply, while not shortchanging people on anything that they want,” he says. “They can still have a washer/dryer combo, still have a kitchen, still have a living area and be able to live very comfortably in a small space.”  

Part 2: For This Tiny-House Owner, Living Small Means Being Flexible

Kasita was started in 2015 by Jeff Wilson, an Austin college professor who gained notoriety when he spent a year living in a dumpster. Wilson wanted to challenge himself to live small while furthering the conversation on sustainable living.

At a model home in the Community First! Village in East Austin, the kitchen and bathroom are built on a platform above the living room. A built-in sofa can be rolled out from under the kitchen floor to become a queen-size bed.  

When the bed is not in use, it can be rolled under the kitchen and become a couch.
Credit Jorge Sanhueza-Lyon / KUT

The company’s homes range in price from $89,000 for a basic model to $129,000 for a premium tiny home – significantly less than the Austin metro area’s median price home price of $296,500. In the coming weeks, Kasita will be providing houses for one of the newest tiny home developments in the Austin area.

Strategically Located

At the future home of Constellation ATX, construction crews are making space for the 82 tiny homes that will make up the development. The site is just outside city limits near South Austin, tucked between rows of larger single-family homes. Residents will own their tiny homes while renting the land they sit on, says Lauren Carson, a development partner with Constellation ATX.

“We’re doing a luxury, full-amenity development with a really nicely landscaped pool area,” she says. “There’s going to be pagodas, BBQ areas, fire pits.”

"What we're hoping to show here is that we can bring in a great community with a great feel, and it doesn't necessarily diminish the neighborhood."

Carson says building this tiny home community outside Austin was a strategic choice.

“Actually, about 100 feet that way is Austin city limits,” she says, pointing to a nearby neighborhood. “So we have full access to city utilities, but we don’t have the zoning restrictions that come with being in the city.” These restrictions can make it tough to build something other than a traditional single-family home.

Carson says Constellation ATX is responding to a growing demand for scaled-down, sustainable living, and the company envisions residents staying here long-term. The development will offer leases at least 30 years long. The goal is to try to avoid spikes in rent due to rising property values. Carson says that strategy has also made banks more open to lending to tiny-home buyers.

“We’re working on a solution to bring a traditional mortgage to these tiny homes,” Carson says, “and we’re able to do that by offering the long-term leases … so [banks] feel comfortable that they’ll be around for the term of the mortgage.”

While the Constellation ATX team is finding ways to work within the traditional housing market, Carson thinks there’s more education to be done around tiny homes. She says city regulations haven’t kept pace with newer types of housing.

“A lot of those zoning restrictions are just left over from a previous time where people are thinking about, ‘I don’t want to have trailer parks in the neighborhood and all these little tiny houses,’” she says. “So what we’re hoping to show here is that we can bring in a great community with a great feel, and it doesn’t necessarily diminish the neighborhood. In fact, we would say that it’s going to add to the neighborhood.”

Just Another Single-Family Home

Inside city limits, tiny-home owners have to ensure their houses are in line with zoning and land use regulations, says Jerry Rusthoven, assistant director of Austin’s Planning and Zoning Department.  

“Tiny homes are just considered to be residential, single-family residential,” he says. “So there are no specific zoning requirements that would apply to them.”

In general, the city considers anything between 100 and 400 square feet to be a tiny home. Those homes can be placed on any parcel of land zoned for residential use, Rusthoven says.

On a single-family lot, tiny homes have to meet many of the same standards as larger houses, things like minimum lot size and the number of units allowed on the property. Multiple tiny homes can be placed on land that’s zoned for a multifamily residence, and any tiny home that’s placed on a foundation has to meet the standards of the International Residential Code.

In 2014, the Austin City Council asked staff to explore the rules governing tiny homes to find ways to make them easier to build. That effort didn’t lead to changes for tiny homes in the zoning code, but it did identify one specific constraint.

“If they are on wheels and they have a license plate attached to them, then they’re considered to be a vehicle and not considered to be a home,” Rusthoven says.

Under the city’s current zoning code, tiny houses on wheels are treated like RVs. They can be inhabited in certain areas that allow campground use, but if they’re parked on residential property, you can’t actually live in them.

“So our requirement is that they be placed on a foundation in order to be considered a home,” Rusthoven says.

It’s tough to pin down just how many tiny homes there are in Austin, he says, because they’re not permitted any differently than single-family homes. He says proposed changes in CodeNEXT, the ongoing rewrite of the land development code, could allow for tiny homes in more parts of Austin.