It’s no secret the U.S. housing shortage has caused serious problems in housing affordability. But in recent years, trends such as house flipping and tiny houses have given new homebuyers the chance to succeed in the housing market.

Homebuyers who may not be able to afford a down payment on a $200,000 home may choose to invest in an older house and use the rest of their budget to renovate their homes instead. Up to 85% of the nation’s houses built prior to 1980 are in need of some form of repair and, just this year, 58% of homeowners said they planned to renovate.

Compared to renovations, tiny houses are considered a more radical and creative way to address the lack of affordable housing. But is tiny house living really worth the investment? Here are some of the pros and cons of choosing to invest in a tiny house.

What are the advantages of tiny house living?

Affordable housing isn’t the only reason why tiny houses took the world by storm. Tiny homes also began trending because homeowners aged 40 and under don’t have the same needs for larger homes as older Americans do.

Younger homebuyers are looking for smaller houses because they have smaller families, fewer belongings, and a smaller budget to pay for utilities. Tiny homes appealed to those desires and so the tiny house movement was born.

Tiny houses do offer their owners some advantages, too. These benefits include:

• Lower building costs. Tiny houses require fewer materials and hours of labor to make compared to full-size homes. About 83% of contractors say that prefabricated buildings reduce construction waste as well.
• Lower utility costs. Just like a studio apartment compared to a three-bedroom house, the energy costs involved in living in a tiny home are significantly cheaper.
• Easier maintenance. Because tiny houses are smaller, they require less maintenance than your average single-family home.
• Freedom of movement. Many tiny houses come equipped with built-on trailers, which allows tiny house owners to take their homes wherever they want to go.
• Simpler living. Tiny houses go hand-in-hand with the minimalist trend, which emphasizes simpler living and the freedom from materialism.

What are the disadvantages of tiny house living?

Of course, tiny house living isn’t for everyone. Some tiny homeowners find themselves regretting their investments after a few years. That being said, here are some of the downsides of investing in a tiny house.

• Loans are challenging. It can be difficult to get financing for a tiny house. Standard mortgage loans aren’t available for these types of building projects because banks and other mortgage lenders don’t consider tiny houses to have enough value for collateral.
• Zoning laws. Before you consider buying a tiny house, it’s important to read up on your area’s zoning laws. Zoning laws include a minimum size for dwellings. That means, while a 200-square-foot tiny home may seem perfect to you, your tiny house might not qualify in your area as an actual house.
• Less storage space. Tiny houses don’t offer a lot of storage space, which makes them difficult to live in for most families, even those who don’t have a lot of belongings.

Tiny house living isn’t ideal for everyone. Large families or those who are deeply attached to their belongings may not feel comfortable living in under 500 square feet. But the tiny house movement remains a popular trend and a potential solution to the nation’s affordable housing crisis. The key to a tiny home’s appeal is that less is more.