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The barriers to tiny homes

As it stands, the number of tiny homes being bought and sold in Canada’s urban centres is minimal.

Toronto’s east end has Craven Road, a street known colloquially as “Tiny Town,” and is home to a number of small-footprint homes. Similar modern developments are planned in Sherbrooke, Que., and outside Goderich, Ont.

But otherwise, these homes are mostly one-offs or built in rural areas and aren't a practical solution to home shortages in Canada’s major metropolitan areas, says Soper.

“The challenge isn't the size of the home, it's the underlying cost of the dirt.”

In Canada’s cities, where plots of land are expensive and hard to come by, building a small home may not be a cheaper alternative if high prices have shut you out of the condo market.

Take the Tiny Footprint Homes business in southwestern Ontario, for example. Two friends, Paul Arts and Josh Batkin, decided to start manufacturing tiny homes because they noticed a lack of affordable housing in their area.

Despite their building experience, it still wasn't an easy endeavour, the Rural Voice reported.

Ontario has health and safety building codes that have a minimum square footage for each room in a home, and the two are also working to ensure their builds are Canadian Standards Association (CSA) compliant. Each step the entrepreneurs take needs to be approved by inspectors.

And that’s well outside of city limits, where competing with developers and getting municipal approval can be a bigger challenge for builders.

The only way Soper sees tiny homes or other non-traditional housing becoming more popular is if Canada Mortgage and Housing Corp. (CMHC) and provincial governments normalize and encourage this type of development.

“We need to put renewed focus on densification,” says Soper. “Canada has some of the least dense cities in the world.”

Given that sprawl is expensive for cities to maintain, as well as less environmentally sustainable, Soper argues that some combination of lightweight housing, small homes and converting existing homes into multiple units could be a gamechanger.

But to get there, communities will have to get on board too. Part of what holds back the development of more of these nontraditional homes is a "not-in-my-backyard" (NIMBY) response from existing homeowners, says Soper.

"In my parents' day, there were two kinds of ways people lived: They lived in an apartment … or a white-picket-fence house. Now, think of all the lofts and converted industrial spaces in cities with excess commercial property.”

“[We’re] restrained only by people's imaginations as to how we can create attractive, functional and more affordable housing."

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Financing tiny homes can be a problem

Another challenge is the matter of finding financing. Graeme Moss, of Fair Mortgage Solutions in Hamilton, Ont., says it can be difficult finding a lender to finance the purchase of a tiny home.

“One of the major issues is the fact that it's an innovative and new concept,” says Moss. “[Governments and banks are] sort of slow to react to that.”

Lenders, he explains, are conservative. Unconventional lending is risky; lenders want to ensure they’ll get their money back.

The solution, Moss says, would be to seek out an unsecured loan or line of credit. But without the collateral of your home, it also means you may pay up to double the amount of interest compared to a traditional mortgage.

It’s not just that it’s a new idea that scares lenders. There’s also the question of who owns the land these tiny homes are on. Unless you’re building on your own land, tiny homes, or similar space-saving laneway houses in urban centres, will likely mean you’re buying a home on leased land. That’s a risk for lenders and can complicate the process.

Where to go from here

That being said, it's important to note that a tiny house is more than just a home — it's a lifestyle. And it doesn’t suit everyone. For Soper, if someone in his life was considering buying a tiny home, he’d urge them to do their research first.

He adds it may be helpful to think of it like buying a cottage — will you be responsible for your water and sewage? Do the specs of your home meet the legal requirements of your municipality or province?

These are important questions the buyer of a typical home may not need to consider, but these issues could have a huge impact on whether this type of home is right for you long term.

If you’re considering a tiny home, find real estate and building inspection professionals who’ll ask the right questions and help you figure out all that this move will entail — beyond culling your belongings for your new minimalist life.

“Don’t treat it like a bargain sale at Costco,” says Soper. “It’s important to take a sober second look at the idea and consult professionals.”

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About the Author

Sigrid Forberg

Sigrid Forberg

Associate Editor

Sigrid’s is Money.ca's associate editor, and she has also worked as a reporter and staff writer on the Money.ca team.

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