Tiny House Q&A: What does it cost to build a small house?

Q: What does it cost to build a small house?

A: The simple formula to determine the cost of building a small house is to multiply the cost per square foot by the number of square feet you plan to build. It’s said that the national average is $125 per square foot. So, a 300 square foot home should cost $37,000. It’s simple math. Yet, in reality it’s a bit more complicated.

Factors Influencing Cost Per Square Foot

However, the cost per square foot for new construction of any home (large or small) varies widely depending on where you are building since the cost of materials and labor depends on the local economy. Another factor to consider is the quality of materials being used. Higher quality materials will cost more.

Smaller homes are more dense. For example, a 2,000 square foot home, with large open spacious rooms, uses very little material in those large open spaces. In a small home, there is much more wood, shelving, and possibly built-in furniture. So, more materials are used per square foot than in a larger home. This makes small homes potentially more expensive per square foot.

This is why you might find some small homes for sale that exceed the $125 per square foot average.

Building a Quality Home

Some people choose to build small, because they can stay within their budget while still choosing the highest quality materials for construction and selecting the best quality appliances and amenities. For these people, the cost per square foot may be much higher, and the ultimate cost of their small home may seem very high, yet the quality is what matters most to these builder/owners.

Building a Cheap Home

Small houses on wheels are not as closely scrutinized by local building inspectors. In fact, most municipalities don’t care what kind of camper, RV, or cottage on wheels you park in your driveway. They aren’t going to come inspect it (unless a neighbor complains about something). Small houses are also easy to setup in rural areas, far from anyone who might be critical of their size or construction.

For these reasons, it’s possible to build a small home with cheap materials and save lots of money. The cheapest homes are basically a shed made of plywood without much concern about quality or attractiveness. They are built to provide basic shelter and that’s about it.

If using used, reclaimed, and repurposed materials, it’s possible to build a ‘home’ for several thousand dollars.

Working with a Contractor or DIY

If you have someone build your home for you either delivered to you or build on-site, the costs may be higher since you’ll have the labor costs on top of the cost of materials. See our list of tiny house designers and builders for examples of cost for buying new tiny homes.

Those who build a home on their own, are often surprised with how much time it actually takes to construct a quality home. When people calculate the cost per square foot to build tiny homes, they often forget to include the value of their own labor. Even if they work ‘for free’ the opportunity cost of what they could have earned at a job needs to be considered.