Could Lennar Homes' Tiny House Community In San Antonio Be The Answer To America's Affordable Housing Crisis?

Lennar Corp., which has long been one of America's largest developers of single-family homes, is doing a brisk business selling homes at Elm Trails, a community of tiny homes in San Antonio, Texas, with prices starting in the $150,900 range. Could this new model of home building be a viable solution to America's housing affordability crisis? Benzinga looks at Elm Trails and what it could mean for the future of American housing.

Affordability, Convenience And Ownership In One Of Texas's Most Famous Cities

Elm Trails is a planned community of one-bedroom, two-bath tiny homes in San Antonio, Texas. Developer Lennar Corp. is advertising them as low-maintenance, new homes for sale, and they are targeting at people looking for affordable housing. There is only one floor plan in Elm Trails, the Henley, which is a split-level house with a designated parking space and a list price of $159,900.

At first glance, the Henley looks somewhat odd but only because your eyes are more likely accustomed to detached homes in the 2,000-square-foot range — nearly three times the Henley's size. Based on size alone, it's clear that the Henley isn't for every buyer, but there is a strong potential market for a tiny home in San Antonio or any other major metropolitan area.

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Tiny Home Ownership Has Tremendous Potential Flexibility

If you were a single person looking for a starter home in the area but can't afford the average San Antonio home price of $377,000, the chance to be a homeowner for about half of that might be appealing. If you eventually decide to move to a larger home or you start a family and need more space, the Henley's 660-square-foot size makes it just about perfect for renting.

If being a landlord isn't your cup of tea and you decide to sell your tiny home, the chances are also high that someone will come along and buy your Henley for the same reason you did; it was a great value, and they didn't need a 2,500-square-foot starter home. As it stands right now, Lennar only has one Henley available in Elm Trails.

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That means there is a market for this kind of housing. It may also lead to other homebuilders following Lennar's lead in different markets around the country. At this point, anything new and affordable is music to the ears of the millions of Americans who fear they may be permanently frozen out of the housing market.

Buying The First House Is Always The Hardest

At a time when interest rates are at 20-year highs and investment funds have the financial muscle to spend $98 million buying 264 single-family homes in Las Vegas in one day, buying your first home in any of America's major metropolitan areas is harder than it's ever been. That's why Lennar may be on to something with Elm Trails. Not every prospective buyer needs several thousand square feet.

There is a market for people to buy tiny homes like the Henley. Perhaps Elm Trails will mark a shift in philosophy from housing developers and open the door to a much-needed focus on affordability. Elm Trails model won't work everywhere, at least not for $150,000. That's especially true in cities like Los Angeles with average home prices north of $1 million where even a tiny house might still cost $350,000.

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Affordability is always going to be a relative term, with a sliding scale based on where you are trying to buy. However, the end equation for would-be homebuyers remains the same. Getting the first foothold in property ownership is always the hardest step. If tiny home communities like Elm Trails help more people do that, then it's a win for everyone.  

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