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There are three major factors that effect what builders will build.
1: Local lot costs. If you can buy a lot for $10,000 which is possible in some areas of the country, you can build a tiny house and make a profit. If the lot is going to cost $1,000,000 as it is in some areas of the country, then you cannot build a tiny house and sell it to make a profit. A lot of land subdivisions, will have minimum size restrictions and will not allow tiny houses to be built.
2: Cost of preparing lot for building. This includes preparing the lot itself for building, utilities being available to the lot. Cost for permits to build, etc. which will include streets, water, gas, electric hookups, sewer or septic system, phone lines, and all incidental costs. In some areas of the country, they can be reasonable and in others it can be very expensive to provide these. To sell a cheap tiny house, many parts of the country are priced out by lot preparation costs.
3: Local cost to build, including cost of materials, and local labor costs. Some areas of the country, these costs will drive the tiny house out of existence.
When these factors are all combined, then and only then can you determine if a tiny house is even feasible to be built in your area of the country.
After that is determine, the appraisers will determine what the home can be mortgaged for (price), and that will determine if the tiny house is even feasible in your area of the country.
A tiny house can be built as a modular in factories, to help keep costs down, but those other factors will determine if Tiny Houses are possible in that area of the country. Where they are most needed, they will not pencil out and will not be built.