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Real Estate News for Investors Podcast Episode #265: Warren Buffett Backs Tiny Homes Movement

[REN #265] Warren Buffett Backs Tiny Homes Movement

Billionaire Warren Buffett is betting on something small in the real estate world. One of his Berkshire Hathaway subsidiaries is going mainstream with tiny homes. It’s an idea that caters to the minimalist lifestyle and affordable housing needs.

Clayton Homes unveiled a new line of tiny modular homes recently at a Berkshire Hathaway shareholders meeting in Omaha, Nebraska. The homes are less than 500 square feet and are designed for the minimalist lifestyle, but are made to “feel” large with vaulted ceilings and plenty of windows.

It’s an extension of a movement that’s been underway for a few years but has only more recently gained traction. Many people are now seeing the tiny home as a possible solution to high housing costs along with a desire to live more simply.

There have been many obstacles for tiny home owners however, including building codes that vary from region to region. But last December, the International Code Council reported a huge breakthrough in the establishment of tiny home construction standards.


Recognition by the International Code Council

After extensive collaboration by a team of architects, builders, designers, and educators and a public comment period, the ICC reported that it was adding an appendix for tiny homes to the 2018 International Building Code. That makes it possible for tiny homes to get a Certificate of Occupancy if they meet those standards.

Recognition by the ICC will go a long way in helping the tiny home movement in cities and communities across the U.S. And many local jurisdictions are already moving in this direction. Atlanta’s City Council recently voted in favor of tiny homes and other smaller residential structures. In Portland, Oregon, the city launched a pilot program to fight homelessness by encouraging homeowners to build tiny homes in their backyards and host homeless families.


Roll-Out of Clayton Tiny Homes

And now, Clayton Homes is rolling out a classy prefabricated line of tiny homes in two floorplans — the Saltbox and the Low Country. They are built indoors at a facility in Addison, Alabama. The facility has been registered as ISO 14001 compliant with green building practices. And all the homes are built to the ICC’s International Building Code.

Clayton’s Jim Greer said in a press release: “There’s a big focus and trend toward minimalism, living an experiential life versus being tied down to our things. And having a smaller home, less to maintain is really part of that.” But despite their small size, they come with upscale amenities.


Low Country Model

The Low Country model is 464 square feet with a front porch, poplar bark siding and cedar shake shingles on the roof. Inside, you’ll find cathedral ceilings in the living room and bedroom, quartz countertops and high-end appliances in the kitchen, oak flooring throughout and energy-efficient Ply Gem french doors that open onto a porch. The bedroom is big enough for a queen-size bed, full-height closet space and a built-in desk. The dining area built-in bar seating for four. It’s selling for $109,000.


Saltbox Model

The Saltbox is a tiny bit smaller at 450 square feet but there’s more outdoor decking in both the front and the back. It’s modeled after the New English “lean-to” design with a tilt to the root that reveals more windows on the higher side. It also includes modern features and high-end appliances. And, it has an optional 1000 gallon above ground cistern to collect rainwater for washing or gardening.

Clayton is rolling out these homes in the Southeast. They are now available in Alabama, Louisiana, Nebraska, Kansas, Mississippi, and Tennessee. Over the coming months, they will also be available in Georgia, Iowa, Kentucky, Florida, and Texas.

CEO Kevin Clayton says: “The tiny home movement is driven by people who want to downsize their living space with an efficient, stylish home design.” He says: “We’ve been providing Clayton Homes for over 60 years with unique floor plans and different sizes, so it made sense for Clayton to be the builder that brings tiny homes to a national scale.”


“Oracle of Omaha” Seizes Investment Opportunity

Berkshire Hathaway CEO Warren Buffett is one of the most successful investors of all time with a net worth of more than 70 billion dollars. His ability to pick good investments earned him the nickname “Oracle of Omaha” — and his knack for recognizing an investment opportunity is steering him down the road of “tiny homes”.

With the sudden validation of tiny homes by the ICC and the Oracle of Omaha, don’t be surprised to see one popping up near you — or for that matter, a whole development of tiny homes. To walk-through the tiny homes with a virtual tour, check out the Clayton Home website here.

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