The Best State in the US for 'Tiny Homes'

Thinking of downsizing your living space and costs but can't find the perfect fit? Well, getting your own "tiny home" could be your best bet—and there's no better place for it than California, according to property experts.

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Home to around 39 million residents, according to the 2023 figures from the U.S. Census Bureau, California's population size alone makes tiny houses "such a great opportunity" in the state, Seamus Nally, CEO of property management platform TurboTenant, told Newsweek.

"California is the most highly populated state in the country, which means that demand is almost always significantly outweighing supply when it comes to real estate. Tiny houses can increase housing opportunities even in areas where it may seem like those opportunities just aren't there."

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Tiny homes, which typically measure around 100 to 400 square feet, have been a popular solution for those looking for a simpler lifestyle with lower costs and reduced environmental impact.

Just over half of Americans (53 percent) would consider living in a property that is 600 square feet or smaller, according to a 2018 survey by the National Association of Home Builders (NAHB). More than one in 10 (12 percent) said they'd prefer a smaller home following the COVID-19 pandemic, in a March 2021 report by the NAHB.

Here, experts unpack what makes California the best state in the U.S. for owning a tiny home.

'Fantastic' Affordability

The rising value of homes and rents across California has been making it increasingly easier for homeowners to finance the construction of tiny homes, "offering affordable housing options to individuals, couples, and families and many cities around the state," Colton Paulhus, the founder of Anchored Tiny Homes, told Newsweek. His company builds accessory dwelling units (ADUs)—separate additional living spaces that form part of a primary property—in the Northern California community.

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Sebastian Jania, the owner of Ontario Property Buyers—a real estate solutions and investment company that focuses on flipping and renovating houses—echoed these thoughts, telling Newsweek that "tiny homes are fantastic for getting a landlord additional rental income without a massive cost to building them."

"Real estate in California is fairly expensive relative to the rest of the United States, and by having a way to build a tiny home at a much less cost than a traditional single family home, a landlord can up their cash flow," Jania said.

For those looking to live in one themselves, "the cost to buy a tiny home or build a tiny home is much less than the cost to construct a traditional detached home, so it provides an affordable alternative," he added.

Favorable Housing Laws

Laws passed in California in recent years have made it easier for residents to opt for a tiny home.

Paulhus noted that new laws, such as SB13, AB68, AB881, and AB670 that went into effect in 2020, "have made building a second tiny home on almost any residential property easier, faster, and more affordable than ever before."

"These laws are unique [to] the state with it quickly spreading to other states in an effort to solve our national housing crisis," he added.

Saddat Abid, CEO and senior property buyer at Property Saviour, said: "California is ahead of legislation relating to tiny-home communities. Many cities and counties are moving to update their zoning laws regarding tiny homes as a viable way to help solve the housing crisis."

For example, cities such as Los Angeles and Fresno have legislated ordinances allowing ADUs, Abid said, "which opened wide the door for homeowners to legally add such structures to their properties."

He said: "It is this type of flexibility in the zoning laws of this state that will spur the growth of tiny-home living."

'Goldmine' Opportunity Zones

California is also "a goldmine for tiny-house enthusiasts," especially within its opportunity zones, which are distressed low-income areas that "offer incredible tax incentives for investors and developers, turning tiny-house projects into smart financial moves," Ashley Tison, CEO and founder of OZPros—an advisory firm specializing in opportunity zones— told Newsweek.

He said that the state's "diverse landscape and favorable climate create an ideal setting for tiny homes, blending urban convenience with natural beauty." However, "the real game-changer" has been opportunity zones.

The state's "progressive zoning laws also support the growth of tiny-home communities, making it easier to develop sustainable, affordable housing," Tison added.

Investing in tiny homes within these zones not only promises a high return but also fosters economic growth in underserved areas, he said. "This is how we do well by doing good—by transforming investments into impactful, community-enhancing projects."

A Sustainability 'Match Made In Heaven'

Tison said that California's embrace of solar energy and tiny homes is "a match made in heaven," with the state's "abundant sunshine and forward-thinking renewable energy policies" making it "the perfect place to integrate solar-powered tiny homes."

Built with advanced solar technology and energy-efficient designs, tiny homes can be entirely self-sufficient, reducing the carbon footprint and cutting energy costs to virtually zero, he said. "California's strict building codes and incentives for renewable energy adoption further amplify these benefits, encouraging the development of eco-friendly, off-grid living solutions," he added.

'Attractive' Landscape and Climate

Abid agrees that California's varied landscapes and mild climate "make it very attractive for small-home living."

He said: "With its temperate weather throughout the year, outdoor living spaces can almost be used as an extension of tiny homes to maximize on their small square footage. This nice weather allows them to cut down on extensive heating or cooling, therefore making the tiny home energy-effective and cost-effective."

Jania also noted that the state offers different climates within a few hours' driving distance. So, owning a portable tiny home allows you to move around to make the most of multiple climates.

"By leveraging this and having a tiny home that can be moved around, one can take advantage [of this]...and save money by not getting an Airbnb in a different area of California," he said.

Have you built or bought a tiny home? We'd love to hear from you. Email s.kim@newsweek.com and your story could be featured in Newsweek.