The Honest Truth about Container Home Affordability

Fundamentals

featured-affordable

Much of the attraction to and buzz around shipping container homes is related to price.  Some of it is fair, some of it is not.  In many cases, shipping containers can be built quite cheaply, perhaps even cheaper than an equivalent house made with traditional construction techniques.

While there are a huge number of variables that influence cost (geography, size, design, interior finish-out, etc), we generally find that container homes do offer some cost savings for most owners.  And, if you’re interested in doing some of the work yourself while being resourceful with some of the other expenses, the savings can be more significant.

This doesn’t necessarily mean container homes are inexpensive overall (though they sometimes can be). Instead, it means when comparing a container home to a similar equipped traditional home, you may see lower costs. Calculating exactly how much less requires getting really specific on details.

Importance of Cost

To start, it’s important to frame the subject of affordability in terms of why cost is an important consideration.

Housing Expenses

No matter if you’re a fixed-income retiree, a Silicon Valley millionaire, or a middle-aged middle manager, we all have a housing budget. And as with all budget line items, if you can spend less while still adequately meeting your needs, that free up funds for other purposes.

A common rule of thumb says that you should aim to spend no more than 30% of your income on housing. Survey data from the US Government’s Bureau of Labor and Statistics below shows that most families, regardless of income, achieve that for the raw cost of the housing itself.

However, when factoring other housing-related expenses like utilities and maintenance, many families on the lower end of the income range exceed 30%.

housing expenses as a percentage of income

Housing Expenses as a Percentage of Income (Data from the BLS’s 2018 Consumer Expenditure Survey)

In most households, housing expenses make up the largest percentage of their expenditures. Why is this relevant? Impact.

Small changes on a percentage basis can have large impacts on the bottom line. Think about the actual cost savings of reducing your mobile phone bill by 10% versus reducing your housing expenses by 10%.

Clearly, focusing on large expenses like housing can really help your overall financial pictures. And thus, analyzing if container homes can offer cost savings in your specific situation is an effort worth undertaking.

Frugal or Cheap: Which One Are You?

The conclusion from the previous section is clear, right? Spend as little as possible on housing, and reap the benefits of the saved cash. Well, that’s actually not exactly what we’re saying at all!

Before going forward, it’s important to understand the difference between being frugal and being cheap. The two terms seem almost synonymous, but they actually have very different meanings in your day to life.

Cheapness generally equates to paying the lowest price for something, period. It’s a short-sighted view that truly does lead to cost savings up-front, but not necessarily over a longer period of time.

Frugality, on the other hand, is about prioritizing spending to ensure your limited resources are allocated to the things you most care about.

When you’re frugal, you:

  • Factor in the cost of your time and the pain of your future frustration when making purchasing decisions
  • Think about full ‘cradle to grave’ ownership and ‘long tail’ costs like maintenance, disposal, and replacement
  • Understand that paying less doesn’t necessarily mean you’re saving anything overall
  • Understand that paying more doesn’t necessarily mean you’re getting a better value
  • Look for opportunities to save that don’t require you to give up anything in return, or to only give up things you don’t really care about anyway
  • Know the difference between needs and wants, and work to get the best prices on true needs instead of trying to do without them

We hope we’ve convinced you that having frugality mindset is not only a helpful way to live in general but also a great way to approach the decision of using shipping containers for your next project.

Let’s talk about some of the choices you can make to generate cost savings.

Container-Specific Cost Cutting

The first area of savings are those due specifically to using a shipping container. These are somewhat ‘passive’ savings as they don’t require any other real adjustments to your design or lifestyle and just take advantage of the positive properties of containers.

When compared to traditional types of housing, container houses have different line item costs. However, these do vary somewhat depending on your design.

A few of the common areas of savings are:

  • Roof: Containers include a flat metal roof that is sufficient to protect against the elements. 
  • Exterior Walls: A container’s corrugated metal skin is durable enough to endure the elements as-is. No need to have additional exterior walls unless you just want them for aesthetic or insulative purposes.
  • Foundation: Shipping containers have a strong metal frame that only needs to be supported on the four corners, meaning you can cover a lot more floor area with less foundation work than a conventional home.
  • Flooring: With a cheap coating of epoxy, you can seal your container’s existing plywood floor and have one less thing to worry about.

However, there can also be some areas where containers may end up costing you more money, such as:

  • Offloading: One container can be slid off the back of a tilt-bed trailer, though exact positioning with this method isn’t possible. Other situations will likely require renting heavy machinery or a crane for a few hours.
  • Insulation: Most people insulate inside the container, so the exterior maintains its look. But given the narrow width, you’ll probably need high-performance insulation that costs a bit more than what you’d otherwise use.

The table below from the National Association of Home Builders shows what percentage of an average single-family home’s cost goes to different construction line items. While every home is different, this table can help give you an rough idea of where you might be able to save with a container home, depending on your choices with some of the items above.

 

Home Price Breakdown

Single Family Home Cost Line Items: Look at Part II, the Construction Cost Breakdown, and focus on the Share of Construction Cost column

Understand the costs in the above table are inclusive of material and labor, though often paid through subcontractors. If you’re doing some of these tasks yourself, you can expect the cost to be lower (your labor is free), which will, in turn, change how the percentages flow together.

Again, don’t treat this information as the gospel, as it is based on averages taken across a huge variety of home types, sizes and locations. Rather, just use it to get a rough idea of how much different construction tasks cost in comparison to others.

Armed with this information, you can decide if the container home you’re envisioning may offer cost savings just by being made from containers. The, you have the choice of a cheaper house of the same size or a larger house for the same price.

However, looking for these container-based cost savings isn’t the only way to keep some money in your pocket. Read on to find out some other options you have available.

Shrink the Building Size

How and Why Home Sizes have Changed

A second way to reduce the cost of your container building is quite logical: reduce its size. 

Let’s start with some data. The following charts were created based on data compiled by this site, which itself is based mostly on US Census data with some other sources used for earlier years.

The first chart shows two trends that are seemingly at odds with each other. The average household size has been going down over time, while the average house size has been going up. What this intuitively means is that average square footage of a house, per person, has been going up even more. That can be seen in the 3rd line on the graph.

house size over time

House Size Over Time: Raw Data

However, given the different axes and starting points, it’s a bit hard to compare the changes in each measure to each other. So, we’ve normalized all the numbers in the next chart based on what they were in 1920. This highlights the growth (or shrinkage) over time for all measures.

house size over time, normalized

House Size Over Time: Normalized on a percentage basis

These are pretty surprising statistics! The average household size has almost been cut in half from 1920 to 2015, presumably a function of fewer multi-generational households and fewer children per household.

But look at the square footage numbers. The average house size has increased a little over 2.5x, while the average house size per person has increased almost 4.5x.

We get it, that was a lot of numbers, but what do they mean? Let’s start with a question.

When you look back on old family photo albums, newspaper clippings, or even movies from the early 20th century, what do you see? Are people sad and feeling hopeless about their small house?

Or are they strangely happy? Maybe, even happier than a lot of us seem today? In most cases, they generally seem to be doing pretty well, right?

The takeaway then is that despite having 4.5 times as much room in a house now than they did back in 1920, people don’t really seem 4.5 times more fulfilled. Yes, it’s 4.5 times as much space to spread out and impress your neighbors with. But it’s also 4.5 times as much space to clean, heat, cool, and furnish.

Of course, while the numbers are scientific, the sentiment behind them is just our opinion. And maybe you disagree, which is completely ok.

Regardless, we’d urge you to stop and thoughtfully consider what is driving the size of your house. Think about if you could still be happy with a bit less.

We’re not talking about living like the below picture shows! Instead, what size home would your grandparents or great-grandparents have probably thought was normal when they were your age?

cramming in a telephone booth

This iconic picture from a 1959 edition of Life Magazine shows 22 people in one telephone booth

This idea of living small isn’t for everyone, and if you have the means and desire to build a large house, we fully support that as well. We only ask you to challenge your assumptions about why before committing to such a large purchase. 

Perhaps being frugal on your house size might free up resources for other things that are more important. That could be higher furniture quality, a better neighborhood, or even a nicer family vacation.

Let’s say you’re on board with this idea of “less is more” and practical minimalism. How do you start?

Recalibrating Your Mind on Home Size

Media exposure and societal pressure have conditioned almost all of us to believe that ‘bigger is better’. And in some cases, that’s definitely true. But not for everyone. To find a better way, you need to ask yourself the right questions.

Let’s say you have a consultation with a financial advisor about the idea of purchasing a home. One of the first things they’ll try to calculate is how much home you can afford. But that’s the wrong question.

Have you ever heard of bottom-up and top-down thinking? The above case is an example of a top-down approach.

It’s kind of like going to the market and getting the biggest basket you can find, then filling it full of bread. But what if you don’t actually need that much bread and some of what you bought ends up moldy and stale because you couldn’t eat it all?

Using a bottom-up approach would start with your needs. How many bedrooms do you need, and what size should they be? Do you need a bathroom for every bedroom, and if so, how big do they need to be?

Perhaps there are rooms you think you need, but you’re just holding on to old habits. For instance, if you only use a formal dining room two or three times a year, would you be better off renting out a restaurant or park pavilion for those times instead? Think about the thousands of dollars of construction, maintenance, utility, and furniture costs you’ll pay over the years for that under-utilized room. 

Questions like this will help you determine the combined square footage you actually require to meet your needs.

It’s more like figuring out how much bread you actually want to eat and only buying that amount, regardless of how big your basket is. No bread is wasted, and now you have room to buy some fruit!

Remember this: what you can afford and what you need are two different things. Both are important, and there is nothing inherently wrong with buying more than you need. Everyone likes to splurge now and then. If you do so, just make sure that’s a conscious choice, and that you clearly understand the difference between what you need and what you can afford in your mind.

Ease up on the Extravagance

Another way you can affect the price of your home is by adjusting the level of extravagance.

Container homes have been built across the entire spectrum of luxuriousness. Some of them are barely one step above camping. Others almost seem to be built to five-star resort standards.

Remember that you start with a roof, floor, and walls in your container. You’re completely in control of what you add (and what you spend) after that.

Material and Labor Quality

Quality can be important across a couple of different measures. Think about the difference between high-quality materials vs high-quality craftsmanship.

A skilled artist can make some beautiful items out of trash. But some people may never get over the fact that it’s still trash.

A novice artisan can have access to the finest tropical hardwoods and the most beautiful granite. But their work may not look very good because they don’t have the skills and experience to shape the materials into something beautiful.

Some materials may look nice, but are fragile or wear easily. Some craftsmanship is very exacting and yet is almost impossible to notice without a trained eye.

Of course, most things exist somewhere in the middle of all these qualities. But you need to find where on the spectrum you want to be for both materials and craftsmanship.

Your container building will present hundreds of choices for you. What type of floors, what type of appliances, what type of handles on the cabinets.

Almost every item will have multiple options at various price points. Ask yourself how you want it to look and perform, how long you want it to ask, and what type of maintenance it will require.

Remember what we talked about in the section above on Frugality and pick the characteristics that you most value.

Being conscious about these choices can enable you to save money on your container home while still getting quality in the specific areas that matter to you.

Condition and Price

Would you rather have a Ferrari with a few scratches on it or a flawless Hyundai sedan? The answer is different for everyone.

Some people would go crazy having to look at those scratches every day and the Ferrari wouldn’t be worth it to them. Others would be happy that they have the experience of driving a Ferrari every day, even though it’s aesthetically less pleasing.

There isn’t a right or wrong answer. As we keep saying, you have to pick what you value.

Quality and condition are two different things, though they are often confused with each other. Keep them separate in your mind and you might find some great deals.

Oftentimes, the stores you buy materials from will have slightly damaged materials for sale. Maybe something happened during the trip from the factory, or maybe an employee at the store accidentally damaged it. Occasionally, the damage is so minor you have trouble even spotting it.

A lot of container homeowners have also had success with used or surplus materials. Sometimes they source materials from specialty stores that deal in second-hand building materials. In other cases, materials are found a piece at a time from owners doing renovations and selling the old stuff on a local marketplace or website.

Finding used or worn materials like this is not only economically advantageous, it’s ecologically beneficial as well. You’re keeping trash out of a landfill and saving yourself money. Win-win!

Lower the Land Cost

The final area we’ll highlight for cost savings is the cost of land. Most people focus on the container home itself while failing to recognize that using containers presents some opportunities to use different types of land than you might otherwise be able to with traditional construction.

Given the strength containers and their minimal foundation requirements, you could build on land that might be unsuitable for traditional construction without extensive (and therefore expensive) site work. If the land is full of rocks and low spots, just bridge over the problem areas. Land that’s in a floodplain would scare a lot of people away, but it’s easy to build off the ground with containers.

Or, think about a building lot that’s full of trees. Your city may even have regulations about how many and what type of trees you can cut down. This can make it really hard to find a large, clear area for a suitable home. But containers are long and skinny, so you can route around and between trees as needed.

What about land that’s strangely shaped? Maybe it’s long and skinny, or wedge-shaped, or has the appearance of an ‘L’. Arrange your containers in a way that works with the boundaries and offsets of the land is comparatively easy. 

When traditional home buyers and builders see land that’s similar to what’s described above, they often skip over it. It’s too difficult to fix the land and too complicated to change their design. They’d rather have a wide-open property with plenty of room for their building.

These pieces of land can be great opportunities for prospective container homeowners though! Let the design flexibility translate into land savings.

Get in touch with a local realtor that specializes in land sales and ask what’s been sitting on the market for a while and hasn’t been selling, then find out why. Is it something you can accomodate and work around with containers? If you do this early in the planning and design process, you still have a lot of flexibility in your design to work around narrow lots, strange topography, etc.

Summary

We hope that we’ve convinced you not only how you can have an affordable container home, but why that might be a goal worth achieving in the first place. There may be more paths to get to cost savings that you had initially even considered!

If you’re looking for more detailed information about pricing, read through some of our helpful articles in the Learn section of the site. And don’t forget to check out our Case Studies, where we go into detail on actual container homes.

Can you think of some other interesting ways that containers might present cost savings when compared with traditional construction methods? Let us know below in the comments section.

Is a Container Home Right for You?