Start-ups hope small houses are big business

PITTSBURGH – Brian Gaudio, then a college senior, was traveling in South America on a study grant for a documentary in 2014 when he came to a realization: People could live more happily, more economically and in a more environmentally friendly way in small houses.

He means really small houses, no more than about half the size of the average American home.

Gaudio's documentary was about housing. His thought was to bring the small house idea to American urban centers, where the need for affordable and fill-in units was acute. His timing was right: America had been doing some soul-searching about homeownership in the years since the real estate crash of 2008.

"Is the American dream dead," asked Gaudio, 26, who has a degree in architecture. "We don't think it's dead. We think it needs to change."

"We" is Gaudio, 33-year-old Hallie Dumont, and Drew Brisley, 27, who co-founded Module Design LLC in spring 2016.

The start-up is housed in a small business incubator in Pittsburgh, where Gaudio and Dumont have been pitching the idea to community development organizations and designing tiny houses with rooms that can be added with an interlocking system.

The interlocking feature is like pressing together Lego pieces, Gaudio said. A patent is pending for the technology.

City living in walkable neighborhoods may be attractive, but experts say it may be too soon to know whether the tiny house phenomenon will get traction with young home buyers.

"It's an interesting concept," said Tom Cummings, Pittsburgh Urban Redevelopment Authority housing director, who reviewed the idea preliminarily. "What they presented sounded pretty interesting, worth exploring."

With more than 27,000 empty lots in the city of Pittsburgh, Gaudio said there's plenty of room for the business to grow. What's more, his homes are designed for city lots.

The modular home concept with interlocking rooms, introduced as early as the 1970s, offers an affordable path to homeownership, said Christopher Leinberger, chair of the Center for Real Estate and Urban Analysis at George Washington University.

What's different now is young home buyers are more environmentally conscious, which is an added draw for smaller homes.

"From a market point of view, it allows people to buy relatively expensive land and live on it," Leinberger said. "This is the $64,000 question: what will the millennials do when they grow up, and we don't know the answer to that."

Some people aren't waiting to find out. Shawn O'Mahony, founder of the nonprofit veterans group, the B.O.B. Project Inc., plans to break ground this year at a 3.7-acre site in suburban Pittsburgh, where 10 to 17 tiny houses will be built for veterans. The homes will encircle a community center, which will offer services tailored to veterans.

"In a short time, this has exploded into something we never expected," O'Mahony said about the tiny housing village, which has received consulting help from Carnegie Mellon University. "We're so excited about it."

Another potential competitor is Aaron Troisi, principal of the Unknown Craftsmen, who has seen tiny houses rise in popularity since he and his ceramist father Nick began making them in central Pennsylvania 1½ years ago. Their trademark is custom tile work and trimmings.

"It's definitely trending," Troisi said about the tiny house movement. "It has been a very viable business."

Dumont, whose title at Module is designer, says the classic image of home sweet home is a "little bit broken now." For years, the average home size had been rising before slipping 2.5 percent to 2,602 square feet in the third quarter of 2016 when compared to 2015, according to the Census Bureau.

Efficiency is the big draw of tiny housing, especially for young, price-conscious consumers. Existing housing stock often comes with such things as dining rooms and entryways that don't get used much. Module is designing homes that are 600 square feet to 1,600 square feet, with every inch used efficiently.

A 600-square-foot house is a little bigger than a one-bedroom apartment and Module's designs allow rooms to be added upstairs or to the rear according to a family's changing needs. A second or third floor can also be added, up to a comparatively roomy 2,000 square feet.

The smallest model could be erected on a 20-foot wide city lot.

"As part of our digital platform, we can connect you to the right module home and additions," Gaudio said.