Shipping container homes are touted as a practical, sustainable, and affordable housing solution that might seem ideal for Gen Z. But in reality they’re surprisingly difficult to build, permit, insure, and finance — and present little more than a trendy-but-expensive alternative to traditional housing.

With Gen Zs effectively being priced out of the traditional suburban McMansion, many of us are looking into more affordable, minimalistic forms of housing.

Small homes are great — but some are on the older side, and there’s still a ton of buyer competition.

Tiny homes are gorgeous and modern — but some are a little too tiny.

So what’s this I’m hearing about container homes? Are they seriously made of corrugated metal shipping containers?

Depiction of an expanding brain correlating to reduced home sizes

“Expanding Brain” custom meme generated by author using Imgflip

 

How do you finance and insure a container home? Moreover, are they the affordable, sustainable housing solution Gen Z is looking for?

What Is a Container Home?

A shipping container home, or “container home” for short, is a dwelling that uses corrugated metal shipping containers as its main structural element. 

Some container homes are simple, effectively converting a single, 40-foot container into a tiny home:

Image of a container home in Kirkville, NY

Andrea Nentwick’s container home in Kirkville, NY. Photo: Andrea Nentwick, used in Syracuse.com

 

Others use two or three containers to create multiple floors, rooms, or even a sweet-ass balcony:

A container home with a balcony

Photo: CargoHome

 

Finally, some intrepid home builders will even use eight or more units to create what’s effectively a shipping container mini-mansion: 

An extravagant shipping container home made with multiple containers

Photo: Casa Incubo, featured in InHabitat

 

As you’d imagine, the interiors of shipping container homes are long and skinny. Shipping containers are roughly 8’ x 40’ as standard — and when you add insulation, electrical, and structural reinforcement to the walls, the width can narrow to just seven feet.

Definitely still livable — just be prepared for some shoulder bumping at parties.

The narrow interior of a shipping container home

Photo: CargoHome

 

Now, most shipping container homes are 100% custom jobs, designed and built from the ground up. But there are a few companies out there that will build and ship one for you. More on that in a bit.

For now, let’s talk more about how container homes compare to other forms of affordable dwellings.

Container Homes vs. Mobile Homes vs. Tiny Homes

If you’re looking for affordable housing under $200,000, you’ve probably come across container homes, mobile homes, and tiny homes. So let’s compare the three.

Mobile Homes

Mobile homes are, as the name implies, homes that you can put on a truck and move around.

 

Mobile homes cost just $81,900 on average and $111,900 brand new — compared to $354,165 for a traditional home — for two main reasons.

  1. They’re often mass manufactured following a common floor plan, hence their other name “manufactured home.”
  2. Land is not included in the price — just the physical house itself. Land can cost ~$1,000/month to rent or $10,000+ to buy.

Even still, mobile home living has been a tremendously popular affordable housing option for decades, and the homes themselves have only gone up in quality in recent years.

Check out our feature: Are Mobile Homes a Good Deal?

Tiny Homes

Tiny homes are, well, tiny homes. They range anywhere from 160 to 800 square feet, and while most are permanently affixed to one location, some are small enough to hitch to a truck — making them even more mobile than a mobile home.

Image of a tiny home

“The Rocker,” owned by Asha Mevlana of Trans-Siberian Orchestra
Photo: iTinyHouses

 

Permanent tiny homes typically require you to buy the land underneath. Permits can be hard to get for tiny homes, which is why many tiny home-dwellers choose to live in sanctioned tiny home communities.

A Florida community for tiny homes

Tiny House Community Florida
Photo: orlandolakefrontth, featured in The Spruce

 

Check out our feature: Do Tiny Houses Really Save You Money?

Quick Comparison of Container vs. Mobile vs. Tiny Homes

Spoiler alert for the rest of the article: Because container homes are essentially niche custom homes, they’re expensive to build, difficult to finance, and troublesome to insure.

 Container homeMobile homeTiny home
Average cost$50,000-$300,000$111,900$30,000-$60,000
MobilityNoYesSometimes
Average annual insurance premiumUnknown$500-$1,500$450-$1,500
Average annual maintenanceUnknown$1,448$500-$1,000

So let’s break alllllll that down in the rest of the article, starting with one of the container home’s possible saving graces.

Are Container Homes More Environmentally Friendly?

According to a study published by Cambridge University Press, there are over 28 million shipping containers in circulation, and within 12 years all of them will be retired.

As a result, humanity will be looking at a giant, giant pile of 8’ x 40’ LEGOs that are “relatively inexpensive, structurally sound and in abundant supply.”

In addition to saving steel from a landfill, building with shipping containers can conserve a tremendous amount of brick, stone, vinyl, and other raw materials.

And as the costs of refurbishing retired containers comes down, it’s likely that we’ll see more and more large projects like this 200-container shopping mall in Seoul.

The Common Ground mall in Seoul

Common Ground mall in Seoul
Photo: InHabitat

 

Now, while recycling is awesome, building a container home isn’t quite as simple as plopping one down on your property and spray painting your address on the side for the Prime delivery driver.

So, beyond $2,500 for the container, what costs are involved?

How Much Does It Cost to Buy a Container Home?

Since the used market for container homes fluctuates from extremely limited to zero, most folks end up building a container home from scratch.

Now, you can do this one of two ways:

  1. Totally DIY it, or
  2. Hire a firm to build it

Let’s break down both options:

Build Your Own Container Home: ~$40,000 and Up (Plus Land)

Used shipping containers may only cost ~$2,800 a pop, but the cost of refurbishing them into a home costs around ten times that.

Blake Madgett with Containing Luxury has a really awesome video breaking down the absolute rock bottom, barebones cost to building your own container home.

 

Here’s his breakdown:

  • Used shipping container: $2,500
  • Windows: $3,200
  • Insulation board: $1,000
  • Electrical: $1,500
  • Plumbing: $1,800
  • Drywall: $720
  • Flooring: $750
  • Heat/cooling: $900
  • Cabinets: $2,200
  • Countertops: $700
  • Mill work: $600
  • Misc. materials: $500
  • Paint: $250
  • Total: ~$20,000

Mind you, this is basically just for the raw materials to make the home livable. If you added costs for…

  • Container delivery and installation
  • Building permits
  • Tools
  • Labor
  • Exterior siding
  • Roofing
  • Exterior paint
  • Landscaping
  • Land prep
  • Septic
  • Water supply
  • Electrical supply

…then the total for a ~250 square foot container home would be closer to $40,000-$50,000.

Unless you’re an experienced contractor with many of your own tools on hand, you might consider purchasing a prefabricated unit instead to save some time, stress, and asbestos in your nose.

Buy a Prefabricated Unit: ~$60,000 and Up (Plus Land)

As an alternative to the DIY approach, boutique firms like Alternative Living Spaces and Kubed Living will build a shipping container home for you.

Prices for prefab container homes tend to start around $35,000 for homes made from a single 8′ x 20’ container and go all the way up to $240,000 for homes made with multiple 8′ x 40’.

The sweet spot tends to be around $60,000 to $80,000 for a ~250 square foot home made from a single, classic 8’ x 40’ container.

I’m partial to the gorgeous but simple Alt 40’ Model by Alternative Living Spaces:

Simple container home model exterior

Simple container home model interior

“Alt 40’ Model” by Alternative Living Spaces, starting at $82,000

 

At these prices, prefabricated container homes are rubbing up against tiny homes and smaller mobile homes, which begs the question:

Are Container Homes Really an Affordable Alternative to Traditional Housing?

Purely based on the upfront cost to own the home, yes, container homes are technically more affordable than traditional homes.

But square footage-wise, they’re not any more affordable than tiny homes or mobile homes. Plus, since container homes are so new to the market, there are other drawbacks to consider: fewer builders, less inventory, and financing.

Yeah, let’s talk about financing.

How Does Financing Work for a Container Home?

Ok, so you’re thinking $40K to $80K might be doable, but you don’t have that much cash lying around (who does?).

So what would be your financing options if you chose to build or buy a container home?

Can You Get a Mortgage on a Container Home?

In most cases, no.

Most lenders have several requirements for homes to qualify for a mortgage:

  • They have to be permanently affixed to the property beneath them.
  • The borrower is financing both the home and the land.
  • The home is above a certain size (e.g., 800 square feet).
  • The home is above a certain value (e.g., $50,000).

Some lenders are flexible on one or two points, but most would consider container homes to be personal property — not pieces of real estate — and therefore disqualified for a mortgage.

The obvious exception would be for a container home that’s already built and includes the property in the price. But even then, some lenders may shy away from financing container homes since their long-term values are so speculative.

What Are Some Alternative Financing Options?

In lieu of traditional financing options, builders of tiny homes and container homes often turn to construction loans, personal loans, or financing directly through their builder.

Construction loans cover the costs of constructing the home. The funding is paid directly to the builder of the home, and the owner typically has one year to pay it back.

Naturally, since there’s a lot of risk involved (and it would be hard for the lender to recoup their money), construction loans require an excellent credit score (720+), a high down payment of 20% to 25%, and higher interest than mortgages.

And with a one-year loan term, you might be looking at a down payment of $12,000 and monthly payments exceeding $3,000.

Personal loans are a bit more palatable, with longer terms (up to seven years) and lower credit requirements (600+). They’re also easier to get, but interest rates can range anywhere from 6.99% to 19.99%.

Check out our list of the best personal loans of 2022.

Builder financing is becoming an increasingly popular option in the tiny home world, but none of the container home companies I researched offered any sort of special financing options.

I’m gathering that this is because, broadly speaking, container homes and tiny homes are bought by different people.

  • Tiny homes are bought by Millennials and Gen Zs seeking affordable housing and/or wanting to lead a minimalist lifestyle.
  • Container homes, on the other hand, seem to attract wealthier Gen Xers looking to build a trendy, eco-friendly Airbnb or backyard office. They’re not looking for something affordable, per se — just cool.

And that’s totally ok. But for now, let’s keep breaking down why container homes may not be the right move for Gen Zs.

How Does Insurance Work for a Container Home?

Like lenders, some insurance providers aren’t quite sure what to make of container homes yet.

Think about it: Homeowners insurance covers things like fire, theft, and liability if someone else gets hurt on your property.

So when you build a “non-traditional home” out of corrugated metal, insurance providers aren’t sure how to assess the risk of those things occurring.

Gif of a young girl's confused face as she tries to make mental calculations

Insurance underwriters calculating the risk of insuring a metal box. Source: Giphy.com

 

Are container homes more secure? Less secure? Are they prone to rust? Fire?

Dunno, says the provider — so we can’t risk insuring it. And to be fair, insurance providers often say the same thing about tiny homes.

Now, it’s still possible to insure a container home — but you’ll have to compare multiple homeowners insurance providers.

CoverHound has an interesting tip: Tell them that your home is technically an Intermodal Steel Building Unit (ISBU) with “outstanding safety and fire ratings.”

Do You Need a Permit to Build a Container Home on Your Property?

Yep.

And unfortunately, “regulations, permits, and codes surrounding container building is a complicated topic,” writes Discover Containers.

You’ll need to ensure that your future container home will abide by:

  • Property zoning laws
  • General building codes
  • Mobile, manufactured, and modular building codes
  • Deed restrictions, and
  • Local HOA rules, if applicable

To learn about what it would take — time and money-wise — to clear all this red tape, I’d recommend connecting with a realtor or builder in your area who specializes in container homes, modular homes, and/or tiny homes.

Overall, Is a Container Home a Good Investment?

Well, let’s define what a “good investment” in a home might look like:

My personal, unofficial definition of a good home investment would be one that:

  1. You can afford to purchase, insure, and maintain
  2. You enjoy living in, and that
  3. Appreciates in value over time

(A) is up to you, your budget, and your ability to secure a construction or personal loan.

(B) is totally subjective. Container homes are just long, thin, metal tiny homes, and tiny home living isn’t for everyone.

Before investing any serious capital, I’d strongly recommend you and your partner stay in a tiny home for a few days on Airbnb. Heck, you might even find a local container home:

Listing of an container home on Airbnb

Source: Airbnb listing for Tiny home hosted by Ramone

 

Finally, let’s talk about (C): Will container homes hold their value?

Will a Container Home Go Up in Value?

If you buy a tiny parcel of land near an urban center to plop a container home on, historically speaking your home + land combo will appreciate in value.

But will it appreciate at the same rate as if there was a traditional home on the same plot of land?

It sort of depends what the demand for container homes will be in 5, 10, or 20 years. As it stands, though, small homes under 1,200 square feet are actually appreciating at double the rate of homes larger than 2,400 square feet.

But again, container homes and tiny homes are sort of their own sub-brand of small home — and for much of the market, they’re just too small.

So will container home values go up over time?

Possibly, but I wouldn’t bank on it.

Pros and Cons to Container Homes

Pros

  • Durable. Shipping containers are designed to withstand hurricane winds and sea water, and therefore make for reasonably sturdy homes.
  • Affordable. If you have the tools, time, and talent, you can DIY your own container home for well under $40,000 — less than the cost of a Toyota Camry.
  • Sustainable. Container homes give new life to retired 8’ x 40’ shipping containers — a brilliant form of recycling.
  • On trend. Living in a container home makes you indisputably more cool and interesting.
  • Rentable. Since there’s so much intrigue surrounding them, container homes can easily rent for $100+ per night on Airbnb.

Cons

  • Doesn’t include land. Building or buying a container home is just step one — you still have to find land to put it on.
  • Immobile. While some tiny homes have wheels, most container homes are permanent fixtures — meaning renting land or hopping around aren’t really options.
  • Limited financing. Container homes don’t qualify for traditional mortgages, so your options are a short-term construction loan or a high-interest personal loan.
  • Difficult to insure. Container home insurance hasn’t gone mainstream yet, so you may struggle to find a provider willing to cover your investment.
  • Speculative. Nobody’s quite sure how container home values will appreciate in the long term.

Who Should Consider Buying a Container Home?

I think a container home would be a perfect fit for someone who:

  1. Wants a tiny home.
  2. Loves the idea of having it made of (some) recycled material.
  3. Loves the corrugated metal aesthetic.
  4. Isn’t intimidated by the red tape.
  5. Can stomach the possibility of living uninsured, and
  6. Can afford potentially high monthly payments for one to seven years.

It’s a long list of requirements, I know — but I think we’ve established that container homes are definitely niche products for a very specific brand of person with a lot of flexibility.

It’s definitely not the turnkey solution to affordable housing that our generation is looking for.

At least, not yet.

Bottom Line

To end on a happy note, I think shipping container homes are an extremely cool, sustainable variant of the tiny home.

And I think it’s no coincidence that all these shipping containers are going out of service right around the time the world needs more affordable housing.

So while they’re not the turnkey affordable housing solution Gen Z needs today, I think they very well could be tomorrow.

Read more:

Related Tools

About the author

Total Articles: 196
Chris helps people under 30 prosper - both financially and emotionally. In addition to publishing personal finance advice, Chris speaks on the topics of positive psychology and leadership. For speaking inquiries, check out his CAMPUSPEAK page, connect with him on Instagram, or watch his TEDx talk.