Airbnb's Cofounder Will Sell You a Tiny Home for the Price of a Regular Home

An Airbnb co-founder has raised $41 million for his new company where he will build a small house for your backyard for the low, low cost of a regular-sized house. 

Fortune reports that Joe Gebbia secured funding for his company, Samara, which “sets out to improve the way we live,” in part by selling small modular homes called”additional dwelling units” (ADUs), although they’re sometimes called in-law homes, granny flats, or tiny homes (tiny homes are typically a primary residence). The funding comes from the venture capital firm Thrive Capital and investors include Airbnb and its CEO Brian Chesky.

Gebbia first announced the tiny home model, called “Backyard,” on Twitter in November, where he described it as “the little house designed for your next chapter in life.” Samara’s website calls Backyard a “refreshingly simple, fully customizable, all-new ADU.” Samara’s website says that Backyards start at $279,000 for a studio. A one-bedroom is $299,000 and a two-bedroom is $339,000. The sizes range from 39 x 25 square feet to 57 x 25 square feet. The cost includes installation and permitting. The median home sale price in the U.S. was $431,000 in July, according to the St. Louis Fed, meaning half of all sales were below that price.

“We’re taking the same playbook that Airbnb brought to the travel space of ‘make it simple, make it easy for the consumer,’” Gebbia told Fortune.

The California-based company launched after the state changed its zoning to make it easier for homeowners to build “additional dwelling units,” or small add-on homes either attached or detached from a primary residence. In 2019 and 2020, laws signed by Governor Newsom fast-tracked approvals for ADUs in the state. And in 2021, more reforms required municipalities to come up with their own plans to make ADUs affordable. As a result, there are state and local grant programs to subsidize costs of ADUs, including a state grant of up to $40,000 for pre-development costs of building an ADU. All of the regulations were passed with the intent of increasing the supply of housing units in California to address a deepening housing crisis. 

As with startups like Tesla, Samara’s “Backyard” product was likely introduced to capitalize on a wave of government subsidies and new regulations. (In the Fortune article, Gebbia compares the process of ordering one of Samara’s homes to ordering a Tesla). But the reason that California is so forcefully pushing ADUs is that they are so much cheaper to build than a single-family home, and can provide an affordable option for low- and moderate-income renters. The cost of building an ADU generally ranges from $100,000 to $300,000, and Samara’s luxury ADUs—they have trash disposal, solar arrays and air filtration—are definitely on the higher end. Even with some state grants, a homeowner taking on debt to build a $340,000 ADU would probably need to charge an unaffordable rent to pay back the loan.

As a co-founder of Airbnb, Joe Gebbia helped assemble the sprawling peer-to-peer home rental network that flouted local regulations in cities across the country, driving down vacancy rates in tight housing markets, facilitating landlord mini-empires, and driving up rents. Cities have been struggling to regulate the company for years, and some have finally taken a tougher stance: New York City passed a law this year requiring that Airbnb hosts register with the city, further enforcing a ban on rentals that are under 30 days. Gothamist reported that only 400 Airbnbs were operating legally after the law passed. (Nearly 10,000 were still operating illegally.) San Diego and Los Angeles are also cracking down on Airbnbs to differing levels of success.

Maybe Gebbia launched Samara as restitution for Airbnb’s impact on the rental market—adding supply for all the units transformed into unregulated motels. But for ADUs to operate affordably they need to be built affordably, and it remains to be seen whether “Backyard” will be an add-on for rich people looking to expand their own living quarters, or if some of them will be rented cheaply enough to ease the housing crisis.