T
he US housing market is facing a severe shortage, with estimates suggesting there are between 4-7 million fewer homes than needed. This has led to high prices and the "Singles Tax," where single renters pay over $7,500 more per year compared to those with roommates. In response, some homebuyers are considering smaller towns as an affordable option.

    House hacking has emerged as a solution for both renters and homeowners. The term was popularized by real estate influencer Brandon Turner, who described it as a way for millennials locked out of the property market to buy a duplex or triplex and rent out one unit while living in another. However, house hacking gained popularity during the current tight housing market.

    Aaron Tetzlaff, an agent at Coldwell Banker Warburg, notes that the 2008 housing crisis wiped out many homeowners and contractors, leading to a shortage of affordable homes. NIMBYism (not-in-my-backyard residents) has also contributed to the problem, making it difficult for developers to build new homes.

    Sebastian "Seb" Frey, a broker associate at Compass in Silicon Valley, says he's worked with people who have been house hacking for years by converting properties into single room occupancies (SROs). They would occupy one room and rent out the rest to friends or strangers. This approach allows them to take advantage of low down payments and lower mortgage rates while building equity.

    However, Tetzlaff warns that house hacking can be stressful on the market, particularly when people convert garages or other spaces into rentable rooms. He believes it's essential for would-be house hackers to ensure their home, rents, and mortgage payment fit within a reasonable range for their market and finances.

    House hacking may not be a nationwide trend, with some markets like Atlanta seeing little prevalence of SRO scenarios. However, in high-cost areas like New York City, it's become a necessity. In these areas, homeowners are leveraging their properties by adding accessory dwelling units (ADUs) or converting garages into rentable spaces.

    One concern about house hacking is the potential for illegal renting, where people have more occupants than allowed or convert substandard structures into living spaces. This can affect real estate values and quality of life for neighbors.