A record number of people are applying to build laneway housing in Vancouver -- a building boom in mini housing in the face of record high real estate prices.

Laneway homes, structures ranging in size from 340 to more than 750 square feet at the back of existing homes, are offering young families an affordable way to get into the housing market.

The City of Vancouver has received 500 permit applications to build new laneway homes. Since the 2009 launch of Vancouver's EcoDensity laneway housing initiative, hundreds of small homes have been built or are nearing completion. The permit department handles up to 50 new applications each month.

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With an estimated price tag of anywhere from $260,000 to $330,000, the freestanding homes are well below the average price of detached homes in Vancouver. The price includes between $15,000 and $30,000 for development permits, utilities installation and landscaping.

With a baby on the way, the options for Akua Schatz and her husband Brendon were limited. They couldn't afford to buy a standard-sized home, so they jumped at the opportunity when Brendon's parents offered to build a 500-square-foot laneway home in their Dunbar backyard.

"It felt like a risk at first. We were the first we knew of doing it," Schatz said.

"I knew from my perspective that I wanted to be able to live where I could have family nearby. I really valued those kind of relationships and I know that our child will be better for it."

About 80 per cent of people building laneway housing are parents who own property and build the new structure for their children, according to Jake Fry of Smallworks.

Of those, about half are couples in their 20s or early 30s who are married or in relationships.

Fry said the small homes allow young people to live in an established neighbourhood with access to nice school districts and "the lifestyle they grew up with."

He says the agreement for parents and children to share property and equity is often seen as an ideal solution. As the young people start having their own families, many can switch homes with their parents, who are looking to downsize to a smaller property as they age.

Daryle Lum built a laneway home for his two sons to live in. He said the laneway home was the best bang for their buck when looking at real estate options.

"We've explored the alternatives. For $300,000 you really can't buy a lot, especially in Vancouver now," he said.

Alexis Lum said living in a home just feet away from his folks is rewarding.

"We get our own privacy from our parents, but we're still close [enough] that we can have Sunday dinners together," he said.

Fry's Smallworks has built two dozen laneway homes and expects to build another 14 this year alone.

Schatz and her husband are thrilled to have their own little home in an established Vancouver neighbourhood, and grateful to have the support of family just 16 feet away.

"It's really a North American concept to have success tied to moving away or distancing yourself, so maybe we're reinventing what it means to be successful, and that means keeping family close," she said.

The homes take about 16 weeks to build and by law must have a one-car garage. The laneway home cannot be sold independently of the main house and the property will always be owned by one entity.

The homes haven't been without their critics. The Dunbar Residents' Association has complained that the mini-homes disrupt sight lines and cause parking issues and density problems. But Fry maintains many of the houses are being built in neighbourhoods where density is actually decreasing, as is the number of children being born.

Watch CTV News for the full report from Lynda Steele, including a tour inside these unique homes…

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