Silicon Valley tiny house on sale for $2.6 million

What one tiny house in Silicon Valley lacks in size, it more than makes up for in price.

An 897-square-foot bungalow in Palo Alto, Calif., has been listed for $2.6 million – nearly $2,800 per square foot, about $1,000 above average for the pricey college town.

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The adorable 1920’s cottage was listed earlier this month by Laura McCarthy of Alain Pinel.

"I think we priced it a little high...at the price it's valued at," says listing agent Laura McCarthy of Alain Pinel to SF Gate. "My clients were of the mindset that they didn't want to price it low and then see how high it would go."

The two-bedroom, one-bathroom home boasts hardwood floors, baseboard moldings and built-ins throughout the house that are all original. The small light-filled kitchen features a vintage Wedgewood stove and open cabinets.

Though small, the house was designed in a way to feel light and airy with skylights and large windows placed throughout the home.

"The owners worked with a local architect and they were going to build just under 2,000 square feet," says McCarthy.

But what might be most intriguing to potential buyers is the outdoor space. Behind the house is an impressive backyard and extra studio that comes with 200 extra feet of space and a private patio area – as well as a potential to increase the size of the home by adding on.

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The owners already started the permitting process to expand the home, but they decided to sell rather than remodel, SF Gate reported.

Alexandra Deabler is a Lifestyle writer and editor for Fox News.