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A builder pulls up to a half-acre lot on the edge of Boise. Walkable to a school. A grocery store down the road. He has done the math at his kitchen table the night before. He wants to build six small homes. Eleven hundred square feet. Two bedrooms, one bath. The kind of place a young couple buys before they buy something bigger. The kind of place a widow downsizes into. The kind of place a working family scrapes together a down payment for, builds equity in, and trades up from in seven years.
He opens the city’s land development code.
The minimum lot size says he can fit four homes, not six. The setbacks shave fifteen feet off the buildable area of each parcel. The parking minimum requires two off-street spaces per unit, which means the driveway eats half of what’s left. The floor-area ratio caps the footprint, making eliminating some shapes for its footprint and placing a maximum size limit too. The height limit cuts off a second story that would have made the math work anyway.
By the time he closes the codebook, he has room for three homes. Not six. And the only way three homes pencils — given what he paid for the land, what the framing crew charges, what the bank wants on the loan — is if he builds them big. Twenty-four hundred square feet. Four bedrooms. Three baths. Granite. The whole package.
He didn’t want to build that. The young couple he was thinking about can’t afford it. Neither can the widow. But the codebook didn’t ask what he wanted to build. It frankly doesn’t care.
That is the story of American housing in a nutshell, since the explosion of land-use codes of every type over the past 60 years. Every line in that codebook does the same thing — making small homes illegal, making big homes the only thing left to build, and then telling young people that all they need to do to get ahead is work a little harder and stop complaining.
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What’s a Minimum Lot Size?
A minimum lot size is the backdoor to preventing density that zoning doesn’t cover to keep builders and property owners of all types from getting too cheeky to get around the other rules.
It is often layered on top of single-family or multi-family zoning specifically to bar any use of the land that might house too many people too close together.
The policy establishes a floor on how small a place can be for someone to live in it. Want to put in a tiny home? Not here, too small. Want to build a condo for around 2,000 square feet? Sorry, the minimum lot size for this area is 2,500 square feet.
The Defense You’ll Hear
There is a common defense of this arrangement. You’ll hear it from the trade press, economists, planners, and politicians defending the status quo. It goes like this: houses cost more because they are bigger and they have more stuff in them. Granite countertops. Master suites. Three-car garages. Walk-in closets. People want amenities and big houses. Builders deliver. End of story.
It is not the whole story. It is not even most of it.
As with all good defenses, it has some truth. Yes, houses got bigger. The median new home in 1973 was 1,525 square feet. By 2015, it peaked at 2,467. It has settled around 2,300 today. Living space per person in a new home roughly doubled in fifty years, even as the average household shrank.
But what the defense of the status quo misses is that this change in house size in America occurred within a regulatory regime that made the alternative effectively illegal.
In 1980, about 40 percent of newly built single-family homes in this country qualified as starter homes. By 2019, that number had collapsed to roughly 7 percent. In raw production, the country built 418,000 starter homes a year in the late 1970s. By 2020, America had built 65,000. An 84 percent drop in a single category of housing in a single lifetime. Over the same stretch, homes with four or more bedrooms went from one in five new builds to nearly one in two.
The rules did not just make small homes harder to build. They also made larger homes easier to finance. Builders build what the rules allow and what the financing will support. Families buy what is available. It appears to be a consumer preference, but it is actually 2 forces working together to drive a consumer trend.
The Houston Experiment
The chief economist at Zillow, Orphe Divounguy, put it plainly when mortgage rates doubled in 2022, and builders tried to pivot to smaller homes: “When a builder goes in there and tries to actually build something that would sell in today’s market, they just can’t.”
They tried. The rules said no.
There is one major American city that took a different path. I’ve talked about Houston before, but it’s worth noting that it’s never been Shangri-La. They never had zoning but they do have minimum lot sizes; still, Houston proves demonstrative.
In 1998, Houston cut its minimum lot size from 5,000 to 1,400 square feet within the I-610 loop — the inner ring highway that circles the central city and older neighborhoods. The success of the initial reform— measured in construction activity, price effects, and household savings — gave Houston the evidence base to expand it citywide in 2013. In 2013, it extended the reform citywide. That is a 72% increase in the amount of land the law requires you to control before you are allowed to build a single home. The pattern repeated: where the reform applied, smaller homes appeared
The 1998 reform alone produced more than 40,000 new townhomes that sell for roughly 37 percent less than other single-family homes in the city.
Emily Hamilton at the Mercatus Center wrote the definitive academic study of what Houston did and what came of it. Her finding stated plainly: when Houston made small homes legal again, builders built small homes again, and households kept more money.
“Houston gave us something the rest of the country doesn’t have. A clear before and after. We can see what the market produced when the minimum lot size was 5,000 square feet, and what it produced when those rules were relaxed. Builders shifted toward smaller-lot construction almost immediately. And the affordability gains showed up at the household level — not in white papers, in people’s monthly payments.”
— Emily Hamilton, Mercatus Center, on Build the Dream
Per Hamilton’s research, a 2022 follow-up study estimated that the typical Houston household received the equivalent of an $18,000 windfall from the 1998 reform. As with any price-savings mechanism, lower-income households benefited more than higher-income households.
Houston is not perfect. No city is. But Houston ran the natural experiment that most American cities refused to run. The result was not chaos. The result was more housing.
The System Is Stacked
Here is what the amenities defense gets wrong at its core. The choice between a 1,200-square-foot starter home and a 2,500-square-foot house with three bathrooms and granite countertops is not a choice American families have been allowed to make. The first option is functionally illegal in most American cities. The second option is the only thing builders are permitted to construct profitably.
When you eliminate the cheaper alternative, the expensive product becomes the only product. That is a permission system that only appears to be a market.
The median age of a first-time homebuyer in this country is now 40. An all-time high. First-time buyers, who historically made up about 40 percent of home sales, made up 21 percent in 2025. What we have built is a country in which the entry-level homeowner is forty years old, finally arriving with the down payment for the 2,400-square-foot house his parents bought at twenty-eight.
The system asks the next generation why they are not keeping up. The answer is in the codebook, the government rules that prevent housing especially for the least well off trying to buy.
Bring Back Starter Homes
Houston shows the path. So does Auburn, Maine, Florida, Idaho, Texas, Connecticut, and New Hampshire — finally clearing out the rules that made first homes impossible to build.
This is not experimental policy. This is the policy that produced every neighborhood your grandparents bought into. The postwar Levittown. The 1960s Cape Cod. The 1970s ranch. The homes that made the American middle class possible the first time around were built under codes that let small be small.
We do not need a new system. We need the rules out of the way of the system we used to have.
The American Dream isn’t dead. It is being blocked.
Bring back the starter home — the kind of place regular people used to be able to afford. Let builders build the homes that families can actually buy. Let the next generation get a foothold the way the last three generations did, before the codebook ate the ladder.
That is what housing freedom looks like. That is what life freedom looks like.
That is what we are here to build.
