Building on smaller lots and delivering products with smaller footprints can help solve for both attainability and affordability in a market where high prices are sidelining many would-be buyers.
During the “Trending Narrow Lots & Micro Products: How to Achieve Density That Lives Well” session at the 2024 International Builders’ Show, John Hunt of MarketNsight and Chris Moore of DTJ Design highlighted the opportunities, challenges, and examples of smaller projects, demonstrating that design, function, and value do not have to be compromised.
Hunt, chief analyst and principal at MarketNsight, discussed how zoning regulations and local municipalities make it challenging for builders to build homes under 2,000 square feet, contributing to higher prices and an absence of entry-level new-home products.
“You can’t build a proper house today at a starter price point because zoning will not let you,” Hunt said. “There is not much activity below 2,000 square feet because municipalities enforce minimum lot sizes and minimum square footages.”
A large volume of pent-up demand exists for smaller homes that is not being met in the market, according to Hunt. Demographically, millennials and retiring baby boomers represent the largest buying cohorts in today’s housing market. Both groups, for different reasons, do not require homes in excess of 2,500 square feet. Many millennials are moving from either their parents’ homes or smaller apartments and do not need a large detached home as their first house, Hunt said. Similarly, baby boomers looking to move may be empty nesters wanting to downsize from their current homes.
“We’re not satisfying this pent-up demand [among baby boomers and millennials]. We’re seeing a convergence in what our two biggest consumer groups want and don’t have the option to buy,” Hunt said. “They are searching for something that is not 3,000 square feet and not 800 square feet, but something in the middle. They need somewhere to go, and that square footage is missing.”
While several areas of the country, including Minnesota and other Midwest states, have made changes to zoning regulations that promote more density in single-family housing, Hunt said restrictive and exclusionary zoning remains a challenge for density and, by extension, affordability.
“The only thing we’ve built as an industry due to our forced zoning over the last four years is a two-story, ‘five, four, and a door’ [home],” Hunt said. “Our current zoning is stuck in the way the world was 20 to 30 years ago. It hasn’t changed, but the world has changed dramatically.”
Moore’s firm, DTJ Design, has achieved density in projects across its operating markets in Colorado, Texas, and Georgia. Oftentimes, Moore said, a reconceptualization of what density is and what smaller products can achieve is needed when evaluating their utility.
“Creating density that lives well is like viewing an art masterpiece. You study it and think you understand it, but then an art historian walks up and points out half a dozen details that you didn’t see and you look at it differently. Your mind has been transformed, and you’re looking at it through a different lens,” Moore said. “I think we have to do the exact same thing with small-lot products and conventional products.”
In addition to zoning and regulatory challenges, Moore said small-lot products need to overcome conventional thinking about what a home should look like and should function. The most important element of a small-lot product, he said, is natural light rather than a targeted bedroom count or specific floor plan.
“What we must have [in small-lot living] is natural light. When we design townhomes and small-lot products, we tend to forget the importance of natural light. Allowing the light to come in from the back and the sides and top really energizes the space and makes the smaller footprint seem a whole lot more livable and more exciting,” Moore said.
In addition to floor plan and layout, Moore discussed how outdoor spaces function differently in smaller products. Rather than the traditional backyard, micro products can have side or front yards, patios, or roof deck space to promote outdoor living. With more dense areas, outdoor spaces do not need to be private either, he said. Shared neighborhood parks and pocket parks can promote outdoor living, and design can enhance this value by ensuring homes in smaller communities have visibility to these outdoor public areas.
“In order to succeed in developing, building, and designing small-lot solutions, we’ve got to challenge our conventional thinking,” Moore said. “We’ve got to clearly communicate that to the buyer. What is the value of [small-lot homes]? We’ve got to communicate it not only for the house, but also for the yard, for the street, and the neighborhood.”
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