This should be obvious, but I occasionally run into people who refuse to believe it. It seems unlikely that evidence will convince them, but just in case, a recent Dallas analysis by makes it clear.
Smaller Lots Result In Smaller Homes
As lot size increases, so does the most likely home size. On parcels under 1,500 sq. ft, the most common home size is 1,750 to 1,999 sq. ft. On 1,500–2,999 sq. ft. parcels, homes 2,000–2,249 sq. ft. are most common, rising to 2,500–2,999 sq. ft. for 3,000–4,499 sq. ft. and 4,500–5,999 sq. ft. lots. On lots 6,000 sq. ft. and above, home sizes start to get quite large, and once lot sizes reach 1/3 to 1/2 an acre or more (15,000+ sq. ft.), they’re humongous, reaching upward of 6,000–8,000 sq. ft.
Colorado has the highest minimum lot sizes of any state the National Zoning Atlas has studied so far, including Texas. An attempt earlier this year to legalize smaller lots statewide failed because of local government pushback.
Smaller Homes are More Affordable
While imperfect, this analysis indicates that a 1% increase in home size is associated with a roughly 0.65% to 1.0% increase in estimated home value. If reducing lot sizes leads to 20% smaller homes, that would make new homes 10–15% less expensive before accounting for land. Assuming a low $150 per sq. ft. in construction costs, a 400 sq. ft. smaller home should save a homebuyer about $60,000. If the home is 600 sq. ft. smaller, the savings increases to $90,000.
Ignoring land costs, a smaller home is more affordable because it requires fewer materials and less labor to build. People often push back by saying smaller homes cost more per square foot because of certain fixed costs, no matter the size, but people don't buy homes by the square foot; you pay for the whole home.
Smaller Lots are More Affordable
In the red areas of the map, land values are at least $2 million per acre. Most of it is zoned for only single-family detached housing, with minimum lot sizes from 7,500 sq. ft. up to one acre (in the middle of the 9th largest city in America!!). At $2 million an acre, a 7,500 sq. ft. lot—vacant, without a home—costs nearly $350,000.
When you include land costs, the point becomes even clearer. In areas with expensive land, using less land per housing unit lowers housing costs.
How This Manifests in Denver
Most of Denver proper is zoned U-SU-C (the light yellow areas on the map), which requires single-family uses only and 5,500+ sq ft lots.
Several neighborhoods that historically had multiplex zoning, including my own, were largely downzoned to U-SU-C 16 years ago. My townhome sits on a 2,700 sq ft lot, half of what is allowed today. Unsurprisingly, those areas have seen some of the largest increases in housing prices, while other parts of the neighborhood and city where more density was allowed (U-TU-C, two units on 5,500 sq ft, roughly equivalent to my immediate neighborhood before the downzoning) and on smaller lot sizes (G-M[UX]-[35], 3000 sq ft) have seen slower increases. In my immediate vicinity, the remaining older multiplexes/townhomes sell for millions less than the scraped McMansions steadily replacing the older homes. Even newer duplexes (built or approved before the downzoning, or via variances) still sell for a million less than comparable vintage single-family McMansion scrapes.
Northwest Denver is such a clear example of this that AEI cited it in a 2024 study.
I pulled some data on Denver parcel sizes, zoning, and appraisals and built a visualization to explore how this shows up in Denver. Here's a map of Northwest Denver showing estimated land costs for a minimum lot, based on assessed land value and the zoning's current minimum lot size.
Can you guess where the downzoned areas were? For some reason, the pre-2010 parcel-specific zoning is hard to come by. The city has it tucked away somewhere because they used it to create some very limited layers for a mapping tool for the Unlocking Housing Choices work, but I can't find it in the Open Data Catalog. I suspect the purple areas showing the highest per-lot land values are a pretty good approximation.
Inexplicably, UHC doesn't seem to be considering reducing minimum lot sizes, just letting more units be built on existing lots. That's a fine goal, but why not both? What if an owner with extra land wants to build another home on it and then sell it? UHC would seem to require them to set up some sort of condo agreement unless they have a whole multiple of the minimum lot size, in which case they could split the lot. Otherwise, all you can do with the additional units is rent them and become a permanent landlord. There may be an infrastructural reason for this, but it seems more likely to be a political obstacle that City Council isn't eager to take on.