How Lot Sizes Have Changed

What will the communities of the future look like? In many ways, we are at a crossroads. They may look increasingly homogenized; they may remain out-priced for countless people and struggle to flourish economically and socially. With fair and balanced housing policies, though, they could look entirely different: Thriving. Diverse. Multifaceted and multigenerational. Full of opportunity for homeowners to contribute to the fabric of their neighborhoods.

What does all of this have to do with lot sizes?

Lot sizes have changed significantly over the last century. The impact goes beyond just how much yard we can enjoy – or that we have to mow! In fact, the shift in lot sizes can lead to a shift in mindset when it comes to the composition of our communities.

Indianapolis: Home to the Largest Lots in the Land

One hundred years ago, the median size of a lot in Indianapolis was a modest 5000 square feet. By the 1960s, our yards expanded to an incredible 14,200 square feet. The next decades saw lot sizes contract once more to an average of 7900. As of 2020, properties are settling in at 9191 square feet, the largest median lot size in the country.

What are we doing with all that square footage? Not building giant homes! In fact, the median home size is 1465 square foot – or just 15.9% of the lot.

Now, home prices have risen in 2021. This is a fact with which anyone looking to purchase is painfully aware. At the same time, there has been a 50% reduction in inventory, and construction costs continue their upward trajectory.

With the cost of a lot often cited as around $1,200 per lineal foot to develop, requirements arbitrarily increase home prices for the buyer – often without adding any real value.  For example, a community may require a builder to increase its lot size from 60 to 80 feet, expressing concerns about “too much density”.  The end result?  A whopping $24,000 in additional costs that they buyer may not have asked for.

Lot sizes are expected to continue to decrease in Indiana – and nationwide. Since 2010, the median lot size in the US dropped from 10,500 square feet to about 8700 square feet today. While the trend is towards larger homes on smaller lots, what if we rethink our approach to land use?

How Does Intense Housing Demand Play In?

Ask anyone who is looking for suitable housing, and you’ll hear a common refrain in 2021: There’s nothing out there! And it’s not much of an exaggeration. Experts predict the US housing shortage (which includes rentals as well) will continue for years. Housing policies that emphasize utilizing land more strategically are nothing short of essential.

Isaac Hiatt of commercial real estate data and research firm, Yardi Matrix, explains:The demand for housing in many markets is so much higher than the current supply that developers of new residential properties have to make the most of available land. This has led to an increase in what many would call single-family condensed housing.

Condensed. Is this a euphemism for congested? Crowded? Not in my backyard! This is the immediate thought of many residents But it is not the goal, or the reality, of achievable housing. In fact, building smaller homes on smaller lots adds to the diversity of housing options in communities, and this puts homeownership within reach of thousands of Hoosiers who have been priced out of the market.

This is not to say that every lot and home needs to be postage stamp-sized or that large homes on those 9191 square foot lots are “bad.” It is important, however, to introduce a variety of options within communities that allow those with incomes between 80-120% of the median income ($54,000) to access non-subsidized housing.

The fact is, today, they simply cannot – and given the housing crunch, tomorrow doesn’t look much brighter. That is, unless we take coordinated action to address the issue proactively. Balanced, equitable housing and land use policies can do this.

Gentle Density

We are seeing it in action in Minneapolis. In an effort to improve both accessibility and diversity in housing, the city implemented a new plan that bans single-family-exclusive zoning. Instead, it would allow up to three-family buildings in all residential areas of the city. To put it bluntly: this is huge.

On about three-quarters of land in most US cities, it is illegal to build anything but single-family detached homes. Minneapolis is a pioneer in promoting smaller, more accessible homes. (Again, not every lot needs to feature duplexes or townhouses… but a healthy mix benefits the entire community.)

Housing experts call this “gentle density.” Here is a look at a hypothetical example created by the Metropolitan Policy Program at Brookings Institution:

The same lot can accommodate three townhomes or six condominiums comfortably. And we should note: these are not tiny units! The townhomes are larger than the national average for single-family homes (approximately 1800 square feet), and the condominiums are right in line with the national average.

Remember, the “American Dream” is evolving, and single-family detached homes do not meet the needs of every home buyer. From retirees looking to downsize to a smaller condo to young professionals who want to live in an apartment or townhouse in the center of the city, more diverse people need more diverse options. And they need options that allow them to move through different phases of their life while remaining in the communities in which they have put down roots.

We encourage you to check out Brookings’ informative article, “‘Gentle’ Density Can Save Our Neighborhoods.” It takes a comprehensive look at how strategically increasing density can deliver economic and social benefits to communities. Well worth the read!

Join the Conversation

Homeownership is a dream that has been out of reach for countless Hoosiers. Not only do individuals and families pay the price, communities do as well. Literally. This is an economic issue, but it is also a social and equity issue. By implementing fair, balanced housing policies, we can make the dream a reality for more hardworking folks, while enhancing the quality of life and sustainability of our neighborhoods.