These rules, embedded in local zoning codes, set a floor on how small a parcel of land can be for residential development. In doing so, they restrict the number of homes that can be built in a given area, even where infrastructure, market demand, and neighborhood context would otherwise support higher density.
The effects are measurable. A recent study by Gyourko and McCulloch compared parcels across municipal borders and found that more stringent MLS requirements correlated with higher home prices, fewer housing units, and lower urban density. These zoning differences reshaped not just costs but entire neighborhood forms—producing larger lots and pushing development outward. Meanwhile, Zhao’s 2022 modeling work shows how such rules slow the pace of redevelopment, discourage infill, and lock cities into lower-density patterns over time.
This is more than a technical planning issue. As housing economist Jenny Schuetz and others have observed, restrictive lot size rules tend to benefit incumbent homeowners while excluding lower-income families and newcomers. Song’s 2025 analysis went further, finding that MLS zoning disproportionately favors wealthier, often white households—reinforcing patterns of segregation and limiting social mobility.
The cumulative result is a housing system that is more expensive, less flexible, and more exclusionary than it needs to be.
But cities can act. Houston’s experience offers a useful test case. In the early 2000s, the city reduced its MLS requirements from roughly 5,000 square feet to just 1,400 square feet in many neighborhoods inside Loop 610. The change catalyzed substantial infill development, with thousands of townhomes and small-lot homes built on formerly underused parcels. A recent evaluation by HUD found that this reform not only increased housing supply but also moderated land values relative to peer cities, helping to keep prices more stable in growing areas.
Other cities are following suit. Minneapolis, Portland, and Austin have all pursued some form of lot size or density reform in recent years. Even in more cautious jurisdictions, pilot projects or overlay zones have been used to test lower lot size thresholds near transit or job centers.
The broader research literature supports these efforts. Dalton and Zabel’s 2011 study in eastern Massachusetts showed that stricter MLS zoning consistently drove up housing prices over two decades. The Mercatus Center’s policy review concluded that such rules, along with related land-use constraints, “significantly reduce housing supply compared to what a freer market would produce.” And Glaeser and Gyourko’s foundational 2002 paper made the case that zoning constraints—not construction costs—are the primary driver of high housing prices in supply-constrained metros.
Reforming MLS rules will not, by itself, solve the housing crisis. But it is a foundational step—and one that cities can take largely on their own authority. Unlike subsidies or tax credits, zoning reform doesn’t cost public dollars. What it requires is political will and a willingness to rethink assumptions about how much land each home must occupy.
Cities that want more housing, lower costs, and more inclusive neighborhoods should make MLS reform a priority. It’s one of the clearest examples where policy change can unlock immediate and long-term benefits.
