By Walter Pryce
Opinion. This is an analysis of a recent American Enterprise Institute paper. The views attributed to AEI and its authors are theirs; the conclusions about Western New York are the author’s.
AMHERST — Ask why a young Western New York family can’t find an affordable new house, and you’ll hear about interest rates, labor or taxes. A new paper from the American Enterprise Institute argues the culprit is often quieter: the minimum lot size written into nearly every suburban zoning code.
In “If You Care About Housing Abundance, Minimum Lot Sizes Deserve Much More Attention,” published Oct. 21, Tobias Peter and Edward J. Pinto, co-directors of the AEI Housing Center, push back on a popular storyline. “The conventional story is that we are no longer building starter homes,” they write. “The truth is that starter homes are still being built, but it will take policy changes to scale them.”
What AEI found
By AEI’s count, builders put up about 750,000 starter homes in new subdivisions from 2015 to 2024, about 16% of roughly 4.6 million homes. AEI defines a starter home as one worth no more than four times the county’s median household income.
The typical new subdivision home, the authors report, sits on a lot of about 7,000 square feet, has about 2,200 square feet of living space and is worth about $476,000, roughly 5.5 times county median income. Land, they note, now costs nearly four times what it did in 2012, while wages and construction costs are up about 1.5 times.
Their diagnosis: “About 90 percent of municipalities impose minimum lot sizes on zoned lots. In suburban and edge areas, these rules can effectively ban new starter homes.”
Their fix is a state-level ceiling: no locality could require a lot larger than 1,000 square feet. “It means a locality could not require a larger minimum lot size,” they write. “Builders and buyers would remain free to choose larger lots.” AEI’s model estimates that such a cap would have produced about 85% more homes, including about 2.4 million more starter homes. The median one would sit on about 2,500 square feet of land, with about 1,400 square feet of living space, and be worth about $276,000, or about 3.3 times local income.
The authors are candid about trade-offs. “Infrastructure, water availability, land values, existing development patterns, and political feasibility vary,” they write, and more homes require more water, sewer and other services. They note that Texas enacted a lot-size reform in 2025, while Arizona’s governor vetoed one, citing a “lack of affordability guarantees.” AEI’s own polling from May found 64% support for allowing smaller lots in new neighborhoods.
What it looks like in Amherst
Western New York offers a ready test case. The Town of Amherst spells out its lot rules in Chapter 203 of the town code. Its rural-residential district requires 3 acres per lot, and its suburban-agricultural district requires 1 acre. R-1 requires 21,780 square feet and R-2 requires 11,500. Even R-3, which the code itself describes as low-density, requires 8,450 square feet for an interior lot and 9,750 for a corner lot.
Amherst does have smaller-lot options. Cluster development in CR-3A allows 5,000 square feet, and the TR-3 district allows 4,500, but only “within or near existing smaller lot single-family neighborhoods.” Since 2023, the town has also allowed accessory dwelling units. By AEI’s yardstick, though, even the town’s most common single-family district requires more than eight times the land the authors would let a buyer choose.
The town’s pending-projects list shows a request, Z-2026-07, to rezone 50.85 acres at 1790, 1860 and 1920 North French Road and part of 999 Campbell Boulevard from suburban-agricultural to R-3 and MFR-5. According to the state Department of Environmental Conservation’s environmental notice, the project would include 88 homes and keep 33.71 acres as permanent open space. The concept plan shows 36 single-family lots built to R-3’s 8,450-square-foot minimum, and 28 more at 6,000 square feet under MFR-5.
The plan pairs new homes with preserved land, which many neighbors will welcome. It also illustrates AEI’s point. The lot sizes are set by the zoning district a developer can win, not necessarily by what a first-time buyer would choose.
The affordability math
In Erie County, the Census Bureau puts median household income at $72,839 (2020–2024 American Community Survey). Under AEI’s definition, a starter home here would be priced at about $291,000 or less. Existing homes are relatively affordable, with a median owner-occupied value of $233,800. New supply is the harder part. The Census Bureau counts 1,213 building permits in the county for 2025.
Albany has already considered AEI-style reform. Bills A.2586 and S.188, with Assembly Member Anna Kelles as lead sponsor, would have capped minimum lot sizes at 1,200 square feet in cities and villages. Towns would have been capped at 5,000 square feet where water and sewer exist and 20,000 square feet elsewhere. They stayed in committee when the session ended in June.
Where this leaves us
Reasonable people can disagree about whether Albany or town boards should set these rules. Local control has value, and towns like Amherst carry the cost of the roads, pipes and drainage that new neighborhoods need. AEI acknowledges those costs, while arguing that more homes also broaden the property-tax base.
The central claim deserves a hearing in every Western New York town hall: “when we prohibit housing, we get less of it,” as the AEI authors put it. “If every new house must consume a large piece of land, it should not be surprising when the homes that get built are more expensive than they need to be.”
Towns don’t have to adopt a 1,000-square-foot ceiling to act on that insight. They could widen where TR-3 and cluster lots are allowed, or offer a smaller-lot option on rezonings like North French Road. Either step would let buyers, not code minimums, decide how much yard they want to pay for.
Views attributed to AEI are its authors’ own. Read the full paper here.
Featured photo: Cloister Court, Amherst, by Andre Carrotflower / Wikimedia Commons, CC BY-SA 4.0, cropped.
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