REAL ESTATE NEWS

Across the nation’s cities, an urgent housing shortage is forcing a new type of real estate creativity — one that turns seemingly unusable scraps of land into potential homes. Traditionally, city planners searched for square or rectangular plots that fit neatly within zoning regulations, securing approvals before advancing toward construction. But as urban landscapes fill up, new land is almost impossible to find, prompting a shift toward what industry observers are calling a residential answer to infill development—the practice of making use of oddly shaped or overlooked parcels for new housing.

According to reporting in The New York Times, these unconventional sites—dubbed “hidden plots”—often take the form of skinny strips between buildings, leftover triangles, crescents, or other remnants that don’t meet longstanding zoning standards. While such slivers and pockets have confounded developers for decades, city leaders are recognizing an opportunity to alleviate the housing crisis by rethinking what is possible on these parcels.

To open the door for this kind of development, cities and states are rapidly rewriting their zoning rules. ReZone AI, a firm that analyzes zoning data, told The Times that in the past 12 months, the 250 largest metro areas enacted a combined 257 rule changes to allow denser residential construction. The Pew Charitable Trusts reported that between 2023 and 2024, states passed 96 new laws to promote additional housing, with 80 more enacted so far this year.

Many of the new policies focus on lowering barriers for developers, such as reducing or eliminating requirements for minimum lot sizes and mandatory parking spaces. Notably, The Times cited changes to outdated building codes—like requiring just a single stairwell in certain multifamily projects—to make it feasible to build on narrow urban lots.

Similar reforms are helping to address what housing advocates term the “missing middle,” a gap between single-family homes and large apartment buildings. Representative Dwight Evans of Pennsylvania has referred to these “middle neighborhoods” as areas at risk, where longtime owners are often unable to maintain their properties, pushing communities toward decline.

Previously, restrictive codes designated 75% of metropolitan land for single-family homes, leaving little room for denser, more affordable alternatives. Now, reformers say the new measures make it possible to pursue creative construction, even on the most awkward parcels.

“Land is really expensive,” Arica Young, associate director at the Lincoln Institute of Land Policy, told The Times. “If you build one home, there’s a limited market of people who can afford it. But if you put a triplex on that land, you bring down the cost enough where you can find buyers.” Odd-shaped lots, she added, tend to sell for less, further reducing development costs.

Cities such as Seattle, San Francisco, New York and Minneapolis have already started to put these regulatory changes into practice, adopting innovative strategies to expand their housing supply in places once deemed impossible to build.

Source: GlobeSt/ALM