[rootusrootus]

That is very dependent on where you are at. We have suburbs around here with lot sizes of 2178 sf (for houses of ~1800 sf).

I don't really agree that developers are particularly responsive to the market in this regard, either. Or rather, they make quite a lot more profit from two 6K lot houses than they do from a more expensive house on a 12K lot. Builders always, always want to go for smaller lots unless they're selling super-premium houses of at least $1M (for context, the average house price here is probably right around $350-400K right now).

[rayiner]

Minimum lot sizes are pervasive in the U.S. Many of the suburbs that do have smaller lot sizes are "grandfathered in" to the zoning regulations--it would not be legal to build a new subdivision in the same county with the same layout.

Your example does not show that developers are not responsive to the market. The fact that developers can make more profit on two 6K lot houses than they do from a more expensive house on a 12K lot simply means that there is more economic value in satisfying two peoples' desires for a 6K lot house than in satisfying one person's desire for a 12K lot house.

If you eliminated the minimum lot size, people who want big lots would have to pay a lot more for them to make it worth developers' while, and that makes total sense! One person buying a house with a 12K lot pushes out two people who might be perfectly happy with a 6K lot. They should pay more.