Minimum residential lot size dispute heats up in a Texas county

A battle has brewed over residential lot sizes in Texas after Gov. Greg Abbott signed a law last year reducing them in the state’s biggest cities.

Since the law didn’t apply statewide, Montgomery County, which abuts Houston, is trying again to increase its lot sizes after doing so last March.

County planners say the increase this time is needed to correct a clerical error in the size approved in March 2025.

Bigger lots mean bigger, higher-priced houses that price out first-time buyers. They also mean fewer new homes when the market needs more supply, as well as constraining homebuilders from optimizing their land purchases with greater density.

County leaders are moving ahead with the bigger lot rules even after state lawmakers acknowledged last year that smaller lot sizes increase affordability and supply.

The county is drawing sharp opposition from Ellison Development, which has built several attainable housing communities in the county and has more under way. Three years ago, the company sold its affordable housing company, ASGi Homes, to D.R. Horton.

Bill Ellison, the company’s managing member, told The Builder’s Daily that the communities are filled with working-class, first-time homebuyers.

“100% they do not want working-class people out there,” Ellison said.

A public hearing is set for tomorrow morning. That may be just the beginning of the fight.

Spirit of the law

Abbott signed Senate Bill 15 into law to reduce minimum lot sizes to 3,000 square feet. That figure represented a compromise. Lawmakers originally sought 1,400 square feet, modeling what Houston has permitted since the 1990s. It is still a large reduction from typical lot sizes of 5,000 to 7,500 square feet.

The law, however, limits its ordinance to cities of 50,000 or more people in counties with a population of 300,000 or more.

Montgomery County’s population is pushing 800,000. No city within the county has 150,000 people.

“Montgomery County sits just outside the reach of Texas’s recent small-lot reform bill and is using that gap to push in the opposite direction,” Sam Hooper, the Austin-based legislative counsel for Institute for Justice, told The Builder’s Daily.

While SB 15 does not apply, Ellison said that state legislation passed in 2007 does. That law prohibits commissioner courts from regulating the number of residential lots that can be built per acre of land.

State Rep. Cecil Bell introduced legislation last year that would have added prohibitions on regulating minimum lot size, minimum lot width and depth, and building setbacks, or on imposing any regulation that limits density or development.

The bill failed twice in the House.

Bigger lots to get bigger

Last March, the Montgomery County Commissioners Court approved a code change to require 40-foot-wide lots. The county’s director of engineering services later sent the court a long list of corrections for clerical errors in development regulations. The memo crossed out 40 and replaced it with 50, which would set lot sizes at about 7,500 square feet.

The bigger lot size could more than double the price of owner-occupied housing in the county, Ellison said. Ellison has built some 800 homes on 30-foot-wide lots and has another 3,000 lots under development.

Those homes sell for about $150,000. Prices would double, or more, on bigger lots, Ellison said, which would eliminate many prospective first-time working-class homebuyers.

“A 50-foot minimum lot width is a significant constraint that limits the feasibility of smaller, more attainable homes,” Hooper said.

County leaders, however, view the increase in lot size as a path toward bigger homes that can generate more property tax revenue from higher-value properties.

Scott Finfer, a Texas homebuilder formerly with KB Home, told The Builder’s Daily that many local governments believe bigger lot sizes equate to higher quality and greater property tax revenue.

“They’re trying to create a relationship that doesn’t exist,” Finfer said.