The Next Housing Opportunity Might Be Sitting on 5,000 Square Feet

There is an old saying: to make money, you have to spend money. In 2026, developers might add a footnote: assuming the interest rate, construction budget, permitting timeline, appraisal, and sale market all agree to cooperate. Which, of course, they rarely do at the same time.

For neighborhood-scale developers like HarveyReed, rising interest rates have changed the math of residential development. Developers borrow to acquire and improve properties, and higher rates mean higher carrying costs throughout a project. At the same time, higher mortgage rates reduce what the eventual buyer can afford. That leaves developers squeezed in the middle: sellers remember yesterday’s prices, buyers calculate today’s payments, and the developer stares at a spreadsheet, hoping everyone eventually meets in the same universe. This has been my life as a developer lately.

That is one reason good development opportunities can sit on the market. A property may have potential, but the acquisition price, cost of capital, construction expense, and realistic sale value still have to work together.

At the same time, a potentially significant change is on the horizon. In November, Massachusetts voters will consider Question 7, which would allow certain single-family homes on smaller residential lots. If approved, some parcels currently limited by minimum lot-size requirements could become viable housing sites.

That matters for small-scale developers. HarveyReed focuses on neighborhood-scale projects: unusual lots, aging homes, neighborhood-scale multifamily properties, and sites that may not attract large developers but could support one or several thoughtfully designed homes. Smaller-lot development could expand that universe and create more infill housing opportunities in communities where roads, water, sewer, schools, and other infrastructure already exist.

Of course, changing lot-size rules does not make development simple. Building codes, setbacks, permitting, financing, and construction costs will still be there. The real impact will play out parcel by parcel and community by community.

But when capital is expensive, creativity matters more. Basis matters more. Design matters more. And understanding zoning matters a lot more. Sometimes the best opportunity is not a bigger property. It is seeing more possibilities in a smaller one.

Interest rates, construction costs, land prices, permitting, and zoning all shape what housing gets built. The next chapter of housing development in Massachusetts may require us to think smaller: smaller lots, smaller projects, and neighborhood-scale opportunities that add homes one property at a time.

That's the space HarveyReed understands.

Because sometimes the next big housing opportunity is not particularly big at all. It might be sitting on 5,000 square feet.

Manikka Bowman, Founder