What most impressed me about Chelsea Woods—and what I believe we have the most to learn from—is its startling affordability. This neighborhood was built between 1986 and 1987, and the homes originally sold for between $50,000 and $60,000. That would mean a monthly mortgage payment of approximately $400. When they were originally built, these homes would have been affordable to a household earning only $14,400. Today, most of the homes are selling for around $120,000, meaning that the monthly mortgage payment for one of these homes would be approximately $775, and it would be affordable to families earning around $28,000, or 40 percent of the area median income (AMI) of Lexington.

I want to reiterate this for any unbelieving coastal urbanists: These are market-provided single-family homes in great shape, in a city experiencing explosive growth and a mounting housing shortage, and they're affordable to people earning 40 percent of area median income.

Now I don’t mean to imply that Lexington holds the key for San Francisco or New York’s housing woes. But most cities are more like Lexington than like San Francisco, and they have a lot to learn from a neighborhood like Chelsea Woods. The homes are affordable for three major reasons: First, they consume relatively little land. Chelsea Woods offers nice homes on lots far smaller than what would be permitted virtually anywhere else in Lexington. Given that land can make up a substantial percentage of a home's cost, this is a major source of savings.

Second, the homes are small. Most homes hover around 861 square feet. This might seem small to you, but most people simply don’t want or need much above 1,000 square feet, particularly young families and retirees. Lexington doesn’t have any minimum floor area requirements for residential developments, but where such requirements exist in other cities, they commonly mandate that homes have at least 1,000 square feet of floor space. This largely serves to prohibit the construction of new affordable housing. Neighborhoods like Chelsea Woods couldn’t exist under such a standard.