100% agree. Beyond that too, it is very difficult (relative to FHA or even Conventional mortgage) to get approved for a construction loan, and in a lot of cases you have to close on your loan twice, the extra fees and higher interest rates eating into your potential savings. There's also no way you're going to get that loan without a general contractor overseeing the entire operation, who will take 20% off the top alone, which don't get me wrong, is fair if you need it. If you want to do anything DIY to save cash and hire inspectors to catch your mistakes + professionals to do risky/difficult stuff (electric, plumbing, HVAC), you can't do it with the bank's money.

Also, it is pretty common for county codes to require each home to be a minimum 1000 sqft (at least in FL and MI). Even if we don't want to allow tiny homes of sub-500 sqft to gasp potentially lower the value of my home by giving someone else a place to live, the 700-900 sqft range is still very nice for a lot of people.

Also, with min lot sizes a 900 sq ft house doesn't quite pencil out at today's land prices. Most jurisdictions would not let you buy a 900 sq ft plot of land, for example, because the size would be too small.

Why do those jurisdictions create min lot sizes in the first place? Surely there's a reason other than maintaining housing prices.

putting a floor on house prices is a bit of the point, to prevent "the wrong kind of people" from "destroying the neighborhood character"

900 square feet is pretty close the the average size of a family home in the UK.

How many new houses are built to that size though? The UK has a lot of very old housing stock.

Quite a few, though it may have crept up slightly - one link I found said the Uk average new builds size 2002-2012 was more like 1030 sq ft.

UK new build houses (as a type - of course there's lots of variety) are a strange breed. Small and crammed into tiny lots though cleverly designed to make the most of a small space. Energy-efficient but shoddily constructed. The cheapest premium-looking materials (i.e. brick). Generally nice enough to live in but a bit depressing.