I was trying for small lots every lottery. Last round over 470 bids on a small so clearly others would be happy with it too.

You can decorate indoors and outdoors. You get full access to gardening. You even minimize how much Gil you lose if you end up not maintaining it or decide housing isn't what you hoped it would be... plenty of justifications for small lots. Not to mention everyone has different amounts of time they can, or are willing to invest in game. That makes Gil availability vastly different player to player. Not to mention server to server diffences..different...

What issue does a small lot cause? It adds more diversity to the ward having different sizes and style homes. It also doesn't cause the problems people are having finding a house which is just overall supply. That won't change unless they demolish current units and up prices to make it cost prohibitive to all the excess home seekers (terrible idea to alienate people further) or add more wards.