Small houses in Cities Skylines 2 are a debuff that lowers the average household satisfaction in medium-density residential areas. It significantly reduces the happiness of residents in cheap apartments. To address this issue, consider compensating for dissatisfaction by providing amenities like bus stops, schools, services, and parks. Lowering tax rates and average land costs in certain areas can also help people move to larger housing. Alternatively, accepting the presence of a poor population in the city is an option. Dissatisfaction with small houses is linked to an overvalued housing market, limiting affordable options for spacious homes.