Taking advantage of an ordinance that allows homes to be built on very small lots in urban infill areas, Lennar Corp. is about to begin construction on two Hollywood projects totaling 89 single-family homes.

The Miami company, one of the nation’s largest homebuilders, has begun grading a 7-acre hillside lot, on Cahuenga Boulevard West just north of the Hollywood Bowl, where it will build a gated community of 42 homes. A second, denser project will bring 47 homes to a 1.7-acre lot at Melrose Avenue and Gramercy Place on the site of a former school.Both projects, small-lot subdivisions featuring three-story single-family homes, are expected officially to break ground in the next 30 to 60 days. Construction is expected to wrap up early next year.

Paul Habibi, a professor at the Ziman Center for Real Estate at UCLA and an owner of multifamily properties in Hollywood and throughout Los Angeles, said Lennar’s investment is a strong indicator that the housing market is improving.

“The real estate market has really turned a corner,” he said. “This is the first time postrecession that we’ve seen builders come out and do this kind of project at some level of volume.”

Lennar was able to develop the denser projects thanks to a 2005 city ordinance that allows for the development of land zoned for commercial or multifamily use into smaller residential parcels as long as those projects are ground-up developments with independent foundations, walls and roofs. In many cases, the walls of each house stand within inches of its neighbors’.

Few developers took advantage of the ordinance with the onset of the recession, but with housing sales on the rise again, dozens of small-lot projects are in the works across Los Angeles. Given the limited amount of space available for development, most of these dense projects are more modest in size, generally between three and 15 houses, though there are a few builders, including Lennar, aiming much bigger.

One of the larger infill projects to get under way is Newport Beach developer Trumark Homes’ 70-unit single-family home development in Silver Lake, slated for completion early next year.

Trumark expects to sell its homes for between $575,000 and $650,000. Lennar expects to sell its homes for a bit more, starting from $700,000 for those on Melrose Avenue and from $850,000 for those on Cahuenga.

These denser developments, where the height and proximity between buildings in many ways feels more like an urban East Coast neighborhood, are meant to appeal to first-time homebuyers as an alternative to condominium living and to be a counterpoint to traditional single-family homes on larger lots in the same neighborhoods. Because the owner of a small-lot property rarely owns much land beyond the perimeter of the house itself, property prices are dramatically less than for houses with yards.