One theory for providing affordable housing is to allow for smaller dwelling units on smaller lots. These designs can wither at the local application level, due to local land use restrictions (zoning setbacks primarily), building codes, and social perceptions.
It is important to note that many of these policies and regulations came about decades ago with the advent of Euclidean (geometric and rigid) zoning that was (in part) local reactions to impractical and non-sustainable development practices.
Rezonings, planned development proposals, and building code revisions are all options to be considered in the local market for smaller units on smaller lots. Designed developments being proposed are often considered to be "neo-traditional" or from the "New Urbanism" school.
Three of the most significant challenges to small lot subdivisions relate to 1) Euclidean standards that cannot be altered readily (as is appropriate) to accommodate smaller lots; and 2) socio-political opposition based upon negative perceptions of poor quality development; and 3) the cost of services concerns (a fiscal constraint).
A potential method to incorporate smaller lots and SFDs (including zero lot lines, Z-lots, and others) has been as part of a planned development, where design standards can be negotiated, long term maintenance can be incorporated into a HOA/condo/community organization, and sufficient local infrastructure (utilities, parks/recreation, schools, etc.) provided to minimize the cost of service impact.
Stand-alone small unit/lot subdivisions will likely face significant local opposition. Public perception is a factor here, as the long-term viability of these subdivisions will be questioned as long as older, pre- or early-Euclidean (1950’s era) are the only examples. Many of those subdivisions are perceived as "shack farms," with poor quality construction and are currently falling apart.
The cost of services of these subdivisions can be calculated easily, as long time data is available. The cost of development associated with providing buffers, public infrastructure elements, and maintenance often expected of any planned development proposal makes small lot/unit development too expensive to be considered affordable. The affordable small lot/unit concept is dependent upon surrounding and co-designed development to ameliorate negative perception and distribute the cost to be feasible.