WITH DEVELOPABLE LAND in increasingly short supply, many a municipality has embraced density by simply adjusting its single-family zoning laws to allow bigger homes on smaller lots. Too often, the result is a smattering of cramped castles that seem out of place in the context of the existing community—and unhappy neighbors to boot.

Which is perhaps one reason a handful of developers have pushed for cluster housing as an alternative to traditional garage-front subdivisions. In theory, it's a great concept. With their close-knit groupings of detached, single-family homes, clusters reallocate land that would normally be privately apportioned, toward shared open space. Dwellings with small setbacks offer a low-maintenance lifestyle and engender a village sensibility. And, thanks to introverted courtyards or peripheral parking structures, cars cease to dominate the landscape. But it takes good design to make it all work.