With parcels in high demand and short supply, cutting-edge jurisdictions are adopting small-lot ordinances. Los Angeles did this 10 years ago and now has the model down pat. Zoning in the Echo Park neighborhood allows detached homes to be built on lots as small as 1,500 square feet, paving the way for Gaspar. The project's 10 homes fit snugly on what was formerly a single 15,000-square-foot lot. An 8-inch gap between the houses qualifies them for fee simple ownership.

"Fee simple ownership attracts a larger buyer pool than condos, which limit the size of the FHA loan that goes toward purchase," says Alan Scales, studio director at KTGY Architects, which designed Gaspar for Planet Home Living. In addition to reducing construction liability for builders, the detached homes that small-lot ordinances make possible also eliminate the need for an HOA, further lowering homeowners' costs.

At Gaspar, where a slope ran diagonally across the site and the first floor entryway is 10 feet lower than the rear street-level garage, KTGY stepped the structures by bringing the retaining walls into the foundation. "It eliminates severe edges and the neighborhood disconnect that starts to happen when you put homes on a platform," Scales says. The second-floor garage level houses the master suite; a staircase leads down to the secondary bedrooms and flex space, and then up to a roof deck with views of downtown LA. Progressive front and back elevations juxtapose with warm colors and materials found on traditional homes—fiber cement lap siding, stucco, and Cor-Ten accents. Primary windows are on the street, lending a neighborly, pedestrian-friendly feel.

"It's all about trying to make a lot out of a little" on these homes, Scales says: great rooms with kitchen islands for entertaining, furnishing flexibility, and designer touches. Planet Home brought in local artisans to do something as simple as an Escher-type tile backsplash in the kitchens. Small-lot ordinances get builders into established neighborhoods. As infill evolves, "jurisdictions will begin to understand the benefits of a compact footprint with land ownership and long-term neighborhood commitment in mind," Scales says.