However, home buyers these days increasingly are interested in smaller homes that consume less energy and encourage interaction among neighbors.

Developers in cities such as Seattle, Boston, and Milwaukee are building cottage developments to meet the rising demand.

Architect Ross Chapin and developer Jim Soules have erected nearly 50 Craftsman-style cottages during the last 10 years in the Seattle area. (Watch Video: Choosing Cottages Over McMansions)

The quirky homes sell for as much as $600,000, despite the fact that they range in size from just 800 square feet to 1,500 square feet.

Chapin uses clever design tricks, such as corner windows and skylights, to give the illusion of more space. He also makes the most of every inch by including crawlspace storage and built-in bookshelves and cubbies.

“These days, we drive to the house, open the garage door, go in,” Indianapolis developer Casey Land told the Wall Street Journal. “But it’s important to get to know your neighbors. I think people miss that.”

Source: Wall Street Journal, Sara Lin (07/18/08..)