Several cities in the Pacific Northwest are encouraging the construction of smaller homes to help deal with the shortage of affordable housing.
"Recently Portland and Vancouver established zoning and design guidelines to encourage the development of smaller houses, as long as they meet exacting design criteria. A new program in Vancouver that falls under the mayor's overall policy of "eco-density" encourages the reconfiguration of lots in certain single-family districts. In Portland a new set of ordinances and guidelines seeks to promote "skinny houses," intended to fit lots less than 36 feet wide."
In Seattle's Central District, local architect Dave Sarti created a 800-square-foot house in the backyard of an existing home.
"Although the Central District is dominated by old single-family homes on large lots, Sarti says that much of it is zoned for multifamily development. So as the traditionally low-income, once predominantly black area gentrifies, the single-family homes are often replaced with town houses. Sarti, however, bought someone's backyard for $35,000 and built his house there for about $180,000. And this unorthodox maneuver was perfectly legal under existing zoning."
FULL STORY: Revenge of the Small

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Appalachian Highlands Housing Partners
Gallatin County Department of Planning & Community Development
Heyer Gruel & Associates PA
Mpact (founded as Rail~Volution)
City of Camden Redevelopment Agency
City of Astoria
City of Portland
City of Laramie