Perhaps the vision is clustered laneway houses, where two people live uptop a garage - but remove the requirement for a garage to be on the lower level,  and you can accommodate four people. Tight I know, but  perhaps another space in a peaked attic to make it two and a half levels. 

You are right - beyond the means of many - but perhaps still affordable to two working upper income professionals,  that used to be able to afford a sf detached house ten years ago.