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I too am a big proponent of smaller (1,800 - 2,100 sq ft) SFHs with upgrades galore but NOT so close to the neighboring houses that you're looking right in their windows. Yes you can find the smaller homes but they are built so close together. And I'm not talking about needing a full acre plot...say up to .25 with wider margins on the side so each neighbor has *some* privacy.
This was my consideration when looking for a SFH in 2006. I ended up purchasing an older (then 18 yrs old) home on .31 acre, about 2000 sq ft. I figured I could upgrade the house but I couldn't create more land. And I am not so close to neighbors on either side that I feel my privacy is compromised.
Have you guys checked out the Greystone Estates? They have some pretty good sized lots, and some plans are not that large. Not sure about the prices though, but I think the location is really good.