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They could actually be liveable if you removed the driveway and yard, and added a frequent bus service on every other street, as well as a tram line/subway stop in the neighborhood, and a market square with mixed zoning. It could be more thermally efficient, too, with the houses touching. Or just build blocks of flats at this point, they are cheap, dense and not as uncomfortable as shotgun homes. However, I am sure that US regulations would never allow that.
Plenty of townhouses like you've described. The same crowd that moves into these houses are the ones that don't want all the issues you've just described in yours.
Pretty sure most don't have a market square with mixed zoning and trams that get them into the dense city centre in 10 minutes every 5 minutes.
Why not keep the driveway and yard, yet still add the frequent bus service on every other street and other things? The driveway and yard don't detract from livability. If someone wants they could remove the driveway themselves and plant a veggie garden or something.
They take up space that could be used to expand the house to liveable dimensions. And the lots are 6 m wide, enough for on-street parking.
Personally I would prefer 600 sq ft and some outdoor space over 1000 sq ft and no out door space, that's the benefit of detached housing. Otherwise you may as well buy a 1000 sq ft apartment.
Well, the houses could be shorter (square), which is a more practical shape, and have the cost benefit of only two outside walls, with the rest of the plot being a backyard. And the houses could now include a garage with a liveable space above. Its advantages as opposed to a driveway are obvious: the car is protected from weather and crime, and owners of small or no cars can repurpose the extra space for DIY or other purposes. Also, a backyard, as opposed to a front yard, incentivizes non-lawn use, so the street appears less green from the front but actually benefits biodiversity. Backyards also feel more private, especially with tall fences.
So yeah, I can get behind a 2-floor house with the footprint 55 m² (or 600 ft², don't be afraid of superscripts) with green space, as long as half of it is not a concrete driveway and I can do some gardening (or even grow "private plants").