I'm working on the same thing! I believe people will buy smaller well designed and well built homes.
I know a builder who keeps costs down by only building to a limited number of designs. His designs are practically modular, in that whenever a house has similar features, such as bathrooms, they are built of prefab framing and plumbing, but I suppose that must be nearly industry standard.
High quality and quickly finished, because all of the workers always build the same way, just arranged diferently. He also pays high salaries to keep good people working hard.
Very nice floorplans, double-pane windows and high R factor insulation. He works in W. Oregon and S. Washington.
Come to think of it though, he only builds on owner-prepared sites. The permits, water, sewage and electric must already be in, ready to connect. He does offer consultation services to owners.