Want to be 25% happier? Move within a mile of a friend. Halve that distance for a 40% boost.

Real estate developer Phil Levin and his wife knew that living close to pals wasn’t just a nice-to-have but a necessity. “We watched our friends outbid other buyers for homes near ours,” he says. “That’s when it clicked: There’s a massive premium hiding in proximity to chosen neighbors. And nobody is building for it.”

He’s out to change that with Live Near Friends: a platform that helps groups buy or build duplexes, triplexes, or mini ADU compounds where BFFs live close enough to share a baby monitor or a beer at a moment’s notice. These friend-plexes are catching on as Americans realize that having a huge house and yard to themselves can feel more isolating than idyllic; many others simply can’t afford that solo setup. Meanwhile, a number of states have revised their laws to allow single-family lots to be carved into smaller parcels, enabling more homes to be built at a 20–30% discount (more on this below).

“The laws finally exist,” says Levin. “But the product doesn’t—yet. We think this category has enormous latent demand.”

Buyers clamoring for compounds typically fall into one of three camps: young families looking to share a yard and child-rearing responsibilities, multi-generational families hoping to keep aging elders nearby, or “Golden Girls” who want to grow old together. Levin is not alone in thinking that demand for these properties is untapped and waiting to explode.

“Duplexes, homes with ADUs, clustered cottages with shared outdoor space are becoming increasingly valuable,” agrees Barron Peper at Architecture of Belonging, who designs these dwellings and lives in one himself with a friend. “On a very simple level, housing is expensive. Friends who trust each other can do more.”

“Demand is skyrocketing because the traditional single-family home on a large lot is becoming out of reach,” agrees Daniel Ellington, a real estate agent in Chicago who helps clients find multi-generational properties and shares one with his mother and kids. “The pros are significant: We save on housing, food, and childcare, while regaining a sense of community.”

But do friends make good neighbors?

Still, this Friends fantasy can turn Jersey Shore fast if the right questions aren’t hashed out ahead of time to make sure everyone’s on the same page.

“Shared mortgages are where things get messy. People should ideally not be on the same loan,” says Levin, who advises buyers to each get their own mortgage and deed. Or if one friend has more capital, a landlord-tenant relationship can be cleaner than co-buying.

But even in the most well-intentioned setups, “Living in a community is hard,” admits Peper. “People are used to having their own space, which buffers them from relationship skill-building, where you grow and learn. To choose to live in a community is, in some ways, a commitment to becoming skillful in relationships.”

Scroll down for a closer look at what living near friends is like, warts and all.

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An entire town is for sale—four-bedroom home, post office, and pub—for $400,000. Why? Its two residents are packing up.

Real estate developer Phil Levin doesn’t just build friend compounds; he lives in one himself. Here’s what life is like, why even he was skeptical at first, and why the gang has decided to sell the property.

Q: How did this compound come to life? “When my wife and I talked about having kids, we made a deal: We’d do it only with a living situation that made it manageable. So we developed a property in Oakland, CA, called Radish.”

Q: How many people live there? “It started with a few existing buildings, then we added ADUs. Today it’s seven adjacent homes—a mix of one-bedrooms to four-bedrooms—with 14 adults and eight kids under age 5. Each household has their own private home. Step outside, and you’re in a shared courtyard with a cedar hot tub, sauna, and firepit: luxuries that none of us would have alone but are reasonable split between households.”

Q: What are the benefits? “Our friends watch our kids. We share nannies. There’s a cooking rotation where each household makes dinner about once every three weeks. The real benefit is that parenting doesn’t feel like a solo project. I feel like a jerk saying this, but having a kid was much easier than advertised, and we largely credit our living situation.”

Q: Why are you selling? “We love Radish, but we’ve outgrown it. It was our proof of concept, and it worked. Since it was hard to find comps, we priced at a range of $4 to $6 million, and over 1,000 parties have expressed interest. Now our friend group is building three new compounds, which can house more people and larger families. No one is choosing to live alone.”

Q: What advice do you have for others who want to try this? “Every group needs an instigator. One person needs to be beating the drum the whole time, sending listings, booking tours. Don’t wait for everyone to be perfectly aligned. Start with one other household that’s serious, build it, and they will come.”

Q: What would you say to skeptics who worry this would not end up well? “It’s usually the introverts who are skeptical. But introverts benefit the most. The social interaction is lightweight, opt-in, and easy to escape. The extroverts tend to burn themselves out. A pattern I see in almost every group is that the resistant partner ends up being the biggest advocate. My wife got me into this: I was the reluctant introvert. Now it’s my career.”

Check out photos and info about Radish and learn more about creating housing setups like this at Live Near Friends.

Plainfield, NJ, is not plain at all. Just ask the wave of New Yorkers lining up to get a piece, according to Derek Lopez of We Buy NJ Homes Fast.

Average home price: $511,835 (up 3.2% YoY)
Median days on market: 70 (+4 YoY)
Homes sold above list price: 45.5% (down YoY)
Average rent: $2,288/month

The pros: “Plainfield does not get nearly the respect it deserves in comparison to the usual Jersey City/Hoboken crowd,” says Lopez. “It’s one of Northern New Jersey’s most affordable entry points. Access to NYC via public transportation is excellent. As an investor, this is a great market, with nearly 58% of the homes being rentals, so the rental pool is huge.”

The cons: New Jersey property taxes are among the highest in the country, averaging $9,590. “They’re no joke,” Lopez says. “And since this market has become so popular, the days of scouring the MLS and finding deals are behind us, so you need to be creative and really understand the neighborhoods.”

His advice: Hidden bargains can be found in tax-lien or family-estate situations, such as the property Lopez recently wholesaled. “The sellers were relatives who inherited the home but had not been paying the taxes,” he says. “They wanted a quick sale, so I was able to negotiate a contract for $340,000 and flip it to an investor for a $10,000 fee. The opportunity was straightforward: motivated sellers looking for a quick exit and a new investor looking at the potential in the property.”

Got a home or housing market you want to highlight in The Playbook? Tell us more about it here, and we’ll consider featuring it in an upcoming issue.