This month's Owner Builder magazine features "Two Houses from One" by Amanda Scully. This describes how a detached house was turned into a duplex, by placing a fireproof dividing wall through one side of the hallway. The wall was continued out into the garden to provide privacy. As the article points out this is a way to reuse overly large houses, avoiding the financial and environmental expense of demolishing and rebuilding. While the article describes modification of an old house with a large garden, it would be interesting to see how this would be done with newer "McMansions".
Increasing the density of housing in suburbs would have social benefits by increasing the amount of money available for public services, such as buses, as well as reducing the environmental footprint of buildings. Of course some residents may not like the character of their suburb being changed. But they may prefer this be done subtly by dividing existing houses, than by knocking them down and building multistory apartment blocks.
The same magazine follows with an excerpt from the book "In-laws, Outlaws, and Granny Flats: Your Guide to Turning One House into Two Homes" by Michael Litchfield (Taunton Press, 2011). This describes what are known in the USA as "accessory dwelling units" (ADUs). Apart from grannies, these might be used by students.