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The fashion for tearing down elderly detached houses and raising new ones on the old lots is a feature of the current real-estate boom in many districts of Toronto. And it could be shrugged off as merely another ho-hum result of the complex forces at work in the local housing market – if its effect on the urban landscape were completely harmless.

But the impact isn't harmless at all. Too many residential infill projects are muscle-bound, pseudo-historical hulks that are out of sync with the modest, amiable rhythm of Toronto's modern streetscapes.

While popular, however, these monster-mansions are not inevitable.

Other, more sensitive replacements are possible for old Toronto homes that have become too small or too dilapidated to maintain economically. The century-old, ever-evolving career of European and North American residential modernism, for its part, has produced highly effective dwellings that sit well in tight spots, look great, and sing in tune with what's likable about the contemporary metropolis.

Toronto, in fact, is a hotbed of designers who are imaginatively updating the ideals and ideas of architectural modernism and incorporating them into their residential work.

Here's one of them: Donald Chong – founder, along with Betsy and Shane Williamson, of the promising new firm of Williamson Chong Architects – whose recent house on a quiet old street at the western edge of Scarborough is a fine example of contemporary infill.

Mr. Chong and the Williamsons, by the way, are the winners of the Canada Council's 2012 Professional Prix de Rome in Architecture, a prestigious fellowship for international travel and research. Next week, I'll be reporting here on what the trio hope to learn during their trips abroad.

Mr. Chong crafted the detached, 2,300-square-foot house for a couple with a small child. (Another is on the way.) The physical limits on what the architect could do for this family were strict. There had to be a sizable setback from the street, the lot was only 25 feet wide, and, further hemming in the buildable area, a large, venerable Norway spruce stood in the midst of the rear garden.

The three-level (plus basement) building that Mr. Chong has dropped into the available slot is simple, but not dull, and it manages to be efficient and lovely at the same time. The attractive street-side façade, for example, is an open, right-angled composition of warm wood, tall windows and glass doors, with a boxy upper volume that floats over the sheltered concrete porch. Tough and genteel materials combine here to say "home" as clearly as any Gothic cottage might, though in a fresh, thoroughly modern idiom.

It's inside, however, that Mr. Chong's planning skill is most evident. Instead of trying to cram the more public zones of this narrow house – living room, dining room, kitchen – into the entry level, the designer assigned cooking and eating to the first floor, and moved the living room upstairs.

The lower storey, in this arrangement, is a bright, welcoming sweep of space from the tall glass openings at the front to the glass wall and spacious deck at the rear. This flow is interrupted only by a long island that includes, in one gesture, both the counter top and the dining table. In a further bid to eliminate clutter on this level, Mr. Chong has run a straight, continuous wall of wooden panels all the way from the front to the back of the house, then put everything behind it – fridge, appliance garage, closets, storage cupboards, the air-conditioning ductwork – the works. Not a square inch is wasted here, though nothing is mean or bare.

The living room, on the second storey, overlooks the street through a handsome window nearly as wide and tall as this level itself. (Living rooms belong on upper storeys, it`s always seemed to me above the busy city, somewhat apart from the activities of cooking and dining.) Behind this living area are two of the house's three bedrooms, one in the middle, the other at the rear. (The master bedroom occupies the third floor.)

That middle bedroom deserves special mention. In houses snugly squeezed, like this one, into the city's residential fabric, lighting the centre is always a problem. But if middle bedrooms are often gloomy, the one in this dwelling definitely is not. Mr. Chong has brightened it by smartly tucking in the wall of the adjacent living room, thereby exposing the middle bedroom to a large influx of sunshine, and also making the shape of the living room itself more interesting.

Donald Chong's small, thoughtful contemporary house, of course, won't stop the march of the faux chateaux. But it does show what can happen when good urbanism, along with good sense and good taste, are driving the design of replacement housing.