Can you post photos of the area in question? It's hard to get a good sense of the whole issue just from your description :-))

Two great trees to choose from but depending on site specifics, neither may work well. The katsura does lend itself to more of an upward growth habit and often doesn't start branching until some distance above the ground. OTOH, the Stewartia tends to branch very low on the trunk, sometimes nearly from the ground up. Overall, while somewhat narrower in profile, the canopy of the stewartia is less likely to fit into a close space than that of the higher canopied katsura.

Here's a picture. Our house is the white one to the left. The tree will go approximately where the black grill currently sits. The neighbors cleared the area along the fence in April but did not put in the fence until about a week ago so it's a real mess. We plan to tackle clearing and grading the area over the coming weekend.

As you can see, there's a bit of sky between the two houses but not a lot of room on the ground. The trunk of any tree will necessarily be quite close to the path and there's certainly the likelihood/possibility that the branches will need to be pruned away from the arbor (though I don't anticipate the arbor will last indefinitely) and house.

I had originally planned to put one or two service berries along the fence there but we already have one out front and I've become distracted by the katsura/stewartia possibility (both of which are trees I've always loved).

Am I crazy to try and put a big tree in this space.