What seem to be scary numbers in the housing industry have prompted action.

Market analysts cite higher home prices, lower inventory and sustained elevated mortgage rates for squeezing out younger would-be homeowners. But the American dream of homeownership hasn’t evaporated entirely.

Many residential developers and builders have gotten more creative in a push to save money on the back end to lower costs for buyers on the front end.

Strategies range from constructing more houses on plots of land and reducing or eliminating yards to innovative compact architectural designs and using prefab walls or concrete instead of wood to lower construction costs.

The efforts are noticeable, said Jill Gaebler, executive director of Pikes Peak Housing Network, a nonprofit that works to improve housing affordability, access and production in the Pikes Peak region.

“We are seeing signs of home prices beginning to go down, which we believe is largely because developers and constructors have to sell homes, so they’re moving to a smaller type of home that is affordable to those looking to purchase,” she said. “There’s been a significant mismatch between community members who could afford to purchase versus what’s being built. This year, it still exists — but it has gotten better.”

In 2024, 18% of homes for sale in the Pikes Peak region were priced at or below $450,000, which is the price range nearly half of community members were looking for, according to her organization’s 2025 State of Housing report.

That number rose to 29% in 2025, meaning 11% more of all new homes built were starters that are more affordable for young families and also a good fit for downsizing seniors.

“In one year, that’s a significant trend in builders building more affordable housing; I do see them responding,” Gaebler said. “I feel we’re starting to build average normal homes again and that can be a big part of affordability, especially for younger citizens, who are renting longer and delaying having a family.”

Classic Homes, known for decades for crafting traditional homes in ranch and multi-story styles in mid to upper price ranges, has added five new collections in the past five years that reflect the community’s need for more attainable and affordable housing, said Loren J. Moreland, vice president and project manager. He’s also president of the Housing & Building Association of Colorado Springs, a trade organization.

Land use is the best tool for builders to cut costs for buyers, he said, because during and after the COVID-19 era, industry prices on products and materials increased exponentially. But unlike the Great Recession, there’s been no “walk back” on expenses related to new development.

“You don’t see people selling land for pennies on the dollar, as with the previous downturns,” Moreland said.

Higher density on smaller lots featuring different housing models has been Classic Homes’ response.

For example, in a courtyard approach, four different single-family homes share one common driveway, which gives access to each private lot.

Another new design offers accessory dwelling units as an optional addition above the garage or a separate build on the property.

Those are popular, said Kim Sandoval, the company’s director of corporate marketing and design, selling out quickly in some filings, as buyers seek room for an adult child or in-laws to live, or to generate rental income.

Seen a ‘stacked flat’?

Another new idea: attached duplexes sold either as two units or as separate single-family units for a less costly alternative.

“Stacked flats,” featuring one separate living unit on the lower level and another unit on the upper level, are available, which can be seen in Dublin Commons, off Tutt and Dublin boulevards.

“You can buy the building as a primary home and rent the other unit or have the whole building as a straight rental,” Sandoval said. Those sell for $675,000 to $690,000.

Classic has also developed “cozy cottages,” as Sandoval describes, homes featuring 500 to 800 square feet of living space with attached, detached or no garages. Those run between $300,000 and $400,000.

“These are ways we can get density while still having the single-family lifestyle,” Sandoval said.

She calls the direction in homebuilding a “paradigm shift” for Classic, which continues to feature homes that top $1 million while embracing the trend of smaller homes closer to their neighbors.

But these are not cracker box houses, builders say.

“As we establish new collections, buyers are still getting the same Classic quality in these lower-priced homes,” Sandoval said. “A lot of builders are going that route, to address the needs of the ‘missing middle’ yet retain quality.”

Reaching for attainable prices and quality

In November, Oakwood Homes debuted a new style of home that starts at $249,990 in Banning Lewis Ranch, the largest master-planned community in Colorado Springs. The company is the designated builder, although others also are active on site. Oakwood Homes has built approximately 3,000 homes of varying price ranges in Banning Lewis Ranch so far.

The response has been strong, said Ryan Delp, Colorado market president. “People can’t picture how it looks, but it doesn’t skimp on amenities.”

Because “Attainable isn’t just about price point” – it’s about getting the most for your dollar, he said.

The strategy with Oakwood also starts with land planning and optimizing property use, Delp said. That’s being accomplished with private cul-de-sacs that share a driveway, arranging homes in a pod layout and fitting eight homes on a site where two to three traditional ones would have sat previously.

“We have functional floor plans with a product design where there’s no wasted space, but that doesn’t mean we compromise on quality with finishes and cabinetry options,” Delp said.

“That’s a big key — if we can utilize the land efficiently and effectively, and design the home and use building practices that can be economical, we can provide bells and whistles inside and not skimp.”

Though 770 square feet — the size of the homes that start at $249,990 — might sound unworkable, “when you look at it, you think, ‘This is very livable,’” said Ariel Knobbe, senior director of marketing, as she gave a tour of a two-bedroom-one bathroom home under construction. There’s also a kitchen and living room area with a patio, a master suite and a laundry room.

Inside, the home shares a wall with a larger three-story home. Residents also buddy up with garage space and don’t have a yard but do have a community green space.

Also, building practices, such as prefabricated wall panels that fit together like puzzle pieces on the job site — as opposed to stick-built with 2-by-4s — eliminate material waste, Delp said.

Emerging advancements include incorporating concrete instead of wood to reduce costs and fire danger. And some companies are foraying into 3D printing to pour concrete foundations — though that approach doesn’t seem to be available yet in Colorado Springs.

Oakwood Homes also has expanded into Bradley Heights in southeast Colorado Springs, with homes starting in the $400,000s. Delp says the growth is part of a broader push to increase its local footprint with a focus on pricing homes for area median income earners, to ensure people who work in the community can afford to live here.

New-home buyers are a mix of first-timers, older downsizers, military families, and singles, divorced people or couples seeking less maintenance and hassle than an older resale property, Delp said.

“It is so difficult to afford a home and make ownership a reality,” he said. “We’ve always focused on attainable housing; as we’ve seen market shifts and changes, it’s become something to hang your hat on. Because homeownership is still one of the best ways to build wealth.”

The two biggest barriers to home ownership today, Delp said, are buyers’ ability to make the down payment and the monthly mortgage payment. But there are ways to lessen the pain on the front end, with down payment assistance, various incentives such as buying down the interest rate and loans that include flexible payments. There are also military discounts and choices on items such as window coverings and appliances that can reduce expenses.

Market seeing ups and downs

The local real estate market is ebbing and flowing, as global events and the overall economy remain uncertain and unstable, industry professionals say.

New-home building permits in El Paso County hit 2,811 last year, which reflected a 10% decrease from the previous year. Builders call that “relatively flat.” But market indicators from the first quarter of this year show a strong need for the up-and-coming products, they said.

A mid-level medical worker in Colorado Springs said the only way she and her husband could afford to buy their new home in a developing neighborhood in northeast Colorado Springs was to pool their two incomes and go for it.

“The duplexes are like $550,000,” she said, asking that her name not be used to protect her privacy. “But apartments are $1,800 to $2,000 a month. It’s crazy, and it’s everywhere, not just here in Colorado Springs. But somehow, people are doing it.”

She doesn’t think the growth can be stopped, leading to “too many people moving here that can afford it because they come from places like California.”

Some people are leaving, though. Michael and Susan Dunn packed up and bugged out of their 2-year-old home in Briargate last month. They’re headed to Boise, Idaho, where they say home prices are less, the cost of living is less and so are the taxes, insurance and other fees.

“Colorado is the most expensive state we’ve ever lived in,” Susan Dunn said. “And we’ve lived all over the country.”

The couple’s property taxes went up $500 this year, which they said is too much for their wallet.

“The city’s broke, the county’s broke, the state’s broke, and they’re looking at us as ATM machines,” Michael Dunn said, while the couple was walking their dogs before hitting the road heading northwest.

In three weeks and with three showings, their house sold.

“We love it here,” his wife said. “It’s gorgeous, we have a mountain view, we have family here. We just didn’t realize how expensive it is.”

Both sides of regulations have same goal

Those in the home-building industry say ongoing legislative changes add up to a big stumbling block to keeping prices affordable.

Moreland of Classic Homes mentions a “complex energy code” at the state level that’s “taken away the local authority’s right to amend it.”

“The energy code specifies requirements that have to be built here, and it drives significant costs,” he said. Things like prepping transformers and gas appliances for the potential all-electric future.

Colorado’s housing affordability problem isn’t about demand, it’s about cost to build, said Marla Novak, executive director of the Housing & Building Association of Colorado Springs, which is marking its 75^th anniversary this year.

“Over the past five years, costs have been pushed up by well-intended things, but what’s hurting us is the cumulative costs of multiple things — electrification readiness, wildfire requirements, state and federal regulations and local amendments and regulations. Each adds cost to the price of a home,” she said.

A $5,000 to $20,000 increase can eliminate some buyers, Novak said. Even a $1,000 bump is estimated to price out 234 potential homeowners, she said. With the state’s energy code estimated to add $20,000 to the cost of a new home, “you’re talking a lot of people being pushed out of the market.”

Her organization favors local control over building codes and development rather than mandated statewide codes and regulations because Novak said what state legislators decide doesn’t work for every community and the changes legislators make often are not accompanied by state funding.

Gov. Jared Polis, however, believes Colorado is “leading the way in lowering the cost of housing and breaking down government barriers blocking new housing that people can afford,” according to a recent announcement from his office of a new affordable housing condo project in Denver and a new hotel and residential campus in the Denver Tech Center.

Polis says he has signed “landmark laws” passed by the Democratically controlled state legislature to “break down barriers to housing, allow more housing options near transit and cut through red tape to reduce the cost of housing.”

His office cites several major gains through legislation: developing “transit-oriented communities” by increasing housing density in such areas, allowing for accessory dwelling units on residential property, eliminating “discriminatory occupancy limits” for private residences, removing minimum parking requirements for multi-family complexes, change building regulations in certain municipalities to allow up to five stories of a multifamily residential building to be served by a single exit and creating a multi-family residential incentive program for construction defects.

Sen. Tony Exum Sr., a Democrat who represents southeast Colorado Springs and chairs the Senate Local Government and Housing Committee, said via email he’s “been a champion for creating more opportunities to build affordable housing and bring down costs for hardworking Coloradans.”

“The legislation we’ve advanced in recent years has made it easier and more cost-effective to build homes people can afford,” Exum said.

Last session, Exum said he approved legislation to strengthen protections for homeowners in HOAs to help families preserve equity and avoid foreclosure, and he sponsored a bill that reduced regulatory issues for modular homes and tiny homes.

During this year’s session, Exum said the HOME Act, which Polis signed into law on March 25, will “streamline the process for many nonprofits, schools and transit districts to build affordable housing on land they already own.”

At the end of the day, Novak said, “Everyone wants the same thing: safe, efficient homes. We have to make sure they’re in reach of the people who need them.”