In 2010 Portland, Oregon made it cheap and easy for people to build ADUs (Accessory Dwelling Units — also known as “granny flats”, “in-law apartments”, “carriage houses”, etc — small secondary dwellings that are on an existing property), and to nobody’s surprise, the tiny homes boomed. This kind of housing adds density without changing neighborhood character, lets people live lighter on the land, and helps makes housing affordable both for the renters, and the homeowners who now have a rental income that was impossible before. And they do it all without any public subsidy.
Boulder can do this too.