SAN LUIS OBISPO - At first glance, a 7-foot-wide alley on Higuera Street seems too cramped for a realistic solution to San Luis Obispo's housing crunch.

But to Matthew Shanks, a Cal Poly architecture student, his concept for a five-unit apartment building sandwiched between two downtown restaurants may be a perfect fit for the city.

"A lot of what goes on in America is that we don't use the space we have to its full potential," said Shanks, whose model features 700- to 800-square-foot apartments with a communal work space above. "If you look at alleyways, you have to figure out how to organize your space more effectively."

Cal Poly architecture and design students unveiled their designs for high-density homes Tuesday as part of a special project that offers possible new approaches to help ease to the city's housing crisis.

According to the most recent UCSB Economic Forecast numbers, the median home price in the city of San Luis Obispo was $477,300 last December, up 22.7 percent from the year prior. That same month, according to figures released by the California Association of Realtors, only 16 percent of county households had the income needed to purchase a median-priced home. That was the lowest percentage in 13 years.

The student designers had to choose from eight downtown alleys and build models that not only maximized space but integrated residents into their neighborhoods. To save space and infrastructure costs, the designs could not include elevators and had to bring in light from both sides of the building.

Students in the second-year design class incorporated garden or green spaces into their high-density creations.

Much of the inspiration for the proposed designs came from a field trip students took to San Diego, where downtown housing has been built on leftover, underutilized sites, said instructor Thomas Fowler.

"In San Diego, the downtown housing is modeled on attracting recent graduates and the elderly," Fowler said, "and they have more people willing to rent than they have units."

But some of the students say their modern designs may not pass muster with San Luis Obispo leaders.

Michelle Hamilton, a third-year design student, said her 50-foot-tall, narrow structure designed for "Rose Alley" on Monterey Street would allow occupants to live in a space that progresses from communal living to private quarters.

She envisions a building that would expose residents to the streets, nearby bars and other outside activities.

"One of the problems with housing development is that city leaders like a particular style that's very historical," she said. "But they're really limiting themselves. If they saw this design they would probably freak out."

However, Hamilton believes the city would do well to entertain the ideas of the next generation of architects.

"They should be aware that there are other methods of using space if they want to keep San Luis Obispo from sprawling," she said.