There is a market for those single-family homes--they are getting snapped up as quickly as they get built, and as mentioned elsewhere, the multi-unit buildings aren't for-sale units. And they aren't the same as suburban tracts in many respects, as they are built to higher density (20-25 dua instead of 8-10) and are located in transit-rich, walkable/bikeable places. I think we could use more innovative design for homes of this type, but there is still room for this kind of traditional high-density SFH homes in Midtown, Southside and Alkali/Mansion Flat. It doesn't get much press, but there are also a lot of small projects going into the little 40x80 and 40x160 vacant lots that have sat for years. Here's a pic of an alley unit going in behind the little red Victorian next to the recent condo unit formerly occupied by Tuli Bistro (now "Trick Pony" pizza), next to another recent small infill building:
It's an alley unit along R Street, and the architect gave it a bit more thought in terms of contemporary design.
Compare this with Northwest Land Park, which has similar density but even worse design, and is nowhere near light rail or high-frequency bus, or McKinley Village, which will be built to about half this density, again with no nearby transit orientation and limited walkability. I know this is "skyscraperpage" and people here like big tall stuff, but in many ways these small projects are just as important. And if Midtown and surrounding areas gets filled up with small infill, that pushes more development energy for tall/high back into the CBD and brownfield areas where it belongs.
By comparison, here's the model for Northwest Land Park: