[The water's weird and also possibly full of monsters and aliens. Not that Percy would know that. Absolutely not. But given Yuu seems to be processing but not volunteering that the area looks familiar, he can pick up the cue that maybe this is the wrong district.]

From what I've been told, color comes back to stuff when we accomplish quests or we work together as teams. Make bonds or whatever. All of the colors were missing when people first arrived here but as people started doing quests and making friends things started coming back.

If I had to guess? The people living in the weird-colored houses did something different than the rest of us.