Could Bigger Apartments Reverse America’s Birth Decline?

A Market Blind Spot

The apartment sizes in the study fit with the starter for-sale home category. However, restrictive zoning laws—such as minimum lot sizes—make it nearly impossible to build starter homes affordably.

Lawmakers could perhaps glean from the study what the market wants and remove the regulatory hurdles that make building starter for-sale homes so difficult. Urban planners and housing advocates have urged changes in zoning laws at the state and local levels with limited success. California, Oregon, Washington, Texas, and Florida have taken steps in varying forms.

If demand is so clear for apartments, why aren’t developers building what families want?

 The industry faces different regulatory barriers. For example, parking requirements tied to the number of bedrooms penalize the construction of larger apartments. The result is a market flooded with apartments designed for singles or roommates, while young families are left with few viable options.

In the study, the authors point to a critical blind spot among apartment developers: They chase higher rent-per-square-foot, a metric that favors smaller units.

Family-friendly units are more cost-effective than developers and investors realize,” the study says. “One reason these units are underprovided is that developers use erroneous assumptions about vacancy rates that ignore the fact that smaller units have higher vacancy rates, higher turnover, and higher rates of budget-constrained residents who may miss payments”.

The report concludes that fixing this market failure could have profound demographic consequences. By aligning development incentives with the real-world needs of families—through smarter metrics and revised zoning codes—builders could profitably construct more family-friendly housing.

Fijan and Stone say in the study that the likely result is that more young Americans would feel confident enough to have their first or second child, providing a much-needed boost to the nation’s fertility rate.