Could Bigger Apartments Reverse America's Birth Decline?
Last year, the U.S. birth rate dropped to an all-time low, setting off alarm bells about the nation’s long-term economic stability and social vitality.
Building bigger apartments could hold the answer to increasing the birth rate, according to a new study by the Institute for Family Studies.
The study, titled "Homes for Young Families Part 2," finds that a nationwide residential development trend towards building small, child-unfriendly apartments directly correlates with headwind to family formation, leaving many young couples with no room to grow.
If builders built more family-sized apartments, it is very likely that more Americans would have children," the study says.
Smaller rental spaces reverse a homebuilding trend of constructing ever-larger homes since the end of World War II. In 1949, homes averaged about 900 square feet; today, they average about 2,200 square feet.
Post-WWII economic prosperity, rising incomes, and the growth of suburbs allowed Americans to build and afford larger homes. Easier access to credit, a lower cost-per-square-foot for bigger houses, and a cultural shift—where features like extra bathrooms and bonus rooms became standard—also fueled this increase.
However, affordability has become a growing problem in both the rental and homeownership sectors, intensifying during the COVID-19 pandemic. A widening gap formed between increasingly smaller apartment units and larger, pricier homes that young families cannot afford.
Bobby Fijan, who worked on the study with IFS senior fellow Lyman Stone, tells The Builder's Daily that single-family rental and build-to-rent are stepping into that gap.
Those units are smaller than new single-family homes that are for sale," says Fijan, who is a co-founder of Tailorbird, an AI platform for capital planning and acquisitions in the apartment industry.
However, the study focuses on providing young families with options for staying in urban areas, where new apartments have become smaller.
Not only have apartments gotten smaller, but the ratios of bathrooms to bedrooms have increased, so common space has gotten even smaller," Fijan says. "And this is because apartments have become even more focused on serving the singles-and-roommates markets."
More Bedrooms, More Babies
Since 2007, the average size of new apartments has shrunk by 20%, with developers overwhelmingly favoring studios and one-bedrooms over family-sized layouts, according to the study. This mismatch between housing supply and family aspirations, the study contends, actively suppresses the birth rate.
The connection is startlingly direct. In a survey of over 6,000 Americans, the researchers found that the number of bedrooms was the single most important feature for people considering having children, outranking even square footage and rent by a significant margin. For those who have or want kids, the preference for more rooms was overwhelming.
When asked to choose between a 1,200-square-foot two-bedroom and a three-bedroom unit of the same size, a substantial majority of family-oriented respondents picked the three-bedroom. In fact, the study finds that married women living in two- or three-bedroom apartments have higher birth rates than those in smaller units.
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.
I think we could fairly say that babies are important to the future of civilization," Jay Parsons, an apartment industry economist and speaker, said in his latest podcast that featured the study and Fijan.