My internet friend (and fellow Penn alum), Bobby Fijan, is a strong proponent of more family-friendly housing in urban centers. And by strong proponent, I mean that he is both building more family-friendly housing as a developer and publishing thoughtful research on the topic. His most recent project is this study, which surveyed more than 10,000 people, and looked at what it will take to build more urban homes for young families.

What he and his co-author Lyman Stone found is the following:

• People who don't have enough space at home are less likely to have children.

• Apartments are a growing share of new housing in the US, but they are becoming increasingly less family friendly.

• Americans are willing to pay more in rent per square foot for the same amount of space if there are more bedrooms.

• Developers are not properly accounting for the higher vacancy and turnover associated with smaller apartments (especially in the current market environment).

• Cities could increase the number of family-friendly apartments if they did things like exempt them from FAR calculations, accelerate approvals/permitting, and so on.

This is a topic that I feel similarly about. I am an urbanist and I believe that cities are at their best when they provide for every generation and demographic segment. It's also not a new topic for cities like Toronto.

But I do think cities like Toronto and Vancouver are a bit unique. If you look at some of the floor plan examples in the report, you'll find one-bedroom apartments at 750 square feet and two-bedroom apartments at 1,100 square feet. Part of the thinking is that these floor plans could accommodate additional bedrooms in order to make them more family friendly (and it would be accretive to developers based on the above finding).

But by Toronto standards, these would be very generous apartments. At 750 sf, it is likely the apartment would already have 2 bedrooms and possibly even a den/office. The reason for this is that affordability has been strained for a long time in this city, and the market responded with shrinkflation. Every square foot has already been optimized.

So if we truly want to encourage more family-friendly apartments, I believe that we are going to need to change the cost structure underpinning the development of these homes. In other words, we need to make them cheaper to build so that more families can afford a bit more space. The way you start to do this is by doing some of the things listed in the last point above and by reducing added taxes and levies.

Well this is interesting, yet not surprising: According to RBC's annual "Home Ownership Poll", three out of every five respondents (so nearly 60%) said that location is more important than buying a larger home. Now, there's only so much you can glean from a single survey question, but the overarching sense is that people's home-buying attitudes are now starting to revert back to pre-pandemic levels.

Other evidence includes how quickly urban residential rents/prices have bounced back and, in many cases, now exceed their pre-pandemic levels. Below is a chart from the WSJ showing residential net-effective median rent prices in Manhattan. The low came in November 2020 when the median rent price hit $2,743 per month. But today it is well over $3,500, which is the highest it has been in a decade.

Certain aspects of how we will continue to live and work in our cities is admittedly still evolving (see my recent post on office utilization). But part of our pandemic narrative was that location was no longer going to matter, or at least not matter nearly as much. New York City, to give just one example, had died forever. But that was obviously bullshit. And what we are seeing in the residential space is an important leading indicator. Location always matters.

We all know that inflation is a thing right now. Prices are rising. One way businesses can choose to respond to this is through something called "shrinkflation", which the Financial Times writes about here. The idea behind shrinkflation is that, instead of just raising end prices to absorb higher costs, you instead shrink or reduce your product or service offering. Of course, you could also do a combination of both things: increase your price and shrink your offering.

This shrinking can take many forms. A few less chips in your bag. A slightly smaller chocolate bar. Smaller food portions at the restaurant. Or maybe opt-in room service for your hotel room. It can also take the form of less space. Average apartment sizes in most big cities have trended downward over the years for this exact same reason. Developers are working to maintain some kind affordability in the face of rising costs.

I think a lot of people like to scoff at these sorts of practices. Why can't we just build bigger family-sized suites? But the reality is that it is being driven by real market constraints. Without something giving, like suite sizes, urban housing would be multiples less affordable compared to current levels. The developers I know don't have any sort of deep-rooted philosophical aversion to selling 5,000 square foot estates in the sky. The problem is simply that most buyers and renters won't like the sticker price.

My internet friend (and fellow Penn alum), Bobby Fijan, is a strong proponent of more family-friendly housing in urban centers. And by strong proponent, I mean that he is both building more family-friendly housing as a developer and publishing thoughtful research on the topic. His most recent project is this study, which surveyed more than 10,000 people, and looked at what it will take to build more urban homes for young families.

What he and his co-author Lyman Stone found is the following:

• People who don't have enough space at home are less likely to have children.

• Apartments are a growing share of new housing in the US, but they are becoming increasingly less family friendly.

• Americans are willing to pay more in rent per square foot for the same amount of space if there are more bedrooms.

• Developers are not properly accounting for the higher vacancy and turnover associated with smaller apartments (especially in the current market environment).

• Cities could increase the number of family-friendly apartments if they did things like exempt them from FAR calculations, accelerate approvals/permitting, and so on.

This is a topic that I feel similarly about. I am an urbanist and I believe that cities are at their best when they provide for every generation and demographic segment. It's also not a new topic for cities like Toronto.

But I do think cities like Toronto and Vancouver are a bit unique. If you look at some of the floor plan examples in the report, you'll find one-bedroom apartments at 750 square feet and two-bedroom apartments at 1,100 square feet. Part of the thinking is that these floor plans could accommodate additional bedrooms in order to make them more family friendly (and it would be accretive to developers based on the above finding).

But by Toronto standards, these would be very generous apartments. At 750 sf, it is likely the apartment would already have 2 bedrooms and possibly even a den/office. The reason for this is that affordability has been strained for a long time in this city, and the market responded with shrinkflation. Every square foot has already been optimized.

So if we truly want to encourage more family-friendly apartments, I believe that we are going to need to change the cost structure underpinning the development of these homes. In other words, we need to make them cheaper to build so that more families can afford a bit more space. The way you start to do this is by doing some of the things listed in the last point above and by reducing added taxes and levies.

Well this is interesting, yet not surprising: According to RBC's annual "Home Ownership Poll", three out of every five respondents (so nearly 60%) said that location is more important than buying a larger home. Now, there's only so much you can glean from a single survey question, but the overarching sense is that people's home-buying attitudes are now starting to revert back to pre-pandemic levels.

Other evidence includes how quickly urban residential rents/prices have bounced back and, in many cases, now exceed their pre-pandemic levels. Below is a chart from the WSJ showing residential net-effective median rent prices in Manhattan. The low came in November 2020 when the median rent price hit $2,743 per month. But today it is well over $3,500, which is the highest it has been in a decade.

Certain aspects of how we will continue to live and work in our cities is admittedly still evolving (see my recent post on office utilization). But part of our pandemic narrative was that location was no longer going to matter, or at least not matter nearly as much. New York City, to give just one example, had died forever. But that was obviously bullshit. And what we are seeing in the residential space is an important leading indicator. Location always matters.

We all know that inflation is a thing right now. Prices are rising. One way businesses can choose to respond to this is through something called "shrinkflation", which the Financial Times writes about here. The idea behind shrinkflation is that, instead of just raising end prices to absorb higher costs, you instead shrink or reduce your product or service offering. Of course, you could also do a combination of both things: increase your price and shrink your offering.

This shrinking can take many forms. A few less chips in your bag. A slightly smaller chocolate bar. Smaller food portions at the restaurant. Or maybe opt-in room service for your hotel room. It can also take the form of less space. Average apartment sizes in most big cities have trended downward over the years for this exact same reason. Developers are working to maintain some kind affordability in the face of rising costs.

I think a lot of people like to scoff at these sorts of practices. Why can't we just build bigger family-sized suites? But the reality is that it is being driven by real market constraints. Without something giving, like suite sizes, urban housing would be multiples less affordable compared to current levels. The developers I know don't have any sort of deep-rooted philosophical aversion to selling 5,000 square foot estates in the sky. The problem is simply that most buyers and renters won't like the sticker price.