The 9 Million Family-Friendly Apartments Hiding in Plain Sight

The Institute for Family Studies has delivered exceptional research demonstrating that Americans overwhelmingly prefer family-friendly housing with multiple bedrooms. Lyman Stone and Bobby Fijan's survey of over 6,000 Americans confirms what housing analysts have long suspected: bedroom count matters more than virtually any other apartment feature for family formation. Stone and Fijan are absolutely correct that we need more family-sized homes (2+ bedrooms) to support American families, particularly young and low-income families. To complement that research, we spotlight one of the largest providers of family-sized apartments in America, hidden in plain sight: townhomes.

Townhomes: An Affordable Housing Solution

Townhomes represent a hedge solution for young families: lower rent and more affordable homeownership compared to single-family detached homes, and more space per dollar than large apartment buildings (20 or more units). As such, they deliver exactly what Stone and Fijan's research shows families need: multiple bedrooms, affordability, and family stability. With 95% of townhomes providing two or more bedrooms and an average of 2.7 bedrooms per home (2023 ACS), townhomes exceed the two-bedroom threshold that research identifies as crucial for family formation. Additionally, townhome developments are usually a mix of owner- and rental-occupancy, providing another hedge. 

We can see this in the data. There are approximately 9.1 million townhomes in the United States (6.3% of the housing stock). About one-third are rented, creating a natural supply of family-sized rental housing. Despite there being only about 63% as many townhomes as there are units in large apartment buildings, townhomes account for 2.2 million more family-sized homes, and households in townhomes are more than twice as likely to have children in them (ACS).

Townhomes are also an affordability sweet spot for both renters and homebuyers. Among family-sized rentals, townhomes average $1,830 per month compared to $1,970 in large apartment buildings. For homebuyers, townhomes save families over $100,000 in purchase price, relative to a comparably located detached home. 

Townhomes function like apartments for density purposes while supplying both homeownership and rental opportunities.

Townhomes, of course, are only apartments in the most literal sense: multiple homes within a single structure, a classification that also includes condos, duplexes, and most “middle-housing” solutions. This is a strength: townhomes function like apartments for density purposes while supplying both homeownership and rental opportunities. Townhomes require only one-fourth the land area of a similarly sized single-family detached home. Just by building on the same amount of improved land, cities can quadruple their housing construction by legalizing townhomes (and dramatically increase property tax revenues per acre).

The FIMBY Imperative

The legalization of starter single-family homes on smaller lots, both detached and townhomes, is the core concept of the FIMBY (Family in My Back Yard) housing policy, which Ed discussed recently in this space. This concept captures what Stone and Fijan's research demonstrates: Americans need housing with 2 or more bedrooms and enough space for spouses, partners, relatives, and/or children. At the same time, they need affordable housing—which is provided by lifting the burden of land costs from families by legalizing smaller lots. While the NIMBY (Not in My Back Yard) phenomenon often focuses on blocking density, FIMBY represents a positive vision for enabling family-sized homes in every neighborhood.

The data supporting FIMBY are compelling. Single-family homes average 3.2 bedrooms compared to just 1.4 bedrooms in large apartment buildings. Furthermore, 97% of single-family homes qualify as family homes (2+ bedrooms), compared to only 43% of units in large apartment buildings. This stark difference explains why families consistently choose single-family formats when financially feasible.

Homeownership Builds Wealth

The FIMBY approach becomes even more crucial when examining how young families navigate housing markets. Young families face a dual challenge: they are disproportionately low-income and low-wealth during their peak childbearing years, yet they have the greatest need for family-sized housing precisely when their financial resources are most constrained.

This demographic faces what IFS has identified as a particularly acute affordability crisis. Delayed fertility and marriage have created longer periods in which young adults accumulate limited assets while facing rising housing costs. When these Americans do start families, they encounter a market that increasingly offers only studio and one-bedroom apartments in new construction—precisely the opposite of what the research shows families need.

Townhomes uniquely combine affordability and accessibility by offering a 70/30 split between ownership and rentals, both cheaper than typical alternatives for young families. They not only provide affordable housing but also an entry point to homeownership, with lower down payments than comparable detached homes and the same long-term equity benefits—helping first-time buyers form, maintain, and expand their families at the life stage when it matters most.

Complements, Not Substitutes

The beauty of the townhome solution lies in its scalability. Unlike large apartment developments that require dozens of units to achieve cost-effective property management and insurance, townhomes can be built by either large builders at scale, or smaller builders for in-fill developments ranging from 2-8 homes in size. This diversity of builder scale promotes architectural variety and responds nimbly to local market conditions.

The beauty of the townhome solution lies in its scalability.

When Stone and Fijan note that 51% of recent apartment construction occurred in buildings with 50+ units, they highlight precisely why the family housing shortage persists. These apartment developments favor smaller units based on rent per square foot, while townhome developments favor 2- and 3-bedrooms based on marketability. Most townhomes also come with added family-friendly spaces including a yard and flexible space on the bottom floor. As a result, 3-bedroom apartments generally struggle to compete with 3-bedroom townhomes.  

Small Lots, Big Impact

The path forward requires embracing what our research calls "small lots, small lots, small lots." Reducing minimum lot size requirements to 1,200 square feet allows the landowner to make the decision of what to build (and our case studies show they will opt for smaller lots with smaller family-sized homes). Add by-right zoning for both townhomes and small-lot single-family detached homes, and communities can unlock the family housing supply that Stone and Fijan's research shows Americans demand.

Small-lot single-family detached homes complement townhomes perfectly in the FIMBY framework. In Strong Foundations, the AEI Housing Center’s playbook for building new housing, we evaluate the impact of legalizing small lots in the new residential subdivisions the nation already builds. Legalizing small-lot starter homes across the nation would add 414,400 more family-sized homes each year, increasing new construction by 30 percent. More than half of these would be townhomes, priced at $400,000, which is $120,000 less than the current median new-home price.

This isn’t a pipe dream, as cities and states across the country have begun to take steps in the right direction. Texas’s SB-15 and SB-840, enacted in 2025, provide model legislation for this approach in a state that has already succeeded in building starter homes. These bills enable both smaller-lot starter homes in new residential subdivisions, along with townhomes and apartments in commercial areas—precisely the framework needed to expand both apartments and small-lot single-family construction. Large apartment buildings can—and should—be built in areas with very high land values, while we simultaneously can limit sprawl by allowing smaller lots and townhomes in our single-family (and downtown) neighborhoods. If properly enacted, these reforms could create 80,000 new homes a year in Texas alone.

Unlocking Family Homes

Stone and Fijan conclude that "apartment-building is booming in America, and that's not likely to change in the near future." They're right about the trend, and their research points toward the most effective response: legalizing the housing types that most readily provide economical homes for young families. The FIMBY approach appeals to the same broad coalition: families seeking affordability, progressives promoting broader wealth-building, and fiscal conservatives favoring market-based solutions.

We can take three steps to build FIMBY homes now: legalize smaller lots, allow townhomes by right, and legalize townhomes and apartments downtown. The result: more bedrooms per family, faster paths to ownership, and stronger, more stable communities.

Arthur Gailes is a research fellow at the American Enterprise Institute. Before joining AEI, Mr. Gailes was an economist and data scientist at the Othering & Belonging Institute. Previously, he was the University of California, Berkeley, coordinator of California Fair Housing Taskforce. Ed Pinto is Senior Fellow and Co-director of the AEI Housing Center at the American Enterprise Institute (AEI).