Cities made a bet on millennials — but forgot one key thing

Millennials moved to cities in droves during the 2000s and 2010s, drawn by the restaurants, the nightlife, and the high-paying jobs. Urban planners and local leaders celebrated, embracing what became known as the “creative class” theory — the idea that attracting educated, creative workers would drive cities’ economic growth.

Real estate developers built accordingly, constructing apartment buildings filled with studios, one-bedrooms, and two-bedrooms designed for singles, roommates, and childless couples. Young professionals could afford the rent, and investors got steady returns. Building larger apartments for families felt risky when the smaller units were working so well. As for single-family homes or townhouses, the types of housing that families with children typically seek out — well, cities weren’t building those either.

The strategy worked — until millennials aged out of it. As they now enter their 30s and 40s and start having children, they’re ditching cities where the housing stock never caught up to their changing needs. Across the nation, large urban counties lost roughly 8 percent of their under-5 population between 2020 and 2024, according to data from the Economic Innovation Group. In New York City, families with children under 6 have left at twice the rate of everyone else, a trend that became central to incoming mayor Zohran Mamdani’s winning affordability campaign.

When families leave, cities lose far more than tax revenue; they lose their highest earners, biggest spenders, and the next generation of workers. Because Gen Z is a smaller generation, and the rise of remote work means there’s less pressure for them to live in expensive cities to access high-paying jobs, they aren’t going to fill the gap left by millennial families. 

The creative class theory wasn’t wholly wrong, but it missed that cities need to retain those people through their peak earning years, which happen to coincide with when they have children. And as baby boomers retire, working parents become even more critical to a city’s economic strength.

If cities hope to remain economically healthy, they’ll need to build more housing for families with kids. 

Why cities haven’t been building for families

Several forces have worked against family-friendly development. Homeowners increasingly tend to be older and past their child-rearing years and often oppose changing zoning laws to allow more housing in their neighborhoods. Worried that the increased density could hurt their property values or quality of life, these more affluent, politically engaged residents tend to wield their outsized influence to keep newcomers out. 

As a result, American cities are overwhelmingly zoned for single-family housing, leaving little room for the kinds of duplexes, townhouses, and smaller apartment buildings that offer young families an affordable middle ground between cramped apartments and expensive homes.

There is also resistance to certain kinds of families moving in. “I’m sorry, but class and race matter in America,” said Mildred Warner, a professor of city and regional planning at Cornell University. Put differently, many cities have used exclusionary zoning over the years to keep out Black and low-income families. 

Upending these historic patterns will require policy changes beyond just fixing zoning codes. Ending parking minimums — which force developers to build a certain number of costly parking spaces per unit — would make it cheaper to construct family-sized apartments. Allowing single-stair buildings up to four stories — rather than requiring two staircases — would free up space for larger, more flexible floor plans better suited to families. Making it easier to approve smaller buildings (those under 50 units) would let developers experiment with different housing types.

Another option is to pass laws requiring developers to include more family-sized units, like three- or four-bedroom apartments, though real estate experts warn that such a prescriptive approach could backfire.

An alternative idea, proposed by the Institute of Family Studies (IFS) this year, is to change how governments measure the success of their affordable housing programs. Right now, funds that finance apartments at public expense focus on maximizing the number of units built. IFS researchers suggest they should instead prioritize the number of bedrooms and the number of people housed in order to incentivize family-sized apartments. 

A professional culture problem exists, too. Many planners simply don’t consider designing urban communities for families to be part of their job. Michael Huling, a senior county planner in Clark County, Nevada, traces the issue back to dynamics from the 1960s and 1970s, an era when people were flocking en masse to suburbs. Limits on density, rules on how far houses must be from streets, and onerous parking regulations all contributed to a development culture that treated families as a suburban concern, not an urban one.

“A lot of those anachronistic development patterns and development priorities are still lingering today and we’re still stuck with them,” he told Vox.

Still, there’s a structural problem that goes deeper than zoning and building codes, or even professional norms. Kids don’t pay taxes, but they do absorb plenty of government services, and cities crave population growth without the associated costs of funding it.

The economic reality is harsh and unevenly distributed. Public support for seniors can be up to three times higher than for children, but the federal government provides the vast majority of senior aid while covering less than a third of child subsidies. Instead, state and local governments bear the bulk of K-12 education costs, creating a negative incentive for cities to welcome families with school-age children.

Warner has found that many politicians restrict family housing, because they don’t want to pay for the schools those children would attend. Because schools are funded largely through local property taxes, cities treat school spending as a direct burden on local budgets while ignoring that businesses benefit enormously from having its future workforce educated nearby. They “ignor[e] the increasing importance of human capital investment as a critical economic development strategy,” she wrote.

Robert Verbruggen, a fellow at the Manhattan Institute, put it bluntly. “Kids don’t pay for themselves while they’re still kids,” he told Vox. “They pay for themselves later when they grow up and get jobs.”

His advice for mayors is pragmatic: If you want a thriving city, you need growth and more people paying taxes. Welcome families now and “you have a built-in fan base of the next generation of kids who grew up there and are already familiar with city life.”

A belated recognition of the consequences

In addition to city planners, more elected leaders are beginning to recognize the crisis of housing in their cities. They’re right to, given the compounding challenges their cities face if the crisis continues pushing families to leave. If people in their early-to-mid-30s leave cities right when they’re becoming most productive and experienced in their careers, then they take their mentorship skills and institutional knowledge with them. Cities tend to end up with extremes at both ends: lower-income residents and very wealthy residents in luxury housing, but fewer middle and upper-middle class families.

Once families leave, cities are left with fewer vocal advocates pushing for better schools, parks, and transit, making the areas even less attractive to the next generation of parents. And as stressful as more kids in schools might be to finance, in the long run, declining school enrollment (fueled in part by more people leaving cities) and fewer children born mean even fewer taxpayers and less consumer spending. 

Indeed, declining birth rates are another problem. Recent research has found clear links between housing costs, housing size, and birth patterns. Not only is a lack of suitable housing steering families out of cities, it’s contributing to some people choosing not to have kids at all. 

The Institute for Family Studies found that housing costs limit childbearing goals more than any other factor, including undesired singleness, preference for leisure, schooling, child care costs, and student debt. Housing costs can lead to living with one’s parents for longer, and that has a huge negative effect on fertility.

Another study published this month by an economist at the University of Toronto estimated that rising housing costs in the US since 1990 have led to 11 percent fewer children being born and building more two- and three-bedroom apartments could more than double the impact on birth rates compared to building more one-bedroom units. 

Ideas to stem the bleeding

These and other changes are forcing the real estate industry to shift. Some institutional buyers — the investors who purchase apartment buildings to operate as rentals — are starting to reject studio and one-bedroom heavy buildings, worried that tenants will keep moving out after short stays, driving up their operating expenses. And construction financing challenges driven by tariffs and high interest rates have created new openness among developers to rethink their more conservative approaches. The “built-to-rent” boom has also demonstrated to investors that families with kids will, in fact, rent homes. 

One developer is advocating for a range of other solutions. Bobby Fijan is one of the country’s most vocal critics of his industry’s inertia. He started the American Housing Corporation to build family-sized row homes, with the first one set to open in Dallas in December. Eventually, Fijan wants to expand into apartments.

He’s pushing other ideas, too. In a study published in September, Fijan and IFS senior fellow Lyman Stone surveyed over 6,000 Americans about their housing preferences. When shown apartments of the same square footage but different bedroom configurations, many people preferred layouts with more rooms, even if they don’t currently have children.

One model emerged as particularly promising: the one bedroom plus a den. Dens, which often have no windows or closet, are commonly used for an office, a TV room, or nursery. Fifty-seven percent of childless-by-choice people preferred this layout over a standard one-bedroom of the same total size, as did 54 percent of people who say they’d one day want kids. 

For the real estate industry, the IFS pitch is straightforward. Since developers are already building apartments at 750 to 1,100 square feet, adding one more wall to divide the space could create units that appeal to a broader market. And because families with kids stay in apartments longer than singles, lower turnover could translate to lower operating costs.

If cities can keep couples expecting their first child even a half decade or so longer, they might begin to address the problems Warner and others have warned about. More families staying means more of the high earners and high spenders who drive local growth.

But Warner is skeptical of the bedroom-plus-den plan, which puts a ceiling on family size. People “like to stay where they are,” she said, and with that arrangement, you’d probably relocate as your family grows. It could accommodate babies and toddlers, but would be less ideal for teenagers who want real bedrooms with doors and windows (and parents of teenagers who’d want that, too). She’d rather see cities build actual two- and three-bedroom units — a return to how cities used to build before developers shifted to smaller apartments. 

Fijan and Stone don’t disagree but see their proposal as a way to work within existing constraints. Their hope is that keeping families in cities through their children’s early years could create ongoing political pressure for the deeper changes needed to truly fix the problem.

In the end, housing alone won’t keep families from leaving cities. Cities still need to address public safety concerns, improve schools, and fix basic infrastructure like broken sidewalks and unreliable buses. That will require substantial investments in education, transit, and child care, not just removing regulatory barriers. It will mean challenging homeowners who benefit from the status quo and making spending choices that might not pay off for years.

The cities that figure out how to keep their families will thrive. For local leaders watching parents flee and school enrollments drop, these are fights worth having.

This story was supported by a grant from Arnold Ventures. Vox had full discretion over the content of this reporting.