One of the major trends in the recent housing boom is that home buyers are now purchasing smaller, more urban homes to avoid long commutes, writes James R. Hagerty in a Wall Street Journal article. James Z. Pugash, chief executive officer of a company which finances housing developments, Hearthstone Inc., predicts that American cities will become European-like, with more midrise developments, fewer square feet per person, and higher housing costs.

The article also cites a 2004 paper for the Brookings Institution by Virginia Tech professor Arthur C. Nelson that says there are at least tentative signs of a rising demand for more compact living environments combining offices, entertainment, and homes. Mr. Nelson cites as an example Arlington County, Virginia, near Washington, DC. He writes that in 1990, the conventional wisdom was that the county was completely “built out” and there was no space for more residents. However, the county is encouraging higher-density housing on former industrial sites and transit-oriented development (TOD). The county is still growing rapidly, yet the character of established neighborhoods is being preserved effectively.

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