In Japan, a middle class family can own a somewhat cramped (say 900 sqft?) 3bedroom house/apartment walking distance to a world class rail system and generally walking distance to schools and some stores too.

In America's top cities, a middle class family can't afford to own a 3 bedroom apartment with rail access generally, so they move outside the city to the suburbs where they often have to drive to work - which means they need to buy a car, buy gas, etc

But if you don't want the lawn and the picket fence, why is this the only option available? We've taken a one-size-fits-all approach with covering the vast majority of the country with big suburban houses, and the free market is proving people want options, evidenced by wildly inflating prices of urban properties.