Yeah, very few people who want and can afford 3-bedroom homes want to be renting apartments. I assume that even in New York City, the number of 3-bedroom condos is pretty minimal as a percentage because most people who want that kind of space just move to West Chester or Connecticut.

This is not universally true, and it's pretty common to hear people who moved out to the suburbs hate it, but they needed the third or even second bedroom! Slightly larger condos simply didn't exist on the market, or were priced at astronomic rates (double the $/sqft compared to a 1bd unit).

Looked at a dozen midrise buildings this year across DC/Phila/NYC markets, some new/recent construction, some office conversions. Most buildings had zero 3bd units except for maybe a single penthouse, a 2bd unit every other floor, and the entire rest of the building evenly divided between studios and 1bd units in the 400-600sqft range. The competition for the 2bd units was unreal, in several cases people were offering the entire year's lease upfront, in cash, to secure an apartment.

It really is that competitive and the demand is there, the supply is not.

Part of the problem is what is available. If you're a Japanese or a Taiwanese, that detached single family home with a massive garden around it is simply not an option, so you don't feel worst off than anyone else by living in a small house or in a high rise.

Other advantage is that keeping cities very dense and preventing urban sprawl means everyone has access to nature quickly, through public transports.

Oh, those kind of houses are definitely available in Japan. Houses in Japan are worth negative money; if you want to sell one the buyer will want you to knock it down first.

The reason they're so cheap is that nobody wants to live in those areas because cities are better and have better jobs.

There's also a culture in Japan that houses are essentially disposable. Whereas on the east coast at least of the US, 100-200 year old houses aren't rare. The default may be to do some renovations if you buy one but not to knock it down. And a lot of those houses may not be in cities but they're often within an hour or so and many of the jobs are outside the cities anyway.