>My guess would be that the American washing machine market matured during the era when apartment living was seen as low-class, and thus the market concentrates on big machines for the big suburban houses that everyone who could afford a laundry machine lived in.

You can buy a washing machine in just about any size that you would need [1]. They offer stackable units to fit in small closets.

I visited friends in Europe before and they had to buy a dryer that you would empty the water manually because they didnt have a access to a dryer vent.

[1]http://www.amazon.com/Stainless-Dryer5-5-6-6lbs-Compact-Apar...