> Millennials neither want nor can afford large suburban homes
I see this often. Very few people want large homes when they are either single or don't have kids.
As soon as you do have kids and they start to grow to an age where they want to play outside, having space to run, play sports, be away from traffic, have their own room, etc gets a lot higher on your priority list.
You can also get a suburban home without it being "large" and still get a lot of space to go with it. People used to get "starter homes" and then periodically trade up if/when their incomes increased or they had some equity in the home.
It seems like the biggest barrier to this today is that people want to go straight to the HGTV home. I can't tell you how many people I've known who, straight out of school, overextend to the most expensive house they can afford.
If you want more house, for your money...that usually means buying farther away from density.