I've ruminated on this a bit before and have a lot of thoughts, but I'll try to keep it to a few brief points:
It's totally fine - if not ideal - for families to live in low density housing with lots of green space/etc. (this is all from a bit of a privileged lens, but I think it can still apply across the board to some degree). Ideally it should not be the 'only' option, but realistically it will be the preference for generations to come
So IMO the goal should be to get empty-nesters out of their nests sooner, but there is a lot to unpack there and I completely understand the appeal of staying put. And extend the appeal of 'urban living' for young people so they don't have to retreat to the burbs...but more realistically for most is that they wait until kiddo is 3 yo before they buy the SFH and two obnoxious SUVs, instead of doing that at the first hint of pregnancy/trying.
And maybe if we make HD living and alternative mobility options more attractive in the late 20s early 30s phase, then the most appealing upsize will be an infill duplex with 1 car, a cargo bike, transit, and shoes (this is already the case for many, but certainly not the majority)
ie. getting young people to stay 'urban' 5 years longer and retirees to downsize 10-15 years earlier would do a lot to make a more sustainable housing mix that creates a better overall city