Because of a high population density, it is very difficult to obtain land, much less own the house you live in. As a result, only about 42% of people in Germany own their own house. (1) It is very common to rent out flats; low apartment style houses. Even those that do own their own homes usually live in small condominium style dwelling. (1) Most cities in Germany are very old, so space is mostly already taken up. People need to get creative in order to use already existing space for their purpose, whether that be living or running a business. Although most cities are old, most of Europe has a very good transportation system, making owning a car unnecessary. In urban spaces, you will see large rather dull looking apartment towers located on the edge of towns and constructed just to fill the demand for housing. Outside the cities, it is more possible to see single houses for one family, the german dream house. (2)
The most major difference between the German way of housing and the American way is choice and availability. I think it is natural to want to have a place that you can call your own. However in Germany, that is just not an option for most people because of the high costs associated with that luxury. As a result, Germans may just have to accept living in a smaller rented area. With this comes more convenient transportation and lower costs in other areas. In America, we have more options when it comes to housing, but also more responsibility as well as higher transportation and utility costs.
(1) http://german.about.com/library/anfang/blanfang18.htm
(2) http://www.german-way.com/for-expats/living-in-germany/house-and-home/
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