Urban housing demand is a reflection of households’ desire to live in cities. In this article, I discuss possible reasons why US households have exhibited an increasing taste for urban living, including employment, urban amenities, and consumption opportunities. Next, I explain how growing urban housing demand led to rising house prices and a sorting of households across cities by income. That dynamic generated a divergence across housing markets in the value of the tax subsidy to owner-occupied housing as well as housing market risk. Those factors, in turn, had a feedback effect on urban housing demand.