Well, that's perfectly fine, but that's their call... If they prefer staying in a larger house, why shouldn't they?The idea is that, as you get older, you don't need more space and don't want to take care of a large house. Honestly, when I'm older, I'd want to sell my two story for a smaller one story.
It seems that the issue is rather that there's not enough larger house for everyone, so maybe... adapt the offer and build a couple more? Granted, if you want to stay close to large cities, that's an issue, but the whole system where a handful of large cities gather most of the jobs is per se a big issue.