Missing Middle Housing

Jerry Reimer’s dad was a carpenter who built and rented a pair of fourplexes Reimer cleaned, painted and repaired while growing up.

That was Reimer’s introduction to missing middle housing — the new name for an old mix of residential choices that are neither traditional single-family homes nor large apartment or condo buildings, but something in between.

These days Reimer is the co-owner of Urban Village Development, which builds new and rehabs aging missing middle housing — duplexes, mansion apartments, bungalow courts and other types — in a walkable urban neighborhood in Omaha.

Although he started developing those housing types nearly 10 years ago, Reimer only recently learned there was a name for what he was doing. “I never called it missing middle,” Reimer said. “I called it the stuff that was built between 1920 and 1960.”

Up until World War II, traditional single-family homes and missing middle housing — which obviously wasn’t missing yet — were built on the same blocks in almost every residential district of almost every city in the country.

Designed to be compatible in scale and style with the rest of the neighborhood, missing middle housing — rental and owner-occupied — was affordable to a range of incomes. Plus it added a shot of density that helped support public transit and neighborhood businesses by infusing each block with more housing units than single-family homes alone could provide. It was the definition of walkable urban living and smart growth.

But that was before modern zoning codes shut the door on most missing middle construction by separating different forms of housing from each other based on their density. The onslaught of suburban subdivisions helped keep the door shut by focusing on just one form of housing — traditional single-family.

“We call it missing primarily because it hasn’t been built very often in the last 50 or 60 years,” said Dan Parolek, principal at Opticos Design in Berkeley, Calif., who coined the term missing middle. “The biggest barrier is that most city zoning codes (continue to) limit what is allowed in single-family zones. If zoning allows for missing middle housing types, they will get built.”

It’s a simple matter of demographics. “There’s this convergence of what the millennials want, which is walkable urban living, and what the baby boomers need, which is living without having to rely on a car,” Parolek said. “The demand is high.”

As cities and developers strive to meet the demand, building new and rehabbing old missing middle housing is emerging as a way to expand the supply of walkable urban housing besides constructing more downtown high-rises. “There’s a real need for this missing middle type,” Parolek said. “It’s neighborhood living versus (downtown) living and that’s attractive to a lot of people.”

The question is can the missing middle also play a role in addressing the nation’s shortage of affordable housing — not subsidized but market rate? The answer is yes, although not necessarily everywhere for everyone. “A lot of it has to do with the supply and demand equation,” Parolek said.

Land to build missing middle housing in established neighborhoods is scarce and expensive in hot housing markets. The affordability of infill development in places like Seattle is relative — $500, 000 for a row house versus $1 million for a traditional single-family home is a reasonable hypothetical — and only matters to people with six-figure paychecks. 

“Is missing middle housing more affordable than the alternative? Yes, but any home in a desirable close-in location is going to be expensive. Period,” said Linda Pruett, owner of the Cottage Company in Seattle, which develops pocket communities of small upscale homes — priced in the $600,000 range — clustered around a garden court.

That doesn’t mean missing middle housing shouldn’t be part of the affordable housing conversation, Pruett said, but there are limits to where and how it can make the biggest difference.

“It isn’t a silver bullet that’s going to solve every region’s housing affordability issue, but it does provide relative affordability and better utilization of the single most expensive input into housing — and that’s the land,” she said.

The math is pretty simple. Duplexes, townhomes, bungalow courts and other missing middle housing types provide more units on less land than traditional single-family homes. The units are smaller, but people pay less for them than a single-family home. They also enjoy the added tradeoff of living in a walkable urban neighborhood. At the same time, developers can make more money on the same property because costs are spread across multiple units.

“Missing middle housing can provide a nice range of affordability by design if the (regulatory) barriers are removed,” Parolek said.

While opportunities to drive affordability through missing middle infill development are limited in the San Franciscos, Denvers and Bostons of the country, they are more readily available in many next tier cities. Reimer has built or rehabbed 380 units of missing middle rental housing in Omaha’s once declining but now thriving Midtown neighborhood. “We are getting credit for turning the neighborhood around,” Reimer said.

Reimer is in the unique position of developing and owning both missing middle housing and new suburban apartment buildings. Rents for the missing middle units are only modestly higher than for the suburban apartments — $900-$1,400 compared to $750-$1,300 — so they remain affordable to much of the workforce.

One reason for that is Omaha “isn’t traffic constrained,” Reimer said. Missing middle rents can’t stray too far above suburban rents because people in Omaha won’t pay the same premium to live close in as they do in more congested cities.

Another reason is that Reimer keeps management costs for his missing middle housing on par with that of his suburban apartments. Many developers — especially large production developers — shun missing middle infill because of the logistics of managing small numbers of units scattered here and there, Parolek said, but Reimer has an answer to that. He clusters all of his units within a six-block radius.

While missing middle housing is usually pictured as infill development, it can also work in master planned communities beyond the city limits where land is more available. Reimer owns 54 acres outside of Omaha where he hopes to build 500-750 units of missing middle housing together with some commercial development. “I want it to feel like you’re in a walkable city neighborhood, not an apartment complex,” Reimer said.

Habersham in South Carolina, East Beach in Virginia and Daybreak in Utah are master planned communities where large production developers are successfully mixing missing middle housing with traditional single-family homes, Parolek said. His firm designed a collection of townhomes in Daybreak for developer Holmes Homes. They start at an affordable $182,000 for a 927-square-foot home with two bedrooms and one-and-a-half baths and go to $218,900 for a 1,284-square-foot home with three bedrooms and 2.5 baths. “They were initially afraid of building the smaller units, but all of the units are selling really well,” Parolek said.

One drawback to building new missing middle housing on the outskirts is that the urban amenities of a new community rarely match those found in established city neighborhoods. On the other hand, attempts to add missing middle infill to established neighborhoods can cause a backlash from residents fearful of increased density. A recent proposal to adjust Seattle’s zoning code to allow certain missing middle housing types in single-family neighborhoods was shot down in a barrage of protest.

Austin, Texas, is in the midst of a similar — but still on track — effort to embrace missing middle housing as it updates its land use development code. “There are opportunities if you can get the right land use regulations to allow for it,” said Paul Hilgers, CEO of the Austin Board of Realtors ® (ABOR).

The missing middle describes a range of housing, but it also describes a range of buyers and renters who don’t qualify for subsidies but struggle to find market-rate housing in cities like Austin. “Our inventory is very low (and) housing prices are rising 10 percent a year,” Hilgers said. “The housing stock is not being created for people at the middle income level.”

The housing they can afford is being built longer and longer distances away with unintended consequences like increased traffic congestion, higher household transportation costs and the need to invest in additional public services like schools. “The more you can stimulate missing middle housing in the urban core, the less need for developments farther out from the city,” Hilgers said.

Aided by a housing opportunity grant from the NATIONAL ASSOCIATION OF REALTORS®, ABOR enlisted the Urban Land Institute (ULI) to help the city, developers and community learn how to create more middle income housing by encouraging more missing middle housing. Recommendations from the ULI report include:

 • Allow missing middle housing in more zones by using form-based codes instead of density-based codes.

• Streamline the review process for select missing middle housing types.

• Work with the community to demonstrate the compatibility of missing middle housing with existing neighborhoods.

The state of Michigan has made missing middle housing a cornerstone of its placemaking initiative that aims to help cities retain and attract businesses and workers by helping them improve their quality of life.

Concerned about the migration of talented young workers to other states, Michigan studied where they’re all going. The answer is all over, but the top destination by far is Chicago. The study also found that most of them — unless they have kids — choose to live in walkable urban neighborhoods filled with missing middle housing types, said Jim Tischler, director of community development for the Michigan State Housing Development Authority (MSHDA). What’s more, they don’t move with jobs in hand. They go because it’s where they want to live and they look for work later. “That is a marked difference from the last 75 years,” Tischler said.

Message sent. Message received. “We have to change the mix of housing stock in our neighborhoods and communities ... because that is a significant talent and retention tool for economic development,” Tischler said.

The state is now helping cities analyze the supply and demand for middle missing housing in their markets. Results from the 60 urban markets analyzed so far reveal a nearly 600,000 unit undersupply of missing middle housing and a nearly 600,000 unit oversupply of detached single-family homes and two-family duplexes.

Kalamazoo’s market analysis “opened our eyes,” said Rebekah Kik, city planner. “We always thought, ‘Here’s what we’ve got. Come and get it.’” Kalamazoo’s primary walkable urban housing choices are expensive downtown lofts and historic homes that are large and costly to maintain. “There’s value in what we have, but it’s not what the people on the move want,” Kik said.

To meet the projected demand for 1,400 new urban housing units over the next five years, the city is in the process of replacing its density-based zoning code with a form-based code that will allow wider development of missing middle housing.

Many potential sites are ready and waiting because Kalamazoo previously demolished numerous units of neglected and abandoned housing in anticipation of future redevelopment. Kik envisions scenarios where eight row houses sit on the same land where just two single-family homes stood.

To win the community over, the city is showing residents examples of missing middle housing from a design contest sponsored by the MSHDA and others. “When we go out to community meetings, residents are so excited,” Kik said. “They want to know when is this coming? Where is it going?”

Many see missing middle housing as an option to age and downsize without leaving the block. “To me, that is one of the best outcomes of missing middle housing — that people can stay in the neighborhood they put down roots in,” Kik said.

Brad Broberg is a Seattle-based freelance writer specializing in business and development issues. His work appears regularly in the Puget Sound Business Journal and the Seattle Daily Journal of Commerce.

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