Beverly-Hanks & Associates
The Missing Middle: What’s Missing and Who Cares?

The American Dream has traditionally included a single-family home on a neat, level yard with a white picket fence. According to the National Association of REALTORSⓇ “Profile of Home Buyers and Sellers 2016” (NAR), that dream still holds true for many homeowners. Last year, the “typical” home purchased was 1,900 square feet, had three bedrooms and two bathrooms, and was built in 1991.

But buyers are becoming increasingly “atypical.” What housing options are available for them?

What is the Missing Middle?

The U.S. Census Bureau reported that as of 2014, 63% of America’s 117 million occupied housing units were detached homes, with apartment buildings of 10+ units comprising another 13%. Once common in pre-WWII communities, less than one fifth of homes (19%) are now anything in between, including duplexes, fourplexes, bungalow courts, and townhomes.

This “missing middle” option for homebuyers was coined by architect and urban planner Daniel Parolek of Opticos Design, Inc. Parolek recognized growing need for a middle option between suburban sprawl and crowded apartment complexes.

As men and women are waiting longer after college to get married, they are increasingly finding themselves committing to a dream home before a dream partner. Last year, 17% of homebuyers were single women and 7% of buyers were single men. That means that nearly a quarter of homes sold are being bought for single millennial owners. In addition, the number of multigenerational homes is on the rise. Numbering 26 million in 1970, today 49 million people—nearly double—live in multigenerational households. For every single young homebuyer and “modern family,” there are also older folks planning to age in place, opting to stay in a home of their own as long as possible.

For these buyers, a three-bedroom suburban home with a fenced yard is no longer an ideal purchase. Perhaps such a home is unaffordable (and becoming increasingly more so). Perhaps they want something smaller, larger, easier to maintain, walkable to transit and amenities, or closer to work and friends. In those cases, housing options have become increasingly more difficult to come by. It’s this dearth of options that’s been coined the Missing Middle.

Why is the Middle Missing in the First Place?

Since the 1940s, Missing Middle housing types have become increasingly more difficult to build. Experts point to the prevalence of low-density residential zoning as a key issue. This zoning practice gives developers fewer opportunities to build bigger. This, in turn, exacerbates another problem: the high cost of land.

The ability of developers to finance mid-scale projects has also become more difficult. So, when factoring the cost of land, labor, and materials, developers scale up whenever they can, and they scale up as much as possible. This can be seen as an increase in size (as with large apartment complexes) or an increase in “upscale” amenities that tend to price out many first-time homebuyers or retirees. And so, as new construction has moved farther to the extremes, a Missing Middle has emerged.

Why does the Missing Middle Matter?

Missing Middle housing offers a greater choice in housing types for every type of homebuyer, giving them greater opportunity to Live the Life You Choose. Millennials have been shown to drive less, and prefer living closer to city centers and public transit. Those aging in place also value amenities within walking distance, as well as proximity to transit. Many neighborhoods of detached homes cannot currently meet these needs. Because they are often in more walkable locations, Missing Middle homes attract both millennials and Baby Boomers.

Missing Middle housing also adds to the range and affordability of homes on the market. Because they are smaller homes and share communal parking, courtyards, and/or parking, they are easier to maintain, a benefit both to millennials on the go and Boomers ready to downsize responsibilities. Mid-size multi-family homes are also of greater benefit to developers and investors, because they offer multiple sources of income from the same property.

In addition, many Missing Middle options work well for neighbors. They can easily blend into existing single-family neighborhoods, unlike mid-rise apartment buildings. In fact, these types of homes typically have a residential unit density in the range of 16–30 units per acre, but do not feel as dense because of their small scale. Movements like local tiny house communities are already looking for ways to build density into established neighborhoods and offer affordable options for buyers with “tiny” lifestyles. Missing Middle housing proposes to address the issue on a slightly larger, “middle” scale.

Missing Middle housing could possibly also keep cities healthier for longer. Proponents of Missing Middle housing say that it helps keep rents from rising too quickly. This, in turn, helps young professionals save, and actually increases their ability to grow their real estate wealth over time.

According to Forbes:

Where it exists, mid-range multifamily housing development has been found to be very adaptable to changing economic environments, amenable to conversions of all types…. However, where it does not exist it causes problems for cities trying to adapt to a new era in urban living. Unlike the recent past, where young adults moved swiftly from their parent’s home to college, and then to their own single-family home, there are growing numbers of urban dwellers who are choosing renting over owning, multifamily over single-family development, and access over space. Cities have responded to this by accelerating the building of large-scale developments within the context of modern zoning. Much of what one sees happening in the trendy hot spots around the nation are a testament to this.

By investing in Missing Middle housing, small and large cities can increase density, meet the demands of changing demographics, and avoid the ever increasing need for affordable housing that ironically drives up rent.

What are You Still Missing?

Does this answer all your questions about Missing Middle housing? Do you think you’d be comfortable in a Missing Middle type of home, or are you holding out for the picket fence? Let us know your thoughts in the comments below.

 

All real estate is local. In order to make confident real estate decisions, we believe it is important for you to have timely and neighborhood-specific information. If you would like more information about every type of home available in our market, our experts at Beverly-Hanks are here to help. Contact us today to speak with a Beverly-Hanks real estate agent about buying homes and land in Western North Carolina.

 

Top Image Copyright: iriana88w / 123RF Stock Photo

 

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