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There’s A Reason Why Missing Middle Housing Is Missing

Updated: Nov 14, 2023

Solve for affordability, eliminate barriers, and build shared prosperity

The problem we’re trying to solve is affordable housing. Everyone’s community has this problem. Everyone’s talking about it.

It’s a supply and demand issue. There’s not a lot of housing and there’s a lot of people looking for it. With high demand, prices stay elevated. This isn’t unique to my town and it isn’t unique to yours.

How can we apply creative thinking to solve this problem? Surely everyone has tried and will continue to try. Heck, even The Four are getting in on the game.

Missing Middle Housing

Maybe you’ve heard of the term made popular by Daniel Parolek?

What is it?

If you haven’t heard of it, missing middle housing is the type of housing between single-family homes and mid-rise apartment developments.

Image Credit: Opticos Design, Daniel Parolek

How can it work?

Missing middle housing can work for a variety of reasons.

City Perspective

As a city, we get:

- an increase in tax revenue.

- stealth density where the neighborhood still looks and feels small but we have more people per block.

- usually, usually, wealth is created and not exported. These are smaller projects that attract smaller developers.

Citizen Perspective

As a citizen, we get:

- affordable housing. If we’re getting more units per block, supply is increases and rents will drop.

- walkability. That elusive 15-minute neighborhood becomes more of a reality when retail can follow rooftops.

- stealth density. There are demons associated with density. You can subtly build density and avoid the typical anti-density patterns.

- urban granularity. Smaller developers lead to different thinking, which leads to different looks and feels for each project.

- defensible space. Reduce crime by naturally building intimacy gradients and keeping eyes on the street.

If It’s So Good, Why Isn’t Everyone Doing It?

Big developer dogma

If you want to be a developer, the first thing you might do is look for advice from people who have done it before. In my experience, they all tell you to get big. 1031 exchanges, naturally encourage developers to get bigger. But the real reason is that when you’re big you get economies of scale.

Economies of scale, usually a term reserved for manufacturing, means that the more you do the cheaper it is to produce. As a developer, if I’m going to go through all the rules, regulations, fees, time why do it for 4 units? If you do it for 100, it’s the same amount of meetings and paperwork. You just put a couple extra 0’s on the end. That 10% return looks a lot nicer on the bigger projects.

So even if your first project was a duplex, you’re trained and coached to sell that duplex for a 4plex, sell that 4plex for the 8plex and then you’ve “made it” when you’re onto your midrises.

Form follows finance

Carol Willis, associate professor of Urban Studies at Columbia University. Published in 1995, “Form follows finance”. Her argument?

If a building’s primary activity is to make money, the form will be dictated entirely by getting high rents and keeping costs low. If you’ve got 30 minutes, read Carol’s case study about the Empire State building.

Urbanism can exist in many forms but when investment and incentives only support building particular projects, specifically the ones that provide the highest rate of return, those are the only ones that get built.

Specialization required

We’ve made acquiring a single-family home easy and straightforward compared to any project that has more than one dwelling. I know from experience.

I learned more about rehabbing an existing structure into my home and an additional unit than I did getting my bachelor's degree. They both took about the same amount of time. But the development project took significantly more effort and had significantly more risk associated.

With such a high level of specialization needed, and with such a level of tenacity, grit, and patience required people naturally choose to invest their energy and get better returns elsewhere.

It Takes 3 To Tango


Developers are hard to come by for missing middle projects because of the reasons mentioned above. Intense specialization is required in today’s development world and every single resource, coach, person encourages developers to get big.

So even if you are a small developer you’re coached to be small for as short a time period as possible.

The weird thing about this situation is that if someone is looking to get started in development, or even if they want to build a home and diversify their income any missing middle project is a perfect fit. How can we attract generalists to the table to help rebuild our urban fabric?


If you haven’t read the ‘Color of Law’ buy it. Read it. (This is an affiliate link. If you buy the book using this link, I make a little money to help to do research and write articles like this.)

What I learned reading the Color of Law is that there’s a reason missing middle housing is missing. It’s because people believed (believe?) that multifamily housing is where poor people lived. And the best way to keep poor people out of communities was to not loan money for these types of projects.

This is the sad, disgusting, dark side of banking and urban planning. Today most bankers don’t know why they still don’t loan for these types of projects. You call them and ask if they loan money to a new construction duplex project and the conversation goes like this:

Developer: “Do you do loans for new construction duplex projects?”

Banker: “No? No. We don’t really do those projects.”

Developer: “Why not?”

Banker: “I don’t know. We like to keep projects that have more than 4 units or single-family houses in our portfolio. The numbers are just better…”


Similar to banks, cities enforced zoning requirements that made smaller multiunit buildings illegal. Just read the Color of Law. I can’t beat the research and work of Richard Rothstein.

You Need All Three

The missing middle is missing for a reason. You need all three (developers, bankers, local government) parties to understand, recognize, and support the creation of this specific housing type.

If you can get there in your community you can start to solve the affordability problem and start building shared prosperity in your community.

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