HOUSING DATA AND POLICY SNAPSHOT
Missing Middle Housing
Rapidly rising rents and home values have pushed housing affordability to the center of the conversation for communities across the country. During these discussions, missing middle housing (MMH) is often cited as one of the best ways that local governments can proactively address the housing affordability crisis. Advocates suggest that by producing more MMH, municipalities can increase the availability of less expensive housing types and support vibrant, walkable neighborhoods, with only moderate increases in density. What exactly is MMH? And what role can it play in communities throughout Greater Philadelphia? This snapshot will explore these questions by describing the potential benefits of MMH and the policy changes that may be necessary to promote its development.
What is Missing Middle Housing?
MMH refers to a variety of residential developments that fall between the size of a detached single-family house and a mid-rise apartment complex (see Figure 1). MMH can be thought of as smaller, house-scale buildings or building clusters that contain more than one unit–such as duplexes, triplexes, townhomes, and cottage courts, among others. MMH was historically common in cities and older residential areas across the United States, and examples of these housing types can still be found in many neighborhoods throughout Greater Philadelphia. However, a variety of factors, including changes to municipal zoning codes starting in the 1940s, have made MMH difficult or impossible to build in many communities in recent decades. The “missing” descriptor in MMH refers to the declining share of the country’s housing stock that these types of homes represent.
Figure 1: Missing Middle Housing Types
Source: Opticos Design, Inc., www.missingmiddlehousing.com
What are the Benefits of MMH?
MMH can provide numerous benefits for municipalities and residents. For example, by using land more efficiently, MMH increases the overall housing supply, creates more affordable housing options, promotes density and walkability, and makes neighborhoods more accessible to a wider variety of ages and incomes. Many of the benefits of MMH stem from the fact that these units are typically smaller than the average single-family detached home. Based on their lower land and per-unit construction costs, MMH units are often more affordable by design and less expensive to rent or purchase than conventional detached homes. This combination of lower costs and smaller sizes can make MMH units good starter homes for first-time buyers, as well as desirable options for older adults looking to downsize and age in place.
When sited strategically, MMH can be used to support a variety of community goals that extend beyond housing, including supporting local retail corridors, transit service, and nearby job centers. Due to the flexibility of its form, MMH can be distributed throughout a block composed of single-family homes or used to create transition zones between low-density neighborhoods and commercial corridors or higher-density housing.
Furthermore, MMH may be less controversial than other forms of development and thus more politically palatable to elected officials and residents. Based on its compact size and design, MMH may benefit from lower perceived density and thus may inspire less local opposition than higher density development in established communities typically does. Sometimes lauded as “gentle density,” MMH can be used to diversify the housing options within single-family home districts without dramatically changing the aesthetic character of these neighborhoods.
The relative popularity of some forms of MMH is underscored by recent survey results. In 2022, Zillow published a survey of residents in 26 U.S. metro areas that found broad support for “modest densification” options (including MMH) from both homeowners (73 percent) and renters (84 percent). In the Greater Philadelphia region, 60 percent of respondents supported allowing duplexes and triplexes in residential zones, while 77 percent supported allowing either accessory dwelling units (ADUs) or duplexes and triplexes in residential areas.
A 2023 survey from the National Association of Realtors (NAR) suggests that MMH may help municipalities catch up to evolving real estate demands. NAR found that 78 percent of respondents would pay a premium to live in a walkable neighborhood, and for Gen Z, that figure shot up to 92 percent. More than half of those surveyed would prefer to own or rent an attached dwelling in a high-opportunity area that is within walking distance to shops and restaurant and provides a short commute to work.
Barriers to Construction
The underproduction of housing was discussed in Snapshot #3 as a significant contributor to the nation’s housing crisis. One of the key aspects of the housing shortage is the decline in the construction of small apartment buildings, a critical component of MMH. CoStar found that the production of two- to four-unit multifamily buildings fell by almost 75 percent during the past two decades compared with the long-term average from the last thirty years of the 20th century. This trend can be observed in Greater Philadelphia. Since 2000, only five percent of the housing permits approved in the DVRPC region were for small multifamily buildings containing two to four units.
Researchers have identified several factors that have limited the construction of MMH in recent decades. To start, the dominance of single-family zoning means that townhomes, duplexes, and apartments are effectively banned in many neighborhoods. In 2019, the New York Times reported that on average, 75 percent of residential land in American cities is dedicated to single-family homes. In some areas, the rate is far higher.
Even in zones where communities allow for greater residential densities, other land use and building design regulations, such as floor area ratio (FAR), minimum lot size, and setback requirements, can render construction of MMH infeasible. These regulations frequently hinder MMH development by limiting the number of units that can be constructed on a parcel of land, thus making it difficult to utilize existing lots for this type of infill development. Large off-street minimum parking requirements can also constrain MMH development by reducing the amount of developable land and adding to project costs.
Beyond zoning, there are the challenges of building codes, liability issues, and fees. For example, conventional impact fees can hamper MMH construction because they are often tied to the number of units in a development rather than unit size. This can make smaller multi-unit projects prohibitively expensive and incentivize developers to build units as large as the market can support in order to make up the cost of the fees. As the National Association of Homebuilders points out, construction costs and fees affect the development of smaller units more than larger ones. Although fixed costs are generally the same for both, smaller units have less square footage across which developers can recover costs.
Finally, many national banks and other traditional sources of financing may be unwilling to lend money to MMH developers because these projects are perceived as riskier than other forms of housing. As a result, many MMH developers have to rely on smaller, more local forms of capital and cobble together equity from many different sources, which can make the financing of MMH projects more difficult and precarious.
How Can Local Governments Encourage More MMH Development?
Fortunately, there are several ways municipalities can make the construction of MMH easier and more financially feasible. Local governments can start by updating zoning codes to allow for MMH. In some cases, this could be achieved by allowing duplexes and triplexes to be built in residential zones that previously only allowed single-family homes to be built. Alternatively, municipalities could consider transitioning from a Euclidean and density-based zoning to a form-based code, in which the built environment of a city is organized into zones by physical form and building footprint rather than density and use. This method, though time and resource intensive, may facilitate a more nuanced approach to land use and development that better accommodates MMH.
While zoning changes discussed above are important, they may not lead to an increase in MMH development on their own. Rather, as a 2022 report from the Terner Center at UC Berkeley points out, states and localities may also need to update land use regulations and streamline the development process if they want to successfully encourage MMH. Examples of regulatory reforms that can help enable MMH include reducing minimum lot size and setback requirements as well as regulating maximum building footprint size rather than setbacks. Municipalities can also work to reduce or eliminate parking minimums in order to free up space and money for MMH construction.
Municipalities can simplify the MMH development process by reducing the impact fees that MMH incurs, standardizing and expediting the MMH permitting process, dedicating staff to working on MMH permitting issues, and providing pre-approved MMH designs that developers can use.
It may also be important for municipalities to help build the capacity of smaller-scale developers who may be more likely to take on MMH projects. This can include providing technical assistance from planning and permitting offices to help developers navigate the regulatory process, creating user-friendly guides that illustrate relevant requirements, and connecting developers with financing and training opportunities.
Several states and local governments have sought to initiate reforms and create resources designed to promote MMH as part of their strategy for easing the current housing crisis. Some examples include:
- In 2020, Minneapolis, Minnesota, adopted its comprehensive plan Minneapolis 2040, which contains several housing recommendations, including allowing triplexes in the city’s residential neighborhoods, abolishing parking minimums for all new construction, adopting a form-based code, and allowing high density buildings along transit corridors.
- In 2020 and 2022, Portland, Oregon, created the Residential Infill Project (RIP), which changed the city’s zoning code to allow housing structures like duplexes, triplexes, and fourplexes in more neighborhoods, and provided more flexible rules on how homes could be configured. The project also removed off-street parking requirements in single-dwelling zones.
- In 2023, as part of its A+ Homes Initiative, Chester County, Pennsylvania, created a digital resource documenting the challenges of building MMH, the different types that currently exist in the county, the locations where they are permitted, and ways in which communities can facilitate the creation of more MMH.
- In 2020, Arlington County, Virginia, began its Missing Middle Housing Study aimed at exploring how new housing types could address its housing shortage. In 2022, county staff drafted zoning text and a few General Land Use Plan Amendments that, if adopted, would allow townhomes and buildings with 2–8 units in zoning districts currently limited to single-family development, among other reforms.
- In, 2021, Norfolk, Virginia, approved the Missing Middle Pattern Book which provides developers with technical information and free architectural plans for one-, two-, and three-bedroom units that can be configured in side-by-side duplex, triplex, multiplex, or townhouse buildings.
- In 2021, Tacoma, Washington, approved a plan to re-classify its housing types into “low-scale” and “mid-scale” residential, effectively ending single-family only zoning within the city.
- In August 2022, Spokane, Washington, began piloting temporary zoning that allows duplexes, triplexes, and fourplexes citywide, and townhomes on all residential lots.