Missing Middle, What Is It Good For?
Happy Tuesday and welcome to another edition of Rent Free.
Government rules on new home construction make routine real estate development more difficult and expensive than it needs to be. Overly restrictive land use regulations also make it difficult to provide housing in more extreme circumstances. This week’s stories cover a couple of examples of the latter phenomenon, including:
- Los Angeles looks to use the latest fires as a reason to exempt itself from state-level zoning reform bills.
- A Reason report from last week found that the island of Maui has managed to rebuild just three homes 18 months after the devastating wildfires on the island in August 2023.
- In Ohio, a pastor has been convicted of criminal violations of the fire code for sheltering people in his commercially zoned church.
But first, the newsletter covers a slew of “missing middle” reforms being introduced this year, and what they can and can’t do for housing supply, choice, and affordability.
What Middle Housing Reforms Can (and Can’t) Do
Few cities get more plaudits from Yes in My Backyard (YIMBY) zoning reformers than Austin, Texas. It’s a rare boomtown that’s adding jobs, people, and housing while also seeing rents fall.
It’s also one of the cities in the country that has adopted signature YIMBY “missing middle” reforms.
In December 2023, the city approved HOME I reforms that allow three units to be built on residential lots where previously single-family-only zoning had allowed one primary dwelling.
A natural assumption to make is that Austin’s high construction rates are partially explainable by its abolition of single-family-only zoning. This would be a mistake.
Late last year, the city released data on the first six months of the HOME I reforms. From when they went into effect in February through August, builders have submitted 159 applications to build duplexes, triplexes, and two-home detached projects under the city’s new HOME I rules, potentially resulting in 300 new dwelling units, according to the report. Of those applications, 99 projects totaling 220 units have already been approved by the city.
We have new permitting data on the results of Austin’s ‘missing middle’ reforms. Over 200 individual units permitted 6 months after implementation. That would make it more productive than Minneapolis’, PDX’s missing middle reforms were even a year out. pic.twitter.com/tX4pGaJ8Nx
— Christian Britschgi (@christianbrits) January 2, 2025
That’s not nothing. But it’s also a small sliver of Austin’s total housing production.
In 2024, Austin permitted 8,179 units, according to data collected by the U.S. Department of Housing and Urban Development (HUD). Assuming builders filed applications for HOME permits at the same rate from August through the end of the year, the HOME reforms are responsible for about 5 percent of the city’s overall housing production.
Again, that’s not nothing. Local builders note that the increased construction of new HOME-enabled units is coming at a time when rents, home prices, and construction rates are all cooling fast.
Austin’s housing production in 2024 is down some 40 percent from its peak in 2021.
“300 [units] doesn’t sound like a lot but in the worst real estate market in decades here, that’s saying something,” says Scott Turner, an Austin infill developer.
Modest Missing Middle Results
The past few years have seen YIMBY zoning reformers train their fire on single-family-only zoning that blankets most residential land in most American cities—and for good reason.
Zoning rules that allow just one home per property, and that often come paired with large minimum lot sizes, are the most restrictive (or exclusive, if you prefer) form of residential zoning.
They keep apartments and businesses out of neighborhoods where there might otherwise be a lot of demand for them. In many cities, single-family zoning was also adopted with the explicit intent of excluding racial minorities and working-class people from town.
And yet, wherever cities and states have replaced single-family-only zoning with more permissive missing middle regulations that allow small multi-unit developments, the impact on overall supply and construction rates has been exceedingly modest.
In 2022, Spokane, Washington, enacted code changes that allowed up to four units of housing to be built in single-family neighborhoods and eliminated residential parking minimums.
Those reforms served as a model for Washington’s statewide middle housing reforms that passed in 2023. Spokane made them permanent in November 2023 with code changes that technically allow an unlimited number of units in low-density areas (although bulk and height restrictions impose practical limits on how many units will be built.)
Spencer Gardner, director of Spokane’s Department of Planning Services, tells Reason that 80 units were built as a result of the city’s interim code reforms—which amounts to about 5 percent of the city’s overall housing production.
Since the missing middle and parking reforms have been made permanent, Gardner says that the city has continued to see a “significant increase” in townhome and duplex development, but this newly allowed infill development is still only around 5 percent of the city’s overall residential construction.
It’s the same story in Portland, Oregon, and Minneapolis. Missing middle reforms have netted, at best, a few hundred additional units per year in cities that build a few thousand annually.
Short Supply
In one sense, that’s to be expected. Middle housing reforms are pitched to an often skeptical public on the promise that they will only result in modest changes to existing neighborhoods.
These reforms pair the legaliz
Article from Reason.com
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