Creating our Own Missing Middle Housing
A personal reflection on trying to reconcile one's intellectual convictions with one's real life
“If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime.”
Working in economic development, I have a strong love/hate relationship with this oft-repeated proverb. The simple message of “empowerment” is innocuous enough - giving a man a fish has its time and place (for instance, an emergency), but a single fish, once eaten, has minimal value to the hungry man. Learning to fish and solve a problem with your capacities is a more sustainable and dignified solution. Few would argue with this in theory. Yet, one does not have to think for too long to see how the complexities of the real world quickly complicate things - making me far more sympathetic to Terry Pratchett’s parody version: “Build a man a fire, and he'll be warm for a day. Set a man on fire, and he'll be warm for the rest of his life.”
Returning to serious analysis - teaching fishing may or may not be a sustainable form of economic development, depending on whether fishing is profitable in that context. After all, what if a man lives in a town where the supply of fish ponds is non-existent? Or if all fish ponds in the village are controlled by a single landowner who wants to maintain a monopoly and not allow public access? And what if entrepreneurs need to endure a 3-5 year environmental review process to start a new fishery to compete with said landowners? Alternatively, what if the man lives by a sea where overfishing has prompted the government to restrict commercial fishing activity through licensing? And what if said licenses include a requirement of a certain number of years spent working in the fishing industry before you can get a permit?
In contexts where fishing is impractical, giving a man a fish may be the more dignifying solution, as it saves a day of his time where he can learn more economically viable skills instead. But we also should ask: are there ways we can change the context more profoundly to help those who want to fish?
When I first moved to the Eastside of LA in 2014, my first project in the neighborhood involved trying to start a solar construction company. The community had articulated a desire for economic opportunity - good jobs with pathways to mobility that could support a family - hence beginning a business. Rooftop solar installation was also a booming business at the time, which we believed could create opportunities for folks in our community to quickly “learn to fish.”
But as we found, good ideas, in theory, are often much more complicated in practice. Creating a successful business is quite demanding, even in favorable environments with plenty of people on board with the right skills. Your good idea is probably easily copied by someone down the road, and the path to carving out a defensible niche can be long and grueling. But we also quickly discovered that the policy environment was not favorable. Getting a construction license in California is pretty demanding: the Insitute for Justice ranks California as one of the top three most burdensome states in the US for most construction trades, and a general contracting license requires certifying 4+ years of experience in the field before you could get licensed.
We found other structural challenges, too - the way that you onramp into being a solar salesman, like almost all sales, is by trying to start with selling to your network of friends and family. But tax incentives for solar panels make the most financial sense for upper-middle-class homeowners who have saved enough to use that cash for an investment that will defray future utility bills. While this incentive structure has arguably led to a successful and widespread deployment of rooftop solar in southern California, it does not work for many residents of the Eastside of Los Angeles who are either 1) renters or 2) house-rich, cash-poor. Thus, if you grow up in East LA, you have far fewer contacts who can take advantage of those solar subsidies.
We ultimately decided to wind down the solar business to pursue other opportunities. But even though the effort “failed,” I think it contained valuable insights into how “layered” the process of trying to create positive economic change can be. Our endeavors to create a new institution were held back by policy problems (the barriers to construction licensing) and problems faced by individuals (lack of access to the right social networks). On some level, you can even trace the difficulty of starting a construction business to the level of intellectual ideas. I have found that many people intuitively believe that strictly licensing who can enter a profession can make consumers safer at minimal cost - an idea I think is very wrong. Yet, we see it getting applied to more and more fields semi-regularly.
In the past, I have used a version of this diagram to illustrate the levels at which change happens:
Ideally, economic change happens best when efforts push on all four simultaneously, with the most resources allocated to the area (individuals, institutions, policy, and ideas) where the most profound problems lie.
One of the reasons I eventually found myself working more on the issue of housing in recent years is that I have seen how many of my and others' efforts at “teaching fishing” have been rendered useless simply because the cost of housing is escalating at a much faster rate than wages in southern California. It does not take long to see why this would happen in Southern California - We have too few homes, and as a consequence, the ones we do have are incredibly costly. New homes can only be built on a tiny share of land; they take far too long to approve and with very high costs. In many ways, this situation is also downstream from housing policy: California has for years bought into the notion that growth and development are bad for existing residents, and this mindset has slowly built up into a genuine economic crisis.
Thankfully, laws are starting to change, and I am hopeful that changing these laws will have a significant impact on the problem. But I also recognize that more than changing regulations, a necessary first step is needed to solve the problem entirely. To return to the pond analogy, even if fisheries are legal to develop on a policy level, local institutions will not automatically build them. You need local entrepreneurs who will create new institutions organized under the new legal paradigm and realize they and the community can benefit from investments in new fishing ponds and individuals to learn to fish at those ponds.
In the housing context, even when laws change, developers must buy in and experiment with new business models that work financially and can be replicated across a region. That developer needs a financier willing to take a chance on lending money for the project, and most importantly, an individual family needs to be willing to pay for the home.
Take one of the housing reforms that has received disproportionate attention in recent years: reforming single-family zoning. In the last 75 years, single-family homes have become the assumed default form of housing in most neighborhoods in the U.S. Some of this is because of preferences: even the most radical urbanist will admit there is some appeal of a large single-family lot with a nice big yard, ample space for parking, and private space away from the prying eyes of neighbors. But single-family homes have also become the default because it is illegal to experiment with building anything else in most major cities. Now, some will debate whether consumer preferences drove the legal restrictions or if legal restrictions drive individual-level choices. But given the limited space for legal alternatives, it is hard to argue that regulations play no role in the current status quo.
Here in Los Angeles, single-family zoning is government-mandated on 74% of our residential land: practically, that means a mandate to build only one unit, sitting on a minimum 5000 square foot lot, with between 5 ft and 20 ft of dead setback space between the property line and where you can start a structure, and two parking spaces. You can see how prevalent this is below:
When you zoom out broader, Southern California as a region sets aside 78% of residential land for single-family homes, often with even more restrictive mandates:
LA is not an outlier here - almost all US cities have single-family zoning mandates in the majority of neighborhoods:
For the vast majority of history, most neighborhoods in cities and towns had very high levels of diversity in the housing that was built. Developers were small-time operators who built homes for themselves and others in their community, with a pretty good sense of what people needed, and there were minimal rules telling builders what could go where. Chuck Marohm at Strong Towns has helpfully dubbed this the “traditional development pattern.” In this paradigm, you had large homes on large lots and large apartments, but you also had a wide swath of homes now known as the “missing middle” of housing - because they have gone missing from modern cities.
Instead, cities are now purely bifurcated between single-family homes, which are the most expensive and luxurious, and large apartment buildings, cheaper than single-family homes but are often mostly built with single or childless adults in mind.
As an idea, many have been convinced that single-family zoning is counter-productive. Slowly, cities are starting to try to translate that idea into policy: There have been dozens of jurisdictions that have ended their mandates for single-family neighborhoods. The most significant breakthrough in California happened in 2021 when the state passed SB 9, allowing for duplexes and lot splits across the state (more on this later). However, many of these efforts have yet to achieve much beyond the symbolic idea. As Christian Britschgi at Reason magazine has been documenting, the jurisdictions that have tried to end single-family zoning and build missing middle have seen very little new development come online under the new laws. Some of this is because cities technically allow multi-unit buildings in single-family neighborhoods but still keep in place other regulations that make most missing-middle housing practically impossible. This may be changing - some of the most recent successes in 2023, like in Montana and Spokane, appear to have learned some of these lessons and better-designed reforms around what will drive down housing costs.
The biggest flaw in many city reforms is actually pretty simple: opponents of the bills often extracted political concessions that rendered them less feasible (a big issue in the case of SB 9 here in California). However, some of the failures can be attributed to the failure to take the idea of ending single-family zoning and translate it into an effective policy. Effective economic policy starts by taking into account the tangible needs at lower levels, specifically the needs of institutions (like developers) and individuals (like prospective homebuyers). For instance, if a developer is going to take a risk by building missing-middle housing when they normally build single-family homes, they need to justify that risk with the prospect of a greater return. One way to do this is by giving a developer both the ability to build more units on a lot and the ability to actually build a significantly bigger building than was legal before - aligning the social goal of more homes with the business goal of profitability. But many of the original missing middle reforms only let developers build missing middle housing the exact same size as a single-family home, which did not make business sense. On the flip side, potential homeowners are very concerned with getting a federally-backed mortgage, and unless missing middle housing is easily dividable into individual ownership units,’s hard to make mortgages work.
Two missing middle reforms that have been more successful are Accessory Dwelling Units (ADUs or backyard homes) here in California, where tens of thousands of units have come online (mostly at affordable rental levels) since the mid-2010s, and the townhouse in Houston, which has produced close to 100k townhomes in 25 years. These have worked because they are tailored to work for the needs of both developers and homebuyers. Townhomes work for developers because they can be a very efficient and profitable use of land. Townhomes work for individual homeowners because they can buy and finance using a traditional mortgage. ADUs work because the developer is the homeowner, who can profitably take a low-value part of their house or yard (like a garage) and make it much more valuable, often funding the project through the home’s existing equity.
Sadly, to see missing-middle housing come online at scale, there will need to be continuous incremental reforms for many years. I am hopeful that is starting to happen: Portland, one of the early cities to embrace reform, is now slowly improving its missing middle laws to respond to these on-the-ground needs. But I am also increasingly convinced that this change will happen faster and have a more significant impact if, at the same time, individuals and institutional developers start to think creatively, outside of the traditional paradigm, about how they can embrace missing-middle housing. What does this thinking outside the box look like? I obviously cannot predict all the ways, but I can tell my story of thinking outside the box.
My wife and I had long talked about the prospect of buying a house, but we watched in 2020 and 2021 as the combination of a long-restricted supply of homes and low interest rates pushed the entry rung of the market further and further from our grasp. In July 2015, the median home value in our zip code (90063) was just a hair under 300k (295k, to be precise). By the end of 2021, the median home value had doubled to 588k. Brittney and I knew that we would never be able to afford that price - even if we tried to make a smaller down payment, the monthly mortgage cost would stretch our budget beyond what was wise for our family, given that we both work in the non-profit world.
Around this time, I advocated for California to pass SB 9 - the law-making duplexes legal across California and allowing homeowners to split their larger lots into two. Its passage was up in the air for most of the year, but when the law finally passed in the fall of 2021, I started to wonder - what would it look like to try to shift our focus from owning a traditional single-family home to looking at homes that were “missing middle.” Specifically, I wondered if we could find a property that either 1) had an existing duplex that could be split down the middle into two lots under SB 9 or 2) a single-family lot that had sufficient backyard space that you could build a new second house under SB 9. This started as an idea, but after a few weeks of toying with it, I shared the concept with my wife.
Compared to me, my wife spends significantly less time thinking about big abstract and complex problems and more about the practical realities of keeping our family on track. She also grew up in the suburbs of Southern California, where the norm of single-family homes is so ingrained that she initially was resistant to most missing-middle housing concepts. But like most more practically oriented people, it didn’t take long to look at the prices on a spreadsheet for her to become even more enthusiastic about the idea than I was. Within a few weeks, she was brainstorming with potential friends to pitch the idea. Before I even knew what was happening, she had identified, pitched, and persuaded a particular friend who she thought would be a good fit and asked for recommendations for realtors.
Now, in 95% of LA, this would have been impossible, mainly because the price of land would have made this scheme infeasible for us, given our savings. But where we live on the Eastside is one of a handful of neighborhoods in LA where land was feasible price-wise - many duplexes sold in the $700-900k price range, which split two ways, were far more accessible than the $550-750k single-family homes we saw on the market. The Eastside of Los Angeles also had the advantage of an older (for LA) housing stock - in Unincorporated East LA, where we live, the median home was built in 1948. This meant that duplexes still exist and are on the market, unlike most of the city where single-family zoning has predominantly made them a relic of the past.
Of course, our neighborhood also presented unique challenges - while the Eastside did have a fair number of duplexes on the market, most of them were rented to existing tenants. We felt convicted that we did not want to be directly responsible for putting an existing tenant out of their home, so we told our realtor to look only at vacant units. This gave us an extremely narrow scope of homes - and led us to think at various points that this search might be a foolhardy exercise.
But things came together - we were fortunate to come across a property an investor had recently bought at auction from a recently divorced couple, so it was vacant and had a seller who was motivated to sell quickly. Thanks to the experienced guidance of our agent (thanks, Peggy!), we were ultimately able to go into escrow at slightly above the list price. Our mortgage broker was very on top of the changing situation (thanks, Ryan!), so we were fortunate enough to lock in an interest rate at just the right time - while the 6.25% we paid was higher than we hoped, it was much lower than what I would have been even a few days later. This worked to our advantage in negotiations, as the seller knew that future buyers would likely put in offers at lower price points thanks to the higher mortgage rate environment. Suddenly, in a very short period, we owned a home.
I would be lying if I said that this process has been without difficulties. Jointly buying a property does raise issues, and we have had to work out various agreements about how to pay for maintenance and value improvements and deal with one party needing to move. Some of these issues could have been simplified if our duplex had been two adjacent units where the lot could have been split, and then you could manage the property independently. Unfortunately, we knew going in that would not be feasible for our property, where the two units were stacked on top of one another, meaning we would essentially have a two-party condo board, which is not the most efficient housing structure, but it is necessary given our circumstances.
And many aspects of the process were not nearly as complicated as you might think. Getting a mortgage vetted for three people and two households as tenants in common did not kick up significant issues, partly because our house was still deeded as a single-family home, even though it had functionally become a duplex. Neither did figuring out the equity split on the house - we got a third party to give some estimates and then do some discussion back and forth to find a fair number (much as business partners might negotiate equity, but actually with more objective facts in hand). There are also many benefits to partnering with another person in managing a property - shared maintenance tasks can be split, and day-to-day things like taking out trash, taking care of Amazon packages, and keeping an eye on the property during vacations all become easier when there are two parties in the same building. Even little things like the occasional sharing of tools, food, and spices avoid the waste of owning stuff you rarely use.
It's also true that the vast majority of issues we have faced buying the house have nothing to do with living in a duplex. The biggest gripe I have is that the house was built in 1920, and while many folks intuitively find old houses romantic, the practical reality of repairs and upkeep is far less. But given how little housing LA has built in the last 50 years, these problems are shared by our region’s single-family homes just as much as our multifamily homes. Living in an old house has made me look ever more fondly at the new shiny condos built at scale in many other American cities. The second biggest gripe I have is that we live in a little strip of our neighborhood sandwiched between one of the busiest freeways in America (and all the resulting air pollution) and a heavy industrial area where all kinds of hazardous manufacturing and storage are permitted to happen. But the historical legacy of Los Angeles is that such toxic and environmentally degrading land uses were disproportionately located on the Eastside, and a single-family house would not shield us from that.
Ultimately, the purpose of a home is to have somewhere stable and secure to live at a reasonable price point, and in that sense, creating our missing-middle housing has been a huge success, enabling us to stay in the region longer term. Can I confidently say we will never face issues? I cannot. Is this an arrangement that would be desirable to everyone? Probably not. But it is an arrangement, especially given the immense challenge of affordability in Southern California, that more people could embrace if they simply gave it a chance.
To make this more realistic for more people, changes at all levels: more intellectual work will need to be done to convince those who still have legitimate questions. Policymakers need to continue rolling back harmful rules prohibiting missing-middle construction. Developers must find ways to experiment with these reforms, building modern versions of missing-middle housing. And lastly, individuals will need to shift their vision for “the good life” in the housing market. If all of these things happen, I have a lot of hope for the good things that can come.