StorageCafe: Missing Middle Persists

(Image courtesy of StorageCafe)

StorageCafe, Santa Barbara, Calif., released its latest housing growth analysis, covering almost the past two decades and revealing key trends.

From 2005 to 2023, the national housing inventory rose 16.7%, but “middle” housing stock grew by just 11.3%.

Middle housing is defined as housing that isn’t quite multifamily or single-family–structures such as duplexes, triplexes, condos, townhomes, cluster homes, cottage courts and live/work units.

“Several factors contribute to the shortage of middle housing. Zoning laws often favor single-family homes or large apartment buildings, leaving little room for ‘in-between’ options. Rising construction costs for materials and labor make building middle-income housing less profitable for developers, while limited land availability in urban areas adds to the challenge,” noted Doug Ressler, Business Intelligence Manager at Yardi Matrix. “Even when land is available, it’s often expensive, and developers frequently struggle to secure financing for middle housing projects because they’re seen as less lucrative than luxury developments.”

Yardi Matrix is StorageCafe’s parent company.

The “missing middle” housing landscape may be seeing some good news, however. StorageCafe noted there’s been recent acceleration, including in California, which has passed a number of laws to support such housing. Individual cities, including Portland, Ore., Minneapolis, Washington, D.C., and Buffalo, N.Y., have also made progress.

The East Coast generally leads in middle housing density, particularly Pennsylvania and New Jersey.

From 2005-2023, the multifamily sector saw the most notable growth, up by 54%.

Other housing types, such as manufactured homes, RVs, vans and other alternative options have seen expansion, nearly doubling since 2005. But they still remain a very small portion of housing.

Regionally, the South has led in housing inventory expansion, with 31 of the top 50 cities for growth in the region.

Most notably, Texas has 15 cities among the best-performing markets for housing stock growth from 2005 to 2023, with Frisco, McKinney, The Woodlands, Round Rock and Sugar Land constituting the all-Texas top 5.

Some areas did see a decline in housing stock, however.

For example, in Michigan, Flint and Detroit both saw notable decreases, particularly in single-family homes.