A look at housing’s ‘missing middle’

 March 13, 2020 by Fred Allebach

The “missing middle” is a deceptive term used by some housing developers and local planners. The term is deceptive because it does not refer to the median or to any middle point at all. Rather, missing middle refers to people who make 120% to 160% of the area median income or AMI.

160% AMI is in the top 10% of US earnings. How can that possibly be construed as “middle?!” The actual middle is the median, 100% AMI, not 120% or 160% of the median. Missing middle is clearly a deceptive and inaccurate term. When you hear this term, it’s a red flag warning for spin.

First let me say that the 120% to 160% AMI “notch group” demographic is caught in a bad place where many make too much to qualify for any subsidies but can’t afford full market rate either. These folks need help from market rate inflation too, just don’t call them “the middle,” because they are not.

The people who are using the “missing middle” term must be trying to say something. What might that be? What kind of spin are we talking about here? A generous interpretation would be that since the post WWII middle class actually made enough to live comfortably, missing middle is referring to a time when middle class income was an adequate income. If this is the intent, the core issue here is a living wage, not producing housing for the top 10% in the country.

The real “missing middle” is perfectly captured by any hourglass economy graphic. The comfortable middle is gone, and the country has been segregated income-wise into 1%, 10%, and 90% cohorts. This pattern is easily seen between Sonoma and the Springs, and by displacement of the working class to the Central Valley or out of state.   

More realistically, missing middle is a consciously deceptive weasel word phrase that disguises market rate builders’ plans to increase the lower-end market-rate housing supply. Since no one who makes the actual median or below can afford market-rate homes or rents, the missing middle concept appears to be cover for market-rate building interests.

What we’ve seen from Bay Area regional housing plans and from state housing bills, is lots of good-sounding but non-specific talk about “housing” and affordability. But when the rubber meets the road, the cure is all supposed to come from increasing market-rate supply. This is what “YIMBYs” are all about. The public is supposed to buy into this deception? We’re supposed to believe that taking a hair from the high price market-rate dog that bit us is going to help? I think not.

The establishment plan is to build, build, build and increase housing supply, with more units that no one in the hourglass economy middle can afford. This won’t bring median prices down until the whole working class has already been displaced from Coastal California, and until the whole Baby Boom generation dies off and Wall Street investment firms own all the rentals. Are workers simply disposable, as the heartless market pursues profit to satisfy shareholders?

What’s needed right now are higher wages, increased tenant protections, and rent stabilization to protect people here now, until such time as increased supply of market-rate housing actually brings prices down so the real median income class can afford to live here.

A sensible plan is to build, create, and rehab appropriately-priced housing in proportion to the people who need it, not just to serve the highest bidders, who are 10% and less of the population. How long can people put up with such tremendous inequity, and then be told lies about a “missing middle” as well?