The Promise and Pitfalls of Middle Housing

Nathan Gass
Jun 10
5 min read

Middle housing has become a buzzword in the housing reform conversation. Duplexes, triplexes, accessory dwelling units (ADUs), and cottage courts are designed to fill the gap between single-family homes and large apartment complexes. On paper, they promise affordability, variety, and inclusion.

But the real question is: Are these housing types delivering on their promise, or are they just another way for policymakers to check a box while developers and existing homeowners profit?

Let’s explore what middle housing means, and more importantly, who’s really winning?

What is Middle Housing?

A New Approach to Urban Zoning

A labeled diagram showing various middle housing types: a side-by-side duplex with two entrances, a row-style triplex with three connected units, a detached accessory dwelling unit (ADU), a cluster of small homes labeled "cottage court.", and townhomes. The scene is drawn in warm, earthy tones with greenery throughout.

Middle housing refers to housing types that fall between detached single-family homes and high-rise apartment complexes. Think duplexes, triplexes, fourplexes, townhouses, ADUs, and small cottage courts. These forms of housing offer a more compact and flexible use of land, often within existing neighborhoods.

States like Washington have started to legislate in favor of middle housing. Recent policies require cities to allow these options in areas that have historically been reserved for single-family homes. The stated goals are to increase housing supply, promote diversity in housing types, and foster more inclusive communities.

Why It Sounds Great in Theory

From a policy perspective, middle housing is a win-win. It increases density without resorting to large-scale developments and theoretically makes more affordable units available. Advocates argue that it provides a middle ground for families, seniors, and low- to moderate-income individuals.

However, translating these theoretical benefits into real-world impact is proving to be more complicated than anticipated.

Who Benefits the Most?

Existing Property Owners

A happy older woman is in front of their home, while a smiling real estate developer in a suit stands beside an investment property. The contrasting expressions highlight how middle housing reforms primarily benefit existing property owners and developers.

One of the biggest, yet often overlooked, beneficiaries of middle housing reforms are existing homeowners. In cities like Bellingham and Ferndale, those who already own property can now capitalize on these zoning changes.

They can build ADUs in their backyards, split their lots to add a duplex, or even sell their properties to developers at a higher price. These actions significantly increase their property values and provide new income streams—rental units or profitable sales.

Developers and Investors

Developers are arguably the most eager participants in this shift. They closely monitor zoning changes, snatch up single-family homes, and replace them with multiple middle housing units. Whether they rent or sell, these units often fetch high returns, especially in a competitive housing market.

In many ways, this is the new gold rush. But the profits rarely benefit the people these policies were intended to help.

Why First-Time Buyers Struggle

Rising Land Values

An anxious young couple stands in front of a house with a “For Sale” sign, while an upward-pointing orange arrow rises over the roof—symbolizing the rising cost of housing and the financial barriers that make homeownership difficult for first-time buyers.

Zoning reforms that allow for more units on the same parcel of land also increase the value of that land. What was once an affordable starter home lot becomes a hot commodity because of its development potential. This pushes prices higher and places first-time buyers at a distinct disadvantage.

Competition with Cash Investors

Two investors in business attire stand confidently, one holding a sign that says "ALL CASH OFFER," while a young couple looks anxious and discouraged in front of a small home, symbolizing the challenge first-time buyers face competing with cash investors.

Owner-occupiers often can’t compete with real estate investors and LLCs making all-cash offers. These entities can move faster, offer more, and waive contingencies—leaving typical buyers outbid and outmatched.

The result? More homes get turned into investment properties rather than lived-in residences, further fueling rental markets instead of building stable, owner-occupied communities.

Rental vs. Ownership Disparity

Even when middle housing is built, it frequently enters the market as a rental or as a luxury townhome well beyond the reach of median-income buyers. The core idea of helping first-time buyers find a foothold gets lost in the margins.

Local Perspective

Current Trends in Bellingham and Ferndale

A city planner or community leader speaks to a concerned young couple in front of homes labeled “Bellingham” and “Ferndale,” referencing local middle housing policies in Whatcom County and their real-world implications.

In Whatcom County, cities like Bellingham and Ferndale have seen a wave of interest in middle housing, particularly following Washington state’s new zoning mandates. Builders and property owners are testing the waters with duplexes and backyard cottages.

Yet early results show a tilt toward rental-focused development. Few of the new units are owner-occupied, and affordability remains an issue. Land prices are surging as investors eye redevelopment opportunities.

Policy on the Ground

Experts tracking the rollout of middle housing reforms suggest that while the changes have spurred activity, the distribution of benefits is uneven. Developers and homeowners are positioned to gain, while low-income renters and first-time buyers still face systemic barriers.

Policy shifts alone aren’t moving the equity needle—they need to be supported by programs that make ownership accessible and sustainable for a broader swath of the population.

What’s Missing in the Policy?

Lack of First-Time Buyer Support

A sad young man holds a loan application with a thought bubble of a small house, while a businessperson labeled “Investment Property” hands over keys to a set of newly built homes—highlighting the disparity between investors and owner-occupiers.

While zoning opens doors for new construction, there’s little infrastructure in place to help everyday people walk through them. Down payments remain a massive barrier. Loan approval remains tougher for those with limited credit history or non-traditional income.

No Safeguards Against Speculation

There are virtually no checks in place to ensure that new units are used as homes rather than investment vehicles. Without priority mechanisms for owner-occupiers or restrictions on bulk-buying by LLCs, speculation becomes the default outcome.

Middle housing, in its current form, risks entrenching inequality rather than dismantling it.

Toward Real Solutions for Real People

Down Payment Assistance and Ownership Incentives

An illustration of proposed housing solutions including a handshake labeled “Down Payment Assistance,” a smiling woman holding a sign for “Nonprofit Development,” and a sign reading “Community Land Trusts,” with modest homes in the background.

To ensure middle housing truly benefits everyone, particularly first-time buyers, we need stronger support systems. Down payment assistance programs, especially those aimed at low- to moderate-income households, could provide a crucial leg up.

Public-private partnerships that offer favorable financing, tax credits, or subsidies for owner-occupiers would shift the balance away from speculative investors.

Community Land Trusts and Nonprofit Development

Community land trusts (CLTs) have proven to be a powerful model for preserving affordability. In this model, the land is owned by a trust, while the homeowner owns the building. This keeps resale prices stable and allows generational wealth-building within communities.

Nonprofit developers can also be prioritized in middle housing zones, ensuring that some portion of new development is guided by mission, not just margin.

Ownership Priority Policies

Jurisdictions can adopt policies that give first-time buyers or local residents the first chance to purchase newly constructed middle housing units. Similar to affordable housing lotteries, these policies help level the playing field.

Transparent tracking of ownership—who buys, how properties are used, and by whom—should be made publicly accessible to increase accountability.

Middle Housing with Equity in Mind

Avoiding the Developer-Only Trap

Text asks, “Are we creating neighborhoods or investment portfolios?” beside a red arrow. A modest single-family home appears on the left and a large duplex on the right, questioning whether housing reform prioritizes community or profit.

We need to ask: Are we creating neighborhoods or investment portfolios?

Without equity-minded policies, middle housing becomes a fast track for gentrification.

When reforms are paired with ownership incentives, inclusion goals, and restrictions on speculative buying, they can become a force for good.

Real-Life Models of Inclusive Growth

Cities like Portland and Minneapolis are leading the way with balanced approaches. Portland’s Residential Infill Project, for example, includes incentives for affordable units and restricts oversized redevelopment.

Nonprofit-led developments in these cities also carve out permanently affordable housing options, showing what’s possible when community needs guide urban planning.

Middle Housing at a Crossroads

Three houses—one small, one mid-sized, and one duplex—are arranged beneath a large red downward arrow and the phrase “At a Crossroads,” representing the divergent future paths for housing policy and affordability.

Middle housing isn’t a bad idea—it’s an incomplete one. Without programs that support ownership, affordability, and community control, zoning reform alone won’t fix our housing crisis.

This is a pivotal moment. The policies we pair with zoning reform will decide whether middle housing is a tool for equity or another missed opportunity.

If you’re a first-time buyer, an advocate, or a policymaker, now is the time to engage. Show up at meetings. Ask hard questions. Push for solutions that work for everyone, not just the loudest or the richest.

FAQs

1. What qualifies as middle housing?

Middle housing includes housing types like duplexes, triplexes, fourplexes, ADUs, townhouses, and cottage courts—situated between single-family homes and large apartments.

2. How does middle housing impact affordability?

While intended to improve affordability, middle housing can inadvertently raise land values and attract investors, reducing its effectiveness without complementary policies.

3. Are developers the main beneficiaries of zoning reform?

Often yes. Developers and existing property owners typically see the most immediate financial gains unless policies prioritize owner-occupiers and first-time buyers.

4. What can first-time buyers do to compete in this market?

Seek out programs that offer down payment assistance, monitor public land sales, and participate in city planning meetings to advocate for inclusionary policies.

5. How can local governments ensure fair housing outcomes?

Implement ownership-priority programs, fund community land trusts, require transparency in housing transactions, and support nonprofit development.