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Is Missing Middle Housing the Solution to Bellingham’s Housing Crisis?

These days, it’s rare to go even one news cycle without headlines discussing the United States housing crisis. It’s impacting everyone in some way, but it’s not affecting all areas equally. Washington, for one, is getting hit particularly hard.

Bellingham was recently named a “boom town,” meaning we’ve experienced a significant population increase. The love for outdoor recreation and relaxed welcoming culture are just a few of the factors that make Bellingham such an appealing place to live. Some partially attribute Bellingham’s “boom” to COVID-19 work protocols which gave more people flexible, work-from-home lifestyles, providing opportunities for workers to relocate while maintaining employment. From 2016 through 2020 the population grew by 1.1% per year, but between 2021 and 2022 the population expanded by 4.4%, increasing the population by over 10% in a five year period. While this sort of growth can be great in many ways, there are downsides for areas that don’t plan accordingly. One of the biggest challenges that Bellingham is facing today is the lack of affordable housing.

Nationally, the housing market is still feeling the ripples of the 2008 financial crisis. In the immediate aftermath of the Great Recession, the building of single-family homes declined about 80%. According to this article in Forbes, “The U.S. built fewer homes in the 2010s than in any decade since the 1960s.” By some estimates, the country has a deficit of 5 to 6 million homes. Put simply, the supply of houses is nowhere near enough to keep up with demand.

The purchase of single-family homes by institutional investors, especially median- and low-priced homes, also stymies the efforts of individual home buyers. In the last quarter of 2021, investment firms bought 18.4% of the homes that were sold in the U.S. and paid all cash for 75.3% of homes they purchased. Even in the Seattle metro area, which is among the housing markets least impacted by investment firms, those firms purchased 9.3% of homes sold in the fourth quarter of 2021. Competition from institutional investors on this scale has not been seen before in this century.

These factors are reflected in the rocketing median home price in Washington. In 2001, the median home price in our state was $179,900. In 2021, it was $560,400. If median home prices rose equal to national urban CPI inflation, between 2001 and 2021, the median home price in Washington would have only increased to about $280,000. That means that home prices in Washington have risen four times faster than the prices of consumer goods and services.

The value of the dollar is not the only factor in the affordability of purchasing a home. The Runstad Department of Real Estate at the University of Washington has been calculating a housing affordability index since at least 2005. As shown in its archived housing reports, the housing affordability indexes for both Washington State and Whatcom County were generally greater than 100 between 2009 – 2017. An index rating of 100 or more indicates that a middle-income family can afford a median-priced home. But beginning in 2017 for Whatcom County and in 2021 for the entire state, the housing affordability indexes dipped and stayed below 100, indicating that a middle-income family can no longer afford a median-priced home. The numbers for the second quarter of 2022 indicate that housing in Washington generally and Whatcom County specifically is the least affordable it’s been since 2005. And Whatcom County is consistently less affordable than the state as a whole.

Renting is equally challenging. As of September 2022, a renter in Bellingham working 40 hours a week would need to earn $25.19 an hour or $24.81 an hour in order to afford a modest two-bedroom apartment without being cost-burdened in the 98225 and 98226 zip codes respectively. As median income in Whatcom County is $25.48 an hour, this means that around half of renters are unable to afford a two-bedroom apartment on their own. Comparing these figures from the figures in 2012 highlights how the affordability problem has escalated for renters in the last 10 years. In 2012, by contrast, according to HUD figures, the median two-bedroom apartment cost $900 in 98226, requiring an hourly wage of $17.30, and $820 in 98225, requiring an hourly wage of about $15.75. In 2012, the median hourly wage for Whatcom County in 2012 was $18.86, meaning a greater portion of renters could afford a two-bedroom apartment in 2012 than can now.

As affordable housing goes up in smoke, the once-prominent American middle class evaporates along with it. According to data from the Pew Research Center, “The share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021.” As the middle class shrinks, the numbers of those at the highest and lowest ends of the income tiers grow. Getting onto the property ladder doesn’t just symbolize a part of the American Dream, it is also a critical step for people to gain momentum in their economic mobility. Since the 1940s, homeownership has been a primary means of wealth-building. For many, if homeownership is out of reach, wealth-building is, too.

In Whatcom County as around the nation, a high demand for housing is eliminating the option to purchase a home for many people. Supply is short and prices are rising. When there is high demand, the straightforward answer to rising prices is to increase the supply. However, Bellingham’s issues are nuanced. The topography, critical areas, and current infrastructure make it challenging to build in Bellingham. New traditional standalone single-family homes are very much needed to help ameliorate Bellingham’s housing shortage. Missing Middle Housing will be another key to the solution to Bellingham’s housing crisis.

What is Missing Middle Housing?

Put simply, Missing Middle Housing refers to a type of housing that could include smaller, single family detached homes, as well as multi-unit housing that is designed to be integrated into residential neighborhoods. It is largely missing from the market for a number of reasons, one of which are development regulations, including zoning laws.

A range of housing types define Missing Middle Housing, including:

● Duplexes

● Townhomes

● Courtyard buildings

● Small, detached homes on small lots

● Four-plexes

● Live-work spaces

Missing Middle Housing used to be a key element of neighborhoods before the 1940s, but in contemporary life, it is largely absent from residential neighborhoods with primarily low-rise buildings. A major contributing factor is single family zoning, which first made its way to the United States in the early 20th century and took off after it was approved in Euclid v. Ambler Realty Co., 272 U.S. 365 (1926).

Some argue that single family zones contribute to the problem, and rezoning them to allow higher densities will alleviate the problem. The Growth Management Act (“GMA,” Ch. 36.70A RCW) encourages local governments to consider increasing urban density before adding new areas to city urban growth areas. In fact, Bellingham has emphasized infill and increased density for years now, with success. Nonetheless, Bellingham’s housing affordability crisis is worse than ever.

Up-zoning existing neighborhoods is not an ideal solution, or at least not a solution that can work in the absence of other strategies. First, adding density to neighborhoods not originally designed for it will stress older infrastructure. Bellingham’s most central neighborhoods are also its oldest, with narrow streets, limited parking, and old pipes. Adding new units without replacing the old infrastructure can add serious strain, but replacing aging infrastructure would be disruptive and may be challenging, prohibitively expensive, or next to impossible in some areas.

Second, up-zoning helps very little in the short-term. It requires individual property owners to affirmatively decide to add additional dwelling units to their properties. As many have chosen purposefully to live in a single-family zone, not all will be interested in adding density to their lots. Individual property owners must also finance these density additions. Even if a property owner wanted to add an additional unit, they would need to make sure the decision penciled out, which, even with high rental and purchase prices, given current labor and lumber prices and interest rates, is not a foregone conclusion. Incrementally adding additional units to existing neighborhoods may help, but Bellingham needs more housing units now.

Bellingham can add Missing Middle Housing right now, without relying on existing neighborhoods or increasing sprawl.

Carefully designated Urban Growth Areas (“UGAs”) are probably necessary to develop a meaningful quantity of much needed Missing Middle Housing. UGAs are a planning tool established in the GMA. These are areas where a city plans to expand at an urban density. Bellingham can use new UGAs to accommodate new Missing Middle Housing by establishing density minimums. UGA designation will allow currently underdeveloped areas adjacent to city limits to be rapidly redeveloped with new, dense housing, more accessible to a wider range of potential homebuyers.

More Missing Middle Housing May Help the Middle Class

New Missing Middle Housing can be produced less expensively than new traditional single-family homes. Smaller sizes and shared walls reduce materials and labor costs, and smaller footprints make more efficient use of limited land. Often Missing Middle Housing can also be produced less expensively than high-rise apartment buildings, too, since attached single family homes, du-, tri-, and four-plexes, and cottages can be entirely stick-built, not requiring concrete or steel frames.

A large swath of people can benefit from both the price point and convenience of Missing Middle Housing, and the clue is right within the name: the middle class. Missing Middle Housing may also be particularly attractive to aging seniors, people without children, or first-time home buyers. The affordability of Middle Housing makes it an equitable stepping stone to homeownership, helping people who may not otherwise have the opportunity in the current economy build wealth.

Communities as well as individuals benefit from incorporating Missing Middle Housing. When cities plan for and integrate Missing Middle Housing, they create an opportunity to attract a larger taxbase, and in turn, more invested residents. Neighborhoods are more walkable and foster a greater sense of community. Further, a diverse range of housing attracts more equitable communities when middle-income people can afford to become homeowners.

Proactive Planning Prevents Housing Shortages

There is still time to mitigate the damage of Bellingham’s housing shortage before the crisis worsens, but action must be taken now. Proactively building new neighborhoods will be critical to alleviating the current housing shortage and preventing future shortages.

To make homes more affordable, Bellingham needs more homes. Patchwork, reactive policies that up-zone established Bellingham neighborhoods will provide new housing slowly and may stress older, existing infrastructure. New neighborhoods providing Missing Middle Housing is a viable and more immediate solution that can provide affordable housing for a wide range of people seeking homes in Bellingham.

Forward-thinking planners should look to existing UGAs and UGA reserves to develop sustainable new neighborhoods that take the “Missing” out of “Missing Middle Housing” by integrating cottages, attached single-family homes, and du-, tri-, and four-plexes from the beginning. Making housing in Bellingham affordable again for the middle class will likely require more than simply attempting to further increase existing density. New neighborhoods are needed to offer a meaningful opportunity for middle class residents to purchase a home in Bellingham, and for some to find affordable places to rent.



Contact your Bellingham City Council representative and tell them you support a proactive plan for sustainable growth.

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