Addressing the 'missing middle' housing supply to ease shortage

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To help the housing crunch, a growing consensus of economists believe adding homes on lots where one already exists would benefit affordability and incrementally boost supply, according to Zillow.

The biggest squeezes come in large metro areas where demand is constantly high and existing housing density creates the roadblock of adding inventory. While 77% of homeowners support local government efforts to make housing affordable, 37% were in favor of building large, multifamily residences in their neighborhood. That support drops to 30% in neighborhoods of mostly single-family housing.

The answer could lie within accessory dwelling units — also known as mother-in-law units or granny flats. Building those additions received 57% support from those surveyed and 30% said they'd personally invest in them on their own property assuming zoning allowed for it.

"In an era of historically low supply and escalating housing prices, the need for more solutions to create housing opportunities is greater than ever," Cheryl Young, Zillow senior economist, said in a press release. "Our latest research shows that homeowners in major markets are generally supportive of providing a range of housing options that allow for not only more housing units, but also a diversity of housing types in existing communities."

The most fervent support to add housing units through home conversions came from the coasts. San Diego led all metro areas with 70% of homeowners in favor. Seattle's 67% came next, followed by 64% in San Francisco and 63% in both Miami and Boston.

"Homeowners may continue to shy away from adding large multifamily buildings nearby, but are open to adding units in their own backyards," Young said. "This 'missing middle' housing, they believe, could help alleviate the housing crunch without sacrificing neighborhood look and feel while improving local amenities and transit. These findings show that broad-based support, especially from homeowners, provides the middle ground necessary to move the needle needed to bring relief to the housing crunch."

ADUs already gained some traction, appearing in 5.7% of home listings in 2019, up from 1.2% in 2015. Recent studies show even modest development or rezoning could result in millions of new housing units added to the supply.

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Housing inventory Home prices Housing affordability Housing market Zillow