Complete Story
08/24/2026
Taking the “Missing” Out of Missing Middle Housing
"Missing middle housing" is all the rage. What is it, why do we want it, and how do we get it?
What is Missing Middle Housing?
The term “missing middle” refers to a type of mid-density housing somewhere in between traditional single-family homes and larger multifamily buildings. Coined by Opticos Design founder Daniel Parolek in 2010, it includes housing types such as duplexes, fourplexes, cottage courts, and courtyard-style multifamily buildings.
Housing of this size and scale was predominant in the pre-World War II era and can still be seen in older cities across the country, so the term “missing” is somewhat of a misnomer. However, we call it “missing” today because it has been essentially illegal to build since the 1940s.
Why Can’t We Build It?
While housing in buildings with between two and four units comprises 12% of all housing in Illinois, it only accounted for 6% of new construction between 2010 and 2025. This lack of development is due to regulatory barriers such as outdated zoning and building code standards, difficulties obtaining financing, and, to some extent, the remnants of a cultural preference for traditional single-family homes.
Figure 1. Total Units in 2-4-Unit Buildings and 2-4-Unit Share of New Construction
Source: 2020-2024 American Community Survey (ACS) 5-Year Estimates, U.S. Census Building Permits 2025
On the zoning side, parking requirements, minimum lot sizes, lot coverage ratios, setback rules, and a misalignment between floor-area ratio (FAR) and density regulations can limit the development of missing middle housing.
Different standards between residential and commercial building codes are also a culprit, as buildings with more than two units and/or three stories are governed by the International Building Code (IBC) for commercial buildings, which has more stringent requirements than the International Residential Code (IRC) used for detached single-family and two-unit structures.
Financing missing middle housing can also be challenging, as it is a less proven product than larger-scale multifamily housing, leading to higher interest rates and costs of capital. Financial incentives that seek to maximize impact are also often tied to scale.
Why Is It Important?
While physical scale is its defining feature, missing middle housing is also often more affordable than single-family homes or high-rise, market-rate apartments. This natural affordability stems from the sharing of land and infrastructure costs across multiple smaller units and simpler, less expensive construction methods than those used for larger high-rise buildings.
Missing middle housing also increases housing options for young professionals, first-time homebuyers, and older adults looking to age in place in their communities.
In 2025, only 27% of homebuyers had children under 18 residing in their home, compared to 41% of homebuyers in 2013. This trend reflects demographic changes statewide, with decreasing household sizes driving a need for smaller homes (2006-2010 and 2020-2024 ACS 5-Year Estimates).
At the neighborhood level, missing middle housing encourages walkability, supports local businesses, and enhances neighborhood vitality through more human-scale design. It also supports municipal fiscal sustainability by increasing the tax base while reducing infrastructure needs.
How Do We Get It?
Local municipalities are increasingly turning to strategies to support missing middle housing through zoning code updates, incentive strategies, and technical assistance programs.
Zoning updates can take the form of incremental text edits, overlay districts that allow certain missing middle typologies as-of-right, or comprehensive zoning code updates. In Oak Park, the Shape Oak Park initiative aims to implement the Village’s housing plan and support missing middle housing production through a comprehensive overhaul of the zoning ordinance and map. Adopted in 2024, the Warrenville by Design Mixed-Use and Middle-Housing Overlay established an overlay district to foster both mixed-use and missing middle housing development while ensuring that development typologies reflect Warrenville’s small-town character and scale.
Targeted financial incentives and capacity-building programs for small and midsize developers are also important to increase the supply of missing middle housing. The City of Chicago’s Missing Middle Infill Housing initiative helps incentivize development through below-market-rate land sales and reimbursable grants, while prioritizing development partnerships that help build the capacity of smaller and community-based developers.
Local governments can also leverage state and federal legislative changes to support missing middle housing production. In Illinois, the proposed Senate Bill 4061 would remove one of the core building code-related challenges by allowing buildings up to six stories to have only one staircase, decreasing construction costs by 6% to 13%. At the federal level, the 21st Century ROAD to Housing Act includes several provisions that will provide funding to local governments to support missing middle housing production. These include:
- Sec. 208 Innovation Fund - A $200 million annual competitive grant program for local governments and tribes that demonstrate measurable increases in housing supply.
- Sec. 209 Accelerating Home Building Act - Grants to implement pre-approved housing designs for accessory dwelling units (ADUs), duplexes, or townhomes.
- Sec. 303 Property Improvement and Manufactured Housing Loan Modernization Act - Allows ADUs to leverage FHA-insured property improvement loans for construction.
Taking the “missing” out of missing middle housing will require all of us - local governments, advocacy and policy groups, state representatives, planning and development professionals, and individual residents - working in tandem. However, the work is worth it to help build more vibrant communities and increase attainable housing options for all.
SB Friedman is a team of data-driven analysts, civic-minded planners, and implementation-focused problem solvers who work closely with public, private and institutional clients across the country. We are eager to tackle various land use and development issues and establish plans, strategies and partnerships to overcome them. Our primary objective is to assist our clients in achieving their economic development goals.
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