Why Did the “Missing Middle” Miss the Train? An Actors-In-Systems Exploration of Barriers to Intensified Family Housing in Waterloo Region, Canada

Abstract

(1) Background: Missing Middle (MM) housing may be critical to address decreasing housing affordability and to achieve critical density in transit-oriented neighborhoods; however, its production is in decline. We report on a case study of housing development around a new light-rail transit line in the Region of Waterloo, Canada, investigating the puzzle of how a residential building boom coincided with decreasing housing affordability. (2) Methods: Following participatory co-creation and communication of background research characterizing housing demand with stakeholder partners, we created a data narrative arguing that MM housing was desired by residents and profitable for developers and then used it to guide semi-structured interviews with planners and real estate industry stakeholders. Based on these interviews, we developed a qualitative system map and causal loop diagrams that demonstrate interactions between key actors (residents, brokers, planners, developers, and investors) as mediated by boundedly rational real estate demand expectations. (3) Results: Our interviews identify multi-faceted barriers, beyond demand perception, to MM housing development. Systems analysis illustrates how high-density, small-unit high-rise development can become locked in, concurrently locking out MM housing. (4) Conclusions: Our research identifies barriers to MM housing supply by articulating the systemic feedbacks between the planning and land/housing market realms and reveals key leverage points, empowering planners to develop policies that catalyze hoped-for housing market supply responses to increase housing affordability. Based on these findings, we suggest targeted interventions: multi-unit base residential zoning, MM site plan typologies, non-profit and co-op financing, unit-mix requirements, pre-build MM condo purchase by municipalities or non-profits, and MM demonstration projects.