At ELDI, we often talk about the importance of creating mixed-income communities. And for good reason: research continues to show that where people live shapes long-term outcomes, from earnings and college attendance to access to opportunity.
But when we talk about fostering a mix of income levels, the conversation often focuses on two ends of the spectrum: affordable housing and market-rate housing. What gets lost is everything in between.
In the community development world, this gap is often called the “missing middle.”
First introduced by architect and urban planner Daniel Parolek in 2010, the term originally referred to a lack of medium density, multi-unit housing types—such as duplexes, triplexes, cottage courts, and small apartment buildings—that sit between single-family homes and large apartment complexes.
Today, the term is also increasingly used to describe a different but related gap: the shortage of housing for middle-income households.
For Nathan Wildfire, co-founder and CEO of the Missing Middle Housing Fund (MMHF) and a former ELDI employee, that income gap is the focus.
“The missing middle for us refers to an income range,” Wildfire explained. “It means making 80% of the Area Median Income to 120%. It’s workforce housing, or ‘attainable housing,’ if you like that definition better.”
A census tract-level analysis by Moody’s Analytics and the Urban Institute confirms this shortage, finding that the largest housing supply gap is in “middle-income” tracts, defined as 80-120% AMI.
The result is a market where many middle-class workers earn too much to qualify for traditional affordable housing, but not enough to afford what is being built at market rate. This applies to both rental and homeownership units.
Chart: Center for American Progress
A growing affordability squeeze
National data backs up the pressure middle-income households are feeling on the homeownership front.
According to the National Association of Realtors and Realtor.com’s 2025 Housing Affordability & Supply report, households earning $75,000-$100,000 a year could afford only 21.2% of home listings as of March 2025. In a balanced market, that figure would be closer to 50%, requiring nearly 416,000 additional listings priced at or below $255,000.
So what is driving the shortage?
Wildfire points to a combination of increasingly restrictive zoning, rising construction costs, labor shortages, and limited funding options for middle-income housing projects.
“In terms of the zoning laws, it was a different form of redlining,” he said. “Instead of being based on a person’s race or ethnicity, it was more, ‘We don’t really want a duplex next to our single-family house,’ or ‘We don’t really want a cottage cluster on that large lot down the street.’”
At the same time, costs have continued to rise.
“If you have less and less labor entering into construction jobs, the labor that exists gets more and more expensive,” Wildfire said. “Next to that, all the materials started to get more and more expensive.”
And while public funding is often available for affordable housing serving households at or below 80% AMI, there are fewer dedicated tools for middle-income projects.
Connecting innovation across the housing ecosystem
Wildfire founded MMHF with Peter Clarke and Jeff Gaus in 2021 to help address these issues—and to help communities across Oregon and beyond think differently about what it takes to build attainable housing.
After interviewing around 100 developers, 30 architects, 50 public officials, as well as banks, financiers, real estate investors, permitting officials, planners, and general contractors, Wildfire and his team saw that housing innovation was happening everywhere. The problem was that it was happening in silos.
“One of the first things we figured out is that everybody has a different boogeyman in housing,” Wildfire said. “And they’re all kind of right, but they’re all convinced they’re the MOST right, to the exclusion of all of the other barriers.”
For local developers, the barrier is often red tape. For general contractors, it is workforce availability. For cities and community groups, it may be financing, land, or political will. MMHF’s role is to bring those stakeholders together and help communities build a different kind of housing ecosystem.
The organization catalyzes (and sometimes directs) development, hosts housing summits that bring diverse stakeholders together, supports housing innovators, and helps local groups establish housing funds.
Reimagining how housing gets built
MMHF’s Housing Innovation Village Experience, or HIVE project, offers a clear example of this approach applied to for-sale housing.
In partnership with the community group SEDCOR and the Newberg Workforce Housing Consortium, MMHF is producing a first-of-its-kind housing innovation village in Newberg, Oregon. The 10-unit cottage cluster is designed as a scalable model for building more attainable homes for workers earning 80% to 120% AMI.
Each unit will test different building innovations, including advanced mass timber, carbon-negative concrete, precision panelized building methods, and automated and off-site construction. One home even hopes to be constructed on-site partially with drones. The project will also explore innovations in financing, workforce development, and policy reform.
“We have builders and an exhibition showing off new ways of constructing homes,” Wildfire said. “We’ve got the economic development entity for the region subordinating land, providing pre-development capital, and doing builder financing. We’ve got multiple workforce training initiatives on one site, and we’ve got the state Housing Accountability and Production Office weighing in on regulations with us.”
Still, Wildfire is clear that HIVE itself is not the answer. The larger lesson is the process.
“We don’t have a silver bullet or a secret sauce,” he said. “The exact problems and players will change everywhere you go. What’s consistent is a commitment to building your local ecosystem differently.”
A familiar approach for East Liberty
At ELDI, that kind of ecosystem-building has long been central to our work. Through our PAFI model—Plan, Advocate, Facilitate, Invest—we have helped move community plans from vision to implementation by bringing together residents, public agencies, funders, developers, and other partners around shared neighborhood goals.
That work now extends through our spin-off organizations like Main + Elm Development Company, a real estate development non-profit that is helping bring community-aligned housing and Main Street projects to life in East Liberty and beyond.
For Main + Elm Executive Director Jonathan Huck, addressing the missing middle not only requires innovation; it also requires a clear understanding of how missing middle rental housing and homeownership units serve different roles within a healthy neighborhood.
“Rental housing can become more affordable over time when there is enough supply and older units filter down in price,” Huck shared. “But homeownership works differently. Homes tend to gain value, especially in desirable neighborhoods, which means a home that was affordable when it was built can become less affordable over time. That’s why communities need to be intentional about the mix of rental and for-sale housing so people across different income levels can access opportunity and neighborhoods can grow without shutting people out.”
Bringing it home: More than a housing policy issue
For Wildfire, this work is more than professional—it is personal.
During the pandemic, he was living in Portland and directing a community choir. Within a few months, the choir shrank dramatically, not because members became sick, but because many could no longer afford to live in the city.
A retail worker moved away after her store shut down. A machinist continued driving an hour each way to rehearsal because that was where he could afford a home. A baker and a senior care worker lived together platonically because sharing housing was the only way to make it work.
“When you have a choir, you literally have to be in harmony,” Wildfire said. “And my little community, my little family of harmony, was broken by the high cost of housing.”
That, he said, is what people often miss when they hear terms like “middle-income housing” or “workforce housing.” These are not abstract policy categories—they are people’s homes.
“We hear stories about people falling through the cracks with housing, and we tend to have a certain image in our minds of what that looks like,” Wildfire said. “We don’t think as much about the machinist, the barber, the baker, your everyday worker. I think giving voice and a face to that is the piece we skip past too often.”
For us at ELDI, that is why the missing middle matters. A vibrant neighborhood needs homes at different price points, in different forms, for people at different stages of life. Without that range, communities lose more than housing options. They lose workers, neighbors, relationships, and the everyday stability that helps a place thrive.