The Missing Middle

Escalating home prices have shut middle-class buyers out of Arlington's real estate market. Is there a solution?
Housing Final

Illustration by James Heimer

Bridget Obikoya knows how hard it can be to buy a house—any house—in Arlington on a middle-class salary. “Public servants don’t make a lot of money,” says Obikoya, who handles parking and site plan reviews as a design engineer for Arlington County. “I can tell you the opportunity to buy a house in Arlington is almost nonexistent.”

Almost. She lucked out in 2015 while looking at homes with her mother in Green Valley.

“A house was being sold for $490,000,” she recalls, “and I asked the owner about her side yard. She said, ‘That’s not my yard. That’s an empty lot.’ ”

Obikoya found the lot’s owner, called him and made an offer on the narrow property, which he accepted after a second phone call.

Today, she’s serving as project manager on the construction of a 15-foot-wide shotgun-style home, which she designed herself with help from her architect sister and others.

“It was serendipity at its finest,” says Obikoya, a native of Alabama, where skinny shotgun houses are common. She expects to finish construction this spring and move into the new place with her mother and son.

She’s aware that her good fortune is a bit of an anomaly. Unfortunately, the chances of such serendipitous discoveries are quickly vanishing in Arlington, at least for moderate-income buyers. While housing has always been a hot topic in the county, the price crunch for many is intensifying, thanks to rising incomes, the increasing pace of teardowns and skyrocketing sales prices for single-family homes.


Bridget Obikoya on the construction site of her new home in Green Valley. Courtesy photo

Walk through just about any single-family Arlington neighborhood and you’ll see the telltale signs of the teardown trend. A “New Home Coming Soon!” sign stands in front of a modest brick rambler with uncut grass and a gutter dangling precariously from the roofline. Another yard previously bordered by azaleas and boxwoods is now filled with piles of excavated dirt and surrounded by plastic fencing.

On many streets, new houses soar three stories tall with five, six, even seven bedrooms, and a price tag to match.

“In our experience, a family comes to us and says, ‘We only want a 3,000-square-foot home,’ but they also want a home office, an in-law suite and a dining room. Before you know it, it’s 6,000 square feet,” says David Tracy, president of Classic Cottages, which built approximately 30 infill homes in 2020, primarily in Arlington. “Our homes end up on the larger size, but we are only tracking what the market wants us to build. We would love to build smaller, but the market doesn’t reward that.”

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Infographics by Laura Goode

He appears to be right. Over the past decade, builders and homeowners have torn down 1,245 single-family homes in Arlington, many of them modestly sized at an average of 1,515 square feet. Dramatically larger homes have risen in their place, averaging 4,750 square feet with a sales price around $1.7 million, according to county data.

“What developers are currently allowed to do is what we’re getting,” says Russell Daneo-Schroeder, a principal planner with the county’s housing division.

As a result, the American dream of homeownership has become out of reach for middle-class Arlingtonians like teachers, nurses, first responders, restaurant workers and—ironically—many county employees.

Since 2010, single-family home prices have risen sharply in Arlington, jumping 45% from an average sales price of $744,484 a decade ago to nearly $1.1 million in 2019, according to a Housing Market Pressures report released by the county in July 2020.

“I can’t tell you the amount of people who have looked for a single-family house in Arlington and been frustrated,” says Obikoya, who also works as a real estate agent. “I have had clients with $500,000, and there’s not a house in the county for that—not even a teardown.”

The trend concerns county leaders, who worry about the impact of spiraling home prices on affordability, racial and economic diversity, and support for public services such as schools, transit and recreation. (Affluent residents have the means to choose private over public, whether it’s education, transportation or where they exercise.)

“Getting housing right is what makes us resilient in many ways,” says county board member Takis Karantonis, an economist and urban planner who was elected in 2020 after serving as executive director of the Columbia Pike Revitalization Organization from 2009 to 2016.

Amazon’s 2019 arrival in Arlington—where the tech giant is now building a campus in an area known as National Landing, with jobs that pay an average annual salary of $150,000—has only added to the market pressure. “One of the biggest problems with Amazon is that people with very high incomes are replacing people with moderate incomes,” says Karantonis. “That has consequences for a place that is banking on its diversity.”

In Green Valley, the historically African-American neighborhood where Obikoya is building her house, Portia Clark is already seeing the effects.

“It’s rare that there’s anything in the neighborhood that’s affordable anymore, between Amazon and the investors scouting,” says Clark, who’s lived in Green Valley for more than 60 years and currently serves as president of its civic association. “We were one of the last affordable neighborhoods in Arlington.”

Data support her observations. Home prices in Green Valley increased by nearly 15% in the past year, to an average of $677,727, according to data tracking from Bright MLS. Other South Arlington neighborhoods close to Amazon’s HQ2 have seen even steeper rises, with prices up nearly 16% in Douglas Park and 31% in Penrose. (See Arlington Magazine’s 2021 Expanded Real Estate Guide, with sales trends in 400+ neighborhoods.)

Clark says rising home prices have affected community members in different ways. Kids who grew up in Green Valley can’t find a house to buy in their neighborhood. Adult children can’t afford to buy their childhood homes, or discover too late that their aging parents’ properties now have reverse mortgages on them, leaving those homes owned by investors, not family members.

“I have three grown children, none of whom are in a position to afford an $800,000 house,” says Clark. “What are people supposed to do? They can’t live in Arlington, so they go to Maryland or Woodbridge to find more-affordable houses.”

To address the issue, the county board in 2019 approved the Housing Arlington Initiative, a multipronged effort exploring land use, financial tools and partnerships, among other possible remedies. Its goal? To make housing more affordable in Arlington by boosting supply, diversifying the types of housing that are available, and preserving or expanding the number of affordable housing units.

“Housing is a critical workforce issue,” notes Scott Pedowitz, goverment affairs director for the Arlington Chamber of Commerce, which sees housing as an important pillar of economic development. “It’s important not just for workers, but for employers. They want to be in a place where employees at all different points in their career can settle in and find a place to live.”

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Michelle Winters, executive director of the Alliance for Housing Solutions. Photo by Eman Mohammed / Washington Business Journal

With these concerns in mind, county planners in 2019 began working on Arlington’s three-phase Missing Middle Housing Study.

The term, coined by California architect Daniel Parolek, describes essentially all of the different housing types that can be found on the spectrum between single-family detached homes and mid- to high-rise apartment buildings. Examples can include duplexes, triplexes, fourplexes, row houses, cottage developments and other structures, according to Parolek, author of Missing Middle Housing: Thinking Big and Building Small to Respond to Today’s Housing Crisis.

“Missing middle” housing types are typically smaller and less expensive than single-family homes, making them more financially feasible for first-time homeowners and moderate-income buyers—folks who often make too little to be competitive in a tight market like Arlington, but too much to qualify for income-restricted housing programs.

These modest housing types are largely missing in Arlington. According to county data, 24% of Arlington’s 116,000 housing units in 2019 were single-family homes; 70% were multifamily apartments and condos (both high- and low-rise). Duplexes and townhomes accounted for only 6% of the county’s housing stock.

“Arlington is very starkly missing the missing middle,” says Emily Hamilton, a research fellow and director of the Urbanity Project at George Mason University’s Mercatus Center. “In Clarendon, you walk a block from the Metro and you’re surrounded by single-family homes.”

Michelle Winters, executive director of the Arlington-based nonprofit Alliance for Housing Solutions, offers a similar observation. “Normally, a place this close to the [city] center would have more townhouses,” she says. “Glebewood on 21st Road North has one of the last ones developed before the ban. It’s an example of what could have been.”

The ban that Winters is talking about is not recent. It dates to 1938, when Arlington County officials, concerned about fast growth and high density, prohibited the construction of row houses. (That moratorium would last until 1965.) The decision favored a more suburban style of development that was also profoundly unwelcoming to Black residents.

During that same time period, builders created racially restrictive covenants that prevented African Americans from buying the new homes springing up in neighborhoods such as Alcova Heights, Bluemont and Westover. The Federal Housing Administration, meanwhile, refused to insure mortgages for homes located in or near African-American communities in a practice known as “redlining.” (Red outlines marked such neighborhoods as “hazardous” on the federal Home Owners Land Corp. maps in the 1930s.)

Glebewood Village Historic District Farragutful Wikipedia

The Glebewood development was built before a county moratorium on row-house construction that lasted from 1938 to 1965. Photo by Farragetful / Wikimedia Commons

These discriminatory practices were finally outlawed in 1968 by the Fair Housing Act, but their consequences have been lasting.

According to one research bulletin compiled for the county’s missing middle study, the areas of Arlington that are zoned primarily for single-family detached housing overlap with census tracts where at least 70% of the population is white, suggesting that “Arlington’s current zoning framework may not support the county’s goals for diversity and inclusion.”

“Single-family zoning was explicitly identified as a tool to segregate localities when it was first introduced,” explains Hamilton of the Urbanity Project. “And it’s still the case, because there are income disparities across groups.”

That’s certainly true in Arlington, where the median household income for Black residents ($58,878) is less than half that of their white counterparts ($134,723).

The income gap is just one of the many data points presented thus far by the county, which, as part of its missing middle study, has published five research bulletins and a historical overview of residential housing, planning and zoning in Arlington.

The study is still in the early stages of what is expected to be a two-year process, but residents are starting to pay attention. Approximately 150 people attended October’s virtual kickoff meeting, according to Kellie Brown, a section supervisor in Arlington’s comprehensive planning department, and 200 completed the county’s missing middle survey (which closed in December).

“The missing middle housing study is looking at how to address the housing gap between the targeted ‘affordable’ housing income range and million-dollar homes,” Brown says. “This is a real need. The study is looking specifically at how increasing housing supply and enabling construction of more housing choices—smaller than what is currently being produced through single-family teardowns and redevelopment—could be less expensive than the current limited options.”

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Infographic by Laura Goode

It is a complex undertaking. For now, Arlington officials say they are focusing on the big picture, rather than setting specific missing middle housing targets.

“There are three ways we can achieve success,” Brown continues. “One, if we [view] this study as an opportunity to think about how changes in our neighborhoods could better reflect our community priorities; two, if we help people who are already in Arlington stay in Arlington; and three, by adding more housing choices so people can live closer to where they work and continue to support our economy and community.”

Going forward, the county plans to use public feedback, data and other insights to develop a list of priorities, potential new housing types and possible locations for that housing, with points along the way for public comment, stakeholder review and board action. By late 2022, the county could then be studying Arlington’s zoning ordinance, general land-use plan and other essential policy documents to implement changes stemming from the missing middle study.

But achieving all of those goals may be difficult in light of Arlington’s escalating real estate values. Arlington continues to be a highly attractive place to live, which influences housing costs for existing and new construction of all sizes.

“It’s close [to D.C.], it’s where the jobs are, there’s a very good school system, there are lots of amenities, and it’s a pretty well-run municipality. Those are all the characteristics of a desirable location,” says David Tracy of Classic Cottages. “But it does leave behind the people who don’t have enough wealth or income levels to buy a $2 million house.”

(Mortgage calculators suggest that a buyer would need an annual income of nearly $300,000 and a down payment of $400,000 to purchase such a home.)

The cost of land alone can be staggering, with even teardowns in Arlington selling for $700,000 and up.

In late 2020, a Lyon Village home with four bedrooms and one bathroom was on the market for $1,499,999. “Built in 1940, this will likely be a teardown as home is mostly original and outdated,” the listing said.

Karantonis Photo

County board member Takis Karantonis. Photo by Lloyd Wolf

In home-building economics, land costs typically account for 20% to 40% of a new home’s sale price—and an infill market like Arlington tends to be on the high end. Such realities could push market-rate duplexes out of reach as a missing middle solution. “We’ve done a few duplexes, and a duplex today in the right neighborhood might go for $1.25 million,” says Pierce Tracy, vice president of business development at Classic Cottages.

David Tracy says the equation is more complicated than it may appear. Upzoning a parcel to allow a duplex or triplex could “make the underlying land even more valuable,” he explains. “You might build three units at $800,000 each, so if that’s someone’s definition of affordability, then yes.”

At the same time, the builders (they are half brothers) see opportunities for creative market solutions—depending on what the county decides to do. If, for example, Arlington were to allow duplexes and townhouses on smaller lots and busy streets without requiring a special exception permit, teardown properties on arterial roads could be transformed into owner-occupied missing middle housing, rather than investor-owned rentals.

“Allowing these developments on busy streets will kick-start these lower-priced units of new construction while also preserving the character of the current neighborhood,” David Tracy says.

Lyon Village resident Jon Huntley, a senior economist at the Wharton School at the University of Pennsylvania and creator of the data website Arlington Analytics, has his own questions about whether duplexes are a realistic missing middle solution for Arlington.

After looking at assessed values for new-home construction and doing the math, Huntley projected that new duplexes would end up being priced affordably (i.e., with a sale price of $525,000 or less for buyers making the area median income of $117,000) in only six Arlington neighborhoods: Arlington View, Claremont, Columbia Forest, Fairlington, Green Valley and Shirlington.

“The market does not seem to generate units at the price points that advocates are looking for,” says Huntley, who published his research online and serves as a consultant to Arlingtonians for our Sustainable Future, a local group that is concerned about the effects of rapid urbanization. “The numbers I came up with are minimum values. In reality, they might sell for higher.”

County planners are familiar with the obstacles, but say this is the time to talk about all the options. “If you don’t have a conversation about possibly allowing other housing types, you’ll never get to the conversation about who can afford them,” says Richard Tucker, Housing Arlington coordinator with Arlington County.

The question of affordability “has hit a nerve for people,” says Winters of the Alliance for Housing Solutions. She stresses that there is a distinction between what she calls “big ‘A’ affordable” housing, which is restricted to people making a certain percentage of the area median income, and “small ‘a’ affordable” housing, which is simply priced at a level that middle-income homebuyers believe they can afford.

“Some people think that if something’s not capital ‘A’ affordable, we shouldn’t do it at all,” she says. “But that’s not how we are viewing the missing middle. We view it as a way to set the housing market back on the right track.”
To some, the answer to Arlington’s housing problem seems obvious: Build more housing, perhaps loosen some rules and let the market push prices down.

“In super-constrained areas, everything gets more expensive over time,” says Hamilton of George Mason University’s Urbanity Project. “One thing that Arlington stands out as having done really well is planning around transit and allowing lots of multifamily development” along the Metro corridors. “Transit-oriented development has helped the D.C. region stay more affordable than areas like the [San Francisco] Bay Area, New York and Boston, where new housing supply has not been allowed to respond to the demand.”

But it may not be enough, given growth projections that have Arlington’s population surpassing 301,000 by 2045. “The corridors have delivered everything we want, but the region as a whole has underperformed,” says county board member Karantonis. “We are chronically supply-starved in terms of housing.”

Others disagree. “Arlington has been going full bore, adding housing supply for the last 20 years,” says Peter Rousselot, a retired lawyer and member of the leadership team at Arlingtonians for our Sustainable Future (ASF), which has expressed opposition to the county’s missing middle study.

In lieu of density changes it fears would only accelerate population growth, ASF is imploring county officials to reconsider zoning that currently allows extremely large single-family homes on small lots (a significant contributor to price hikes, as well as mature tree loss).

The group also supports the idea of housing vouchers or housing co-ops for county employees, and proposes the establishment of community land trusts to preserve green space. It favors a greater focus on remodeling existing buildings for adaptive reuse as an alternative to teardowns.

According to county data, Arlington produced a net 11,370 housing units from 2010 to 2019. Most (91%) were mid- and high-rise apartments.

“Arlington has done more than its regional fair share to provide housing, and given the cost of schools and other infrastructure, we don’t have the resources to keep doing that,” says Rousselot, who moved to Arlington in 1997 and has long been outspoken on county, school and political issues.

Another ASF concern is that continued urbanization—at the expense of parks and green spaces—will create even more impermeable paved surfaces, leading to more water runoff and increasing the risk of flooding. Rousselot points to flash floods in 2018 and 2019 that resulted in nearly $6 million in damages to county property and millions more to area homes and businesses.

He would like to see the county adopt more long-term planning tools that allow for quantitative and transparent analysis of new development proposals.

“There certainly has been and continues to be a housing affordability issue in Arlington,” Rousselot says, “but adding the so-called missing middle is not going to solve it.”

Some worry that Arlington may already have missed its window of opportunity to fend off a middle-class diaspora. “By the time we finish studying the issue and doing what we’re doing to do, what property is going to be affordable to buy with Amazon coming in?” asks Green Valley Civic Association president Clark.

“The county’s effort is laudable, but one might point out that it’s too little, too late,” agrees Matt Bakker, an associate professor of sociology at Marymount University, where he is studying historically Black neighborhoods. “Arlington has seen a fundamental transformation in the past two decades.”

Bakker doubts that simply allowing builders to construct more units—even ones that qualify as missing middle housing—will address Arlington’s goal of supporting diverse communities.

“The suggestion is that there is too much government regulation [of housing] and builders and developers can solve the problem we’ve created [with smaller market-rate homes],” he says. “It’s naive to see these actors as saviors for the communities who have been historically excluded from the housing market and now experience a real racial wealth gap as a result of discriminatory practices.”

Still, others believe that a little more zoning flexibility could open the door for housing innovation—particularly with smaller projects.

“Habitat for Humanity would love to do more work in Arlington, but they can’t make single-family homes affordable here due to the high land prices. They would benefit by spreading the land cost over several units,” says Winters of the Alliance for Housing Solutions.

She and Clark both point to a dearth of options for Arlington’s senior citizens, including older couples who are downsizing. When the county in 2019 began allowing accessory dwelling units (ADUs)—small cottages built next to primary homes on single-family lots—many hoped they would help ease that shortage by allowing elders and their caregivers to live next door to each other.

But demand for ADUs thus far has been muted, according to Classic Cottages’ David Tracy, whose company started an entire division dedicated to building the small homes. One significant constraint is the county’s 1.5-story height restriction, which limits the buildable area for ADUs.

Arlington also maintains an owner-occupancy restriction that allows only one family to occupy a single-family property if the owner is not living on site. “It creates a bit of a problem if someone needs to move for their job,” Tracy says.

With the missing middle study still in its first phase, it’s clear that Arlington has plenty to discuss as it explores its options.

“There are hugely different ways this could go,” Winters surmises. “There’s a broad approach, with a different type of allowed housing across the county, or a targeted approach where certain types will be allowed in certain areas.”

County leaders say they are looking forward to the conversations. “What we are talking about is tweaking many points of housing policy to address the housing shortage,” says county board member Karantonis. He hopes the missing middle study leads to “an honest discussion and a common understanding that this is a problem. In a community where two-thirds or more are mostly affluent, we can easily have a disconnect.”

Karantonis emphasizes that the board does not expect any missing middle decisions to revolutionize Arlington’s housing market overnight. “The missing middle is just one piece of the puzzle of fixing housing in the modern era,” he says. “It takes a while to restore a market segment.”

In the meantime, Amazon recently introduced another puzzle piece in the “big ‘A’ affordability” category. In January, the tech giant launched a $2 billion housing equity fund with a goal of preserving or creating affordable homes in its three headquarters regions. The first round of investment in Arlington included $381.9 million in below-market loans and grants to support 1,300 affordable homes (for families making 30% to 80% of the area median income) on the Crystal House property in Crystal City.

Whatever avenues Arlington decides to pursue upon completion of the missing middle study in 2022, Winters says she just wants them to be straightforward.

“The ideal outcome is that the solution is understandable, predictable and affordable so that the market can figure out how to use it,” she says. “Modest-sized housing at modest prices would be a great outcome.”

Alison Rice is a journalist living in Arlington. She has covered housing and construction issues since 2000.

Related Stories:

Arlington’s Affordable Housing Crisis
Will Amazon’s HQ2 Trigger a Housing Market Frenzy?
Arlington’s Shrinking Middle Class

Categories: Community