Addressing the Missing Middle: Bonaventure’s Strategy for Affordable and Comfortable Housing

Overview

The term “missing middle housing” sometimes refers to the size and style of homes and focuses on the lack of small single-family homes, townhouses and low-rise apartments in many markets. The missing middle also refers to the lack of housing for people who make an average income. Too often, new homes today are either luxury places or affordable with a capital “A” for households with incomes below 60% area median income (AMI) and generally significantly below that, which is what government programs support. To me, the “missing middle” is housing meant for people who earn 60% to 125%of AMI, depending on the cost-of-living index and adjusted by family size.

At Bonaventure the “missing middle” has always been a core part of our strategy. Why?It’s just good business.

Think about any other product. For instance, you can buy a pocketbook at Target or you can buy one at Louis Vuitton. They both hold your cell phone and wallet. Is Target a better business or worse business than Louis Vuitton? I don’t know. They’re just different.

Our values and our principles align more with the mass market than with the luxury purveyors, but that doesn’t make us right or wrong. We understand our customers. We focus on driving value rather than driving artificial price increases through branding, perceived scarcity and a label. I could never tell you how to get another $500 price increase for the same bag next year at Louis Vuitton, but I could certainly tell you how I can come up with some ideas to save $3,000 a unit on an apartment building.

Our strategy is to design our products to be as affordable as possible to people whose incomes fall into that middle range.

For example, if you take a unit that rents for $1,600 monthly, that comes to $19,200 annually. Generally, people should spend a maximum of 30% of their income on housing costs. So, to rent that apartment your annual income should be around $55,000. In the markets we’re in, that fits squarely in that 60% to 125% AMI.

Of course, if you’re a larger family, you need a larger home. Units with two or three bedrooms in our buildings will be proportionately more expensive, but they still typically fit into the budget of households in the 60% to 125% AMI range.

These apartment buildings offer more than just affordability – they have amenities such as a pool, strong internet service and a fitness center. While it’s great to offer a solution to missing middle housing, it’s even better to provide a comfortable home with a nice lifestyle that makes good business sense for us, too.