The missing middle

In the housing discussion there are a lot of terms being thrown around. Workforce housing, affordable housing, area median income (AMI), missing middle, and more. But, what do these terms actually mean? Do they have a fixed meaning, one with no gray area? Recently these terms have had a lot of play in the Specific Plan for the Sonoma Developmental Center (SDC) housing numbers and discussion.

Over 27 years ago, before I started a second career as a floral designer, I worked in banking. I started as a teller, eventually became an internal auditor, and then worked in electronic banking, with my last job being at Visa, the credit card giant. I really never wanted to be a number cruncher or a techie, but like many, I did it to make a living.  

I decided to go back and do some number crunching to see if I could define some of these terms as they pertain to the affordability of housing. Also over the years, I have rented a lot of apartments and homes and also bought and sold a few, so I know what is involved in figuring out what an affordable rent or mortgage payment is based on how much money you make.

Let’s start with “missing middle” and the AMI. County Planning is stating that 25% of the housing at SDC will be deed restricted, affordable. It is pretty easy to look up the various levels, but they are not telling us exactly what levels of affordability will be included: very low, low, etc.  

They state that of the 75% that are market rate, 50% will be for the missing middle, teachers, fire fighters, etc. So I looked up how much money a family of three would make to be at 120% AMI, the so-called missing middle. The figure is $121,800 per year. If they were to pay 30% of their income for rent or a mortgage it should then be $3,045 per month. One would assume they would want a two-bedroom home of some type, single family, town home, or condo. If I use today’s interest rate with 10% down, I come up with a mortgage payment of $4,034 for a $650,000 home. So if the “missing middle” is going to get these SDC homes they are going to have to sell for much less than $650,000.

If we look at the current cost of market rate homes we see most two-bedroom homes priced from $700,000 to $900,000 with a few condos in the $600,000 to $700,000 range. Specific plans do not talk in dollars and cents, they use these terms: affordable, market rate, missing middle; they do not tell us what the prices of these homes are to the renter or buyer. 

If we look at recent new market rate developments in the city of Sonoma, we see prices of well over a million. I question whether a market rate developer who takes on building at SDC will start building homes at $500,000 or less for this missing middle.

I recently read that the average salary for a SVUSD teacher is $74,043. Let’s think about what people actually earn and stop throwing terms around. It would be refreshing if we saw some real numbers that actually define what will be built at SDC and who will be able to afford it.