An intriguing argument in Keep Austin Wonky:
Often, developers are described as ‘greedy’ (which is a way of saying they are making too high a profit relative to the externalities they produce). Interestingly, many anti-development advocates believe that the same ‘greedy’ developers that produce certain types of development (‘stealth dorms’, large high rises) will recalibrate and build the ‘right kind’ of multi-family if we just place enough constraints on what they can do.
… the development types in the missing middle is what many of the anti-development advocates allude to as being the outcome they would like. In their view, the preferred solution is to regulate the market enough to narrow the options available to the developers so that they get to work on creating housing the Austin NIMBY coalition would like.
The assumption is that the actual humans that are proficient at redeveloping a single-family house or duplex to accommodate a lot of roommates is going to be good at navigating the process for missing middle-style, low-unit multi-family. This is a flawed assumption. …
The different development firms and sources of capital that produce large complexes certainly have the skills and money to tackle the missing middle. But why don’t they? Well, because there’s not an attractive ROI in it, obviously. If you are going to take on development risk, why do it for some relatively minor project? If you are a leader at such a firm, you still have to make time in your schedule for selecting designs, meeting with capital, dealing with the politics whether the project has 1x units or 5x units. So, it makes sense to go for 5x. …