New Research Sheds Light on How Housing Filters Through the Market

The idea of filtering is key to pro-housing-development arguments of the benefits of market-rate housing to the affordability of housing. New research finds that filtering is highly variable depending on location.

1 minute read

February 6, 2020, 5:00 AM PST

By James Brasuell @CasualBrasuell


Bed Stuy in the snow

The laws of physics say that what goes up, must come down. Actually, sometimes housing filters up. | Mike Goren / Flickr

Filtering is described in a new paper by researchers at the Federal Home Loan Mortgage Corporation (Freddie Mac)) as "the process by which properties, as they age, depreciate in quality and hence price and thus tend to be purchased by lower-income households."

"This is the primary mechanism by which competitive markets supply low-income housing," adds the abstract of the paper before revealing findings that reveal new insight into how, where, and when housing filters in the market. The report's main takeaway: that there's a great deal of variety in filtering rates both across and within metropolitan statistical areas. "Notably, in some markets, properties “filter up” to higher-income households," adds the abstract.

Len Keifer, deputy chief economist at Freddie Mac and a colleague of the study's authors, took to Twitter to provide more insight into the study's findings.

Monday, January 27, 2020 in Social Science Research Network (SSRN)

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