Geographic and Temporal Variation in Housing Filtering Rates

Abstract

In Housing Economics, filtering is 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. While at the national level filtering is an important long-term source of lower-income housing, this research shows that there is a wide range of filtering rates both across and within metropolitan statistical areas (MSAs) for owner-occupied properties. Notably, in some markets, properties “filter up” to higher-income households. This paper contributes to our understanding of filtering by demonstrating the heterogeneity of filtering rates. The analysis finds strong geographic and temporal variation in filtering rates.