This really nails it: "Filtering seems to be controversial because it touches on the fact that many of the housing issues that concern us are about the distribution of income and wealth, not the quantity of homes."
I wish people would reframe housing affordability as "poverty". We used to use that word. We no longer do.
As your example shows, fixing the housing market (in your example, somehow enabling two more homes) might not fix the housing problem (overcrowding).
But fixing inequality would fix it.
If fixing the market doesn't fix the problem, but fixing inequality does, it it a problem of markets or inequality?
Let me stray into political science. My guess is that poverty was reframed as a housing market problem to dupe the left into supporting reforms that work for vested interests but not for the left's traditional constituency, the poor.
"My guess is that poverty was reframed as a housing market problem to dupe the left into supporting reforms that work for vested interests but not for the left's traditional constituency, the poor."
"My guess is that poverty was reframed as a housing market problem to dupe the left into supporting reforms that work for vested interests but not for the left's traditional constituency, the poor. "
Killer insight, and ... here in California one does not have to "dupe" the left. If *defines* the left as theatrically pretending to help the poor at the behest of the rich. No-one believes California is housing the poor. It is quite clearly serving elite economies like Silicon Valley to allow it to continue to grow.
I see the filtering argument being used to say, essentially,
"New luxury homes create affordable housing. We don't need affordable housing programs. Stop complaining that all the new housing is large and expensive."
I think a related inconsistency is I often see the same 'supply supply' 'regulation' 'filtering' is the answer people then say that immigrants or international students have no effect on the rental market because they all live in the CBD and in student housing. So in this argument they accept no flow on effects from this demand. They also ignore that many campuses are in the burbs now.
There are so many areas in which this happens. People arguing for all sorts of economic complexities and nuance that magically support their position and a narrative casting any dissenters as xenophobic bogan halfwits. Then on the other side they support the most simplistic common sense notions until their supportive think tank has dreamt up a statistical trick to support the position at least :)
There is also “reverse” filtering. It’s also well documented in the literature that filtering is generally always less than 1 for 1 and may be negative. (Displacement chains are discussed below.)
“While filtering is an important long-term source of lower-income housing at the national level, this research shows that filtering rates for owner-occupied properties vary considerably both across and within metropolitan statistical areas. Notably, in some markets, properties “filter up” to higher-income households.”
The worst outcome of the fact that new units are luxury (target markets >100% AMI) is that elite neighborhoods become more elite via “exclusionary” rents. Any filtering that occurs is likely to occur in lower-income neighborhoods, continuing existing patterns of geographic income segregation.
And finally, my pet rant, one has to understand that demand is persistent and these kinds of analyses are static. In your static, closed system no-one in-migrates from ROW to fill the new luxury units. What can happen in high-growth areas where household growth rates exceeds housing growth rates is that in-migrating residents fill ANY vacant units, including existing units with lower rents, creating "displacement" chains rather than vacancy chains.
Despite increasing housing stock and decreasing population, California homelessness has skyrocketed.
How is that even possible? It's because 1.) an under-supply of mostly new (1BR) units reduces average household size when filled by single, in-migrating tech workers or when used as pied a terre by global elites, and, 2.) the excess of in-migrating tech workers fills existing lower rent units, thereby eventually displacing some lower income families. At the termination of that reverse-filtering (displacement) chain 3.) someone moves out of state, or ends up in cars and tents.
Great comment. Thanks. The idea of reverse filtering also points to how important the distribution of wealth is. You can add more supply per person over a period and in an area where wealth/income inequality is rising and the poorer households will have MORE people per household.
Yes. Good point. I had lower income families only leaving area or state or unhoused, but another option is clustered within a unit at much higher density. In California those densities can be quite extraordinary.
Great summary. Clear and concise as always.
This really nails it: "Filtering seems to be controversial because it touches on the fact that many of the housing issues that concern us are about the distribution of income and wealth, not the quantity of homes."
I wish people would reframe housing affordability as "poverty". We used to use that word. We no longer do.
As your example shows, fixing the housing market (in your example, somehow enabling two more homes) might not fix the housing problem (overcrowding).
But fixing inequality would fix it.
If fixing the market doesn't fix the problem, but fixing inequality does, it it a problem of markets or inequality?
Let me stray into political science. My guess is that poverty was reframed as a housing market problem to dupe the left into supporting reforms that work for vested interests but not for the left's traditional constituency, the poor.
Wow. Seems accurate.
"My guess is that poverty was reframed as a housing market problem to dupe the left into supporting reforms that work for vested interests but not for the left's traditional constituency, the poor."
"My guess is that poverty was reframed as a housing market problem to dupe the left into supporting reforms that work for vested interests but not for the left's traditional constituency, the poor. "
Killer insight, and ... here in California one does not have to "dupe" the left. If *defines* the left as theatrically pretending to help the poor at the behest of the rich. No-one believes California is housing the poor. It is quite clearly serving elite economies like Silicon Valley to allow it to continue to grow.
I see the filtering argument being used to say, essentially,
"New luxury homes create affordable housing. We don't need affordable housing programs. Stop complaining that all the new housing is large and expensive."
e.g. https://www.huduser.gov/portal/periodicals/cityscape/vol25num3/ch6.pdf
I think a related inconsistency is I often see the same 'supply supply' 'regulation' 'filtering' is the answer people then say that immigrants or international students have no effect on the rental market because they all live in the CBD and in student housing. So in this argument they accept no flow on effects from this demand. They also ignore that many campuses are in the burbs now.
Exactly. Either filtering is real on both sides of the market, or it isn't. Picking and choosing when to believe it matters is strange.
There are so many areas in which this happens. People arguing for all sorts of economic complexities and nuance that magically support their position and a narrative casting any dissenters as xenophobic bogan halfwits. Then on the other side they support the most simplistic common sense notions until their supportive think tank has dreamt up a statistical trick to support the position at least :)
There is also “reverse” filtering. It’s also well documented in the literature that filtering is generally always less than 1 for 1 and may be negative. (Displacement chains are discussed below.)
See https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3527800
“While filtering is an important long-term source of lower-income housing at the national level, this research shows that filtering rates for owner-occupied properties vary considerably both across and within metropolitan statistical areas. Notably, in some markets, properties “filter up” to higher-income households.”
You’re example where adding luxury stock reduces local household sizes is also real. In California, population had been decreasing even as new apartments were being built. https://www.ppic.org/blog/shrinking-household-size-strains-californias-housing-market/
The worst outcome of the fact that new units are luxury (target markets >100% AMI) is that elite neighborhoods become more elite via “exclusionary” rents. Any filtering that occurs is likely to occur in lower-income neighborhoods, continuing existing patterns of geographic income segregation.
And finally, my pet rant, one has to understand that demand is persistent and these kinds of analyses are static. In your static, closed system no-one in-migrates from ROW to fill the new luxury units. What can happen in high-growth areas where household growth rates exceeds housing growth rates is that in-migrating residents fill ANY vacant units, including existing units with lower rents, creating "displacement" chains rather than vacancy chains.
Despite increasing housing stock and decreasing population, California homelessness has skyrocketed.
How is that even possible? It's because 1.) an under-supply of mostly new (1BR) units reduces average household size when filled by single, in-migrating tech workers or when used as pied a terre by global elites, and, 2.) the excess of in-migrating tech workers fills existing lower rent units, thereby eventually displacing some lower income families. At the termination of that reverse-filtering (displacement) chain 3.) someone moves out of state, or ends up in cars and tents.
Great comment. Thanks. The idea of reverse filtering also points to how important the distribution of wealth is. You can add more supply per person over a period and in an area where wealth/income inequality is rising and the poorer households will have MORE people per household.
Yes. Good point. I had lower income families only leaving area or state or unhoused, but another option is clustered within a unit at much higher density. In California those densities can be quite extraordinary.