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."
"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"
And just to refine the analysis.... its probably the other way around. Massive "supply" of market-rate housing was pitched as a way of creating "affordable" housing (see below). You know how it works, right. Supply drives prices down to cost!! It took a while for even academics to acknowledge that the overwhelming percentage of housing being built is clearly "luxury" housing well out of reach of lower income families. They thus began to use "filtering" as apologia to this fact.
I loved this in the subtitle: "Sadly, this blame is often misguided because planners do not produce housing"
Australia has became obsessed with the idea of housing targets. State and sometimes local governments now have construction targets they're supposed to be held accountable for.
The problem with this is that
they don't generally build housing themselves, and can't approve building applications until the private sector makes them.
Holding people accountable for something they have no power to achieve is just plain dumb. I've been waiting for the penny to drop. No-one seems prepared to state the obvious.
Might as well set local government some job creation and wage growth targets at the same time. It'd be equally sensible.
All of this is oddly socialist. Somehow the idea that market prices and quantities were generally good, absent any identifiable market failure, has been jettisoned, in favour of an obsession with a particular price being too high, and to be reduced via 5-year plans and targets.
Yes. Socialist indeed. It's very weird. The California RHNA process and HCD bureaucracy is essentially practicing a command economy by literally handing out state-wide housing quotas generated by yet another bureaucracy the Legislative Analysts Office.
And even more strangely, there is a housing "sub-quota." This, for the number of units that needs to be zoned in targeted RCAA's, racially concentrated areas of affluence, read: rich white neighborhoods. To integrate these neighborhoods, there is an HCD policy document that proclaims, straight-faced, that if "towns" or "cities" zone for housing in these areas at particularly densities (20 and 30 du/acre respectively) that those densities are suitable for "low-income" housing and that HCD in its review process will automatically accept this part of that city's housing plan without challenge.
Five miles away, in Atherton, the richest zip code in the US, Steph Curry and Charles Schwab, live, among others. Does anyone really believe that California can income-integrate Atherton by zoning at 20du/acre? And would these hypothetical market rate apartments really be rented by low-income families?
I cannot tell you whether or not any HCD bureaucrat believes what they are saying, or whether its a cynical pretense to upzone in single family neighborhoods. I can say that many of these concepts are pushed down from the Federal agency, HUD, along with Federal carrots. States that want Fed housing money have to conform to HUD requirements.
Worse, as you point out, cities are not held accountable to "approvals", which they can make, but rather to "building permits" pulled by developers. A city cannot "count" an approved unit towards its quota until a permit is pulled. We know that builders time markets and they often bank approvals. One example. Menlo Park recently submitted its housing report, favorably noting some level of RHNA attainment with several thousand units "approved." But a deeper read into the staff report shows that permits have been pulled for only several hundred units. One project with 1700 housing units, part of a large Facebook Expansion was approved several years ago and nothing has happened as Silicon Valley employers still face soft economies.
Here in very Blue, very affluent Northern California all the affluents are mesmerized with their roles in the mass theatrical performance that they are integrating and diversifying their cities when they are clearly making them more exclusive. Prices, rents, gentrification, homelessness have gone up, up, up since that 2017 article I showed you, and since "progressive" supply-side, de-regulatory policies were first enacted. Not a single newspaper, elected official or anyone has pointed out the obvious failure.
"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.
YIMBY, at least in its place of origin, is primarily a creature of the tech industry, which funded the academic underpinnings for YIMBY's arguments and also funds YIMBY's main proponent in the California legislature, Senator Scott Wiener, who is waiting in the wings to run for Nancy Pelosi’s seat in the U.S. Congress when she retires. He’s been very persistent and successful in incrementally dismantling CEQA, the state’s longstanding environmental protection act, and has also been successfully assaulting local land use controls, including zoning.
Yes to all of that. Additionally it funded the movement's founder, Sonya Trauss, and probably continues to keep her on payroll on YIMBY law. These kinds of NGO's are apparently no longer required to disclose names of donors. If you have any way of finding out or know who YIMBY law's funders are, I would like to collect that information. I believe it was Zuckerberg who bought a "housing desk" at KQED that then created and furthered the (factually false) narrative that single family zoning had a "racist" origin, conveniently, during the SB9 debates. It's also fairly easy to review the lobbying database to see which tech companies are funding which legislative measures.
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.
Cameron, my limited understanding of filtering is different and comes from YIMBY materials in California. That explanation is that “filtering” is, indeed, about people moving out of their homes and into other homes, over time. But the way that’s supposed to affect the housing market is that the older a house is, the less valuable it becomes, as former occupants move into newer, shinier homes. In this way, as more housing is built, it naturally provides more “affordable” housing. So it’s about aging rather than simply expansion. That seems to me a somewhat different proposition than what you've described, but no more credible.
Mmm. Doesn't every dwelling age at exactly the rate of one year per year? Surely the argument just collapses back to a quantity and filtering across types/locations argument, no?
As I understood your explanation, filtering is a matter of expanding supply and the issue of how occupants are re-distributed among a larger number of buildings. I don’t think I saw anything about preferability of the newer, additional buildings, and the consequent passing along (and down) of the older buildings to a less affluent population, which is the line I’ve heard YIMBYs pushing in lieu of promoting affordable housing.
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."
"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"
And just to refine the analysis.... its probably the other way around. Massive "supply" of market-rate housing was pitched as a way of creating "affordable" housing (see below). You know how it works, right. Supply drives prices down to cost!! It took a while for even academics to acknowledge that the overwhelming percentage of housing being built is clearly "luxury" housing well out of reach of lower income families. They thus began to use "filtering" as apologia to this fact.
It was known as early as 2017 that de-regulation and supply was a false solution. https://shelterforce.org/2017/03/01/making-it-easier-to-build-wont-generate-affordable-units/
I loved this in the subtitle: "Sadly, this blame is often misguided because planners do not produce housing"
Australia has became obsessed with the idea of housing targets. State and sometimes local governments now have construction targets they're supposed to be held accountable for.
The problem with this is that
they don't generally build housing themselves, and can't approve building applications until the private sector makes them.
Holding people accountable for something they have no power to achieve is just plain dumb. I've been waiting for the penny to drop. No-one seems prepared to state the obvious.
Might as well set local government some job creation and wage growth targets at the same time. It'd be equally sensible.
All of this is oddly socialist. Somehow the idea that market prices and quantities were generally good, absent any identifiable market failure, has been jettisoned, in favour of an obsession with a particular price being too high, and to be reduced via 5-year plans and targets.
Yes. Socialist indeed. It's very weird. The California RHNA process and HCD bureaucracy is essentially practicing a command economy by literally handing out state-wide housing quotas generated by yet another bureaucracy the Legislative Analysts Office.
And even more strangely, there is a housing "sub-quota." This, for the number of units that needs to be zoned in targeted RCAA's, racially concentrated areas of affluence, read: rich white neighborhoods. To integrate these neighborhoods, there is an HCD policy document that proclaims, straight-faced, that if "towns" or "cities" zone for housing in these areas at particularly densities (20 and 30 du/acre respectively) that those densities are suitable for "low-income" housing and that HCD in its review process will automatically accept this part of that city's housing plan without challenge.
Five miles away, in Atherton, the richest zip code in the US, Steph Curry and Charles Schwab, live, among others. Does anyone really believe that California can income-integrate Atherton by zoning at 20du/acre? And would these hypothetical market rate apartments really be rented by low-income families?
I cannot tell you whether or not any HCD bureaucrat believes what they are saying, or whether its a cynical pretense to upzone in single family neighborhoods. I can say that many of these concepts are pushed down from the Federal agency, HUD, along with Federal carrots. States that want Fed housing money have to conform to HUD requirements.
Worse, as you point out, cities are not held accountable to "approvals", which they can make, but rather to "building permits" pulled by developers. A city cannot "count" an approved unit towards its quota until a permit is pulled. We know that builders time markets and they often bank approvals. One example. Menlo Park recently submitted its housing report, favorably noting some level of RHNA attainment with several thousand units "approved." But a deeper read into the staff report shows that permits have been pulled for only several hundred units. One project with 1700 housing units, part of a large Facebook Expansion was approved several years ago and nothing has happened as Silicon Valley employers still face soft economies.
Here in very Blue, very affluent Northern California all the affluents are mesmerized with their roles in the mass theatrical performance that they are integrating and diversifying their cities when they are clearly making them more exclusive. Prices, rents, gentrification, homelessness have gone up, up, up since that 2017 article I showed you, and since "progressive" supply-side, de-regulatory policies were first enacted. Not a single newspaper, elected official or anyone has pointed out the obvious failure.
"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.
YIMBY, at least in its place of origin, is primarily a creature of the tech industry, which funded the academic underpinnings for YIMBY's arguments and also funds YIMBY's main proponent in the California legislature, Senator Scott Wiener, who is waiting in the wings to run for Nancy Pelosi’s seat in the U.S. Congress when she retires. He’s been very persistent and successful in incrementally dismantling CEQA, the state’s longstanding environmental protection act, and has also been successfully assaulting local land use controls, including zoning.
Yes to all of that. Additionally it funded the movement's founder, Sonya Trauss, and probably continues to keep her on payroll on YIMBY law. These kinds of NGO's are apparently no longer required to disclose names of donors. If you have any way of finding out or know who YIMBY law's funders are, I would like to collect that information. I believe it was Zuckerberg who bought a "housing desk" at KQED that then created and furthered the (factually false) narrative that single family zoning had a "racist" origin, conveniently, during the SB9 debates. It's also fairly easy to review the lobbying database to see which tech companies are funding which legislative measures.
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.
Cameron, my limited understanding of filtering is different and comes from YIMBY materials in California. That explanation is that “filtering” is, indeed, about people moving out of their homes and into other homes, over time. But the way that’s supposed to affect the housing market is that the older a house is, the less valuable it becomes, as former occupants move into newer, shinier homes. In this way, as more housing is built, it naturally provides more “affordable” housing. So it’s about aging rather than simply expansion. That seems to me a somewhat different proposition than what you've described, but no more credible.
Mmm. Doesn't every dwelling age at exactly the rate of one year per year? Surely the argument just collapses back to a quantity and filtering across types/locations argument, no?
As I understood your explanation, filtering is a matter of expanding supply and the issue of how occupants are re-distributed among a larger number of buildings. I don’t think I saw anything about preferability of the newer, additional buildings, and the consequent passing along (and down) of the older buildings to a less affluent population, which is the line I’ve heard YIMBYs pushing in lieu of promoting affordable housing.