The impact of “filtering” and why we are experiencing a crisis

By January 19, 2018News

The impact of “filtering” and why we are experiencing a crisis in housing availability.

There are building sites everywhere and construction is taking off again, so why is it so difficult to find an affordable home?

Part of the answer lies with the effects of “filtering”. The definition of filtering is that homes become more affordable over time. In other words, an older house is never worth as much as the same house in the same location built new. So, as people move up and into more expensive homes, the home they vacate is available for a family with a lower income than the original owner.

Generally, new construction is targeted at higher-income households and is more expensive than existing housing inventory. Older homes vacated by higher-income households eventually serve as the natural source of affordable housing. Think of it this way: A higher-income household sells to a moderate-income household, which in turn sells to a lower-income household. Filtering is a multi-tiered cycle and it can take many years for a home to move through the full process and become a truly affordable home and available to lower-income buyers.

What we are seeing now are the effects of the downturn. Between 2007 and 2016, there were very few new homes being built. As a result, fewer older homes entered the real estate pipeline, and little filtering took place. The new homes being built today will result in older homes coming on the market, but it will take years until the filtering process delivers homes for low-income households.

As the economy improves and jobs are created, the increased number of workers in the Wood River Valley will result in an even greater demand for affordable housing. To meet the new demand for housing and to provide newer, safer housing options for low-income households, ARCH continues to build quality affordable housing.