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The concept of "filtering" in housing refers to the process by which properties transition from higher-income to lower-income households over time, thereby becoming more affordable. This typically occurs through two main mechanisms: vacancy chains and depreciation. Vacancy chains are initiated when a household moves into a more expensive home, freeing up their previous residence for another household, which may also be moving up the housing ladder. This sequence continues, potentially making more affordable housing available at each step. Depreciation involves the natural decline in a property's value and rental rates as it ages, making it more accessible to lower-income households.

However, the effectiveness of filtering is influenced by various factors, including housing supply, demand, and economic conditions. In markets with high demand and limited supply, such as rapidly growing urban areas, the filtering process can be impeded. In these scenarios, new housing often remains unaffordable for lower-income households for extended periods, as the high demand keeps prices elevated. Conversely, in regions with slower growth or declining populations, filtering can occur more rapidly, leading to increased availability of affordable housing options.

To enhance housing affordability, a balanced approach to new construction is recommended. Focusing solely on low-cost housing may benefit lower-income households but could reduce amenities and deter higher-income residents, potentially impacting local economies. On the other hand, building only high-cost housing may improve amenities but does little to address affordability for lower-income groups. Therefore, constructing a mix of low-, mid-, and high-cost housing is considered optimal, as it promotes affordability and benefits a broad spectrum of households, thereby reducing the likelihood of low-income families being displaced from their communities.

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