Does Filtering Still Happen? The Effects of Added Supply on the Distribution of Rents

• In Event: Kaleidoscope of Impacts on Urban Rental Markets: Arrivals of High-Profile Firms, LIHTC, Filtering, and Natural Disasters

Abstract

A critical underlying assumption supporting land use deregulation is that the addition of new market-rate housing supply improves affordability across the entire housing distribution. While this perspective has gained traction in policy debates, important questions remain regarding how quickly and to what extent the benefits of new supply reach lower-income households. In particular, it is unclear whether households earning below 30 percent of area median income (AMI), as well as those earning between 30 and 80 percent of AMI, experience meaningful improvements in housing affordability through these market mechanisms alone. This research probes these dynamics in greater depth by examining both the pace and distribution of filtering—the process through which the addition of new, higher-rent units leads older housing stock to become more affordable over time. The study employs two complementary empirical strategies. First, we analyze national panel data from the American Housing Survey (AHS) spanning 2015 to 2023, tracing inflows and outflows within the rental housing stock and documenting how units transition across rent quartiles over time. This longitudinal approach allows us to capture the movement of housing units through the affordability distribution, rather than relying solely on static measures such as median rents. Second, we conduct a detailed six-city analysis using a proprietary commercial database of multifamily properties, with rent information available at both the building and unit-size levels. The selected cities represent three distinct housing market typologies—expansive, expensive, and legacy markets—based on historical patterns of housing supply growth and price appreciation. By selecting two cities within each category, we are able to compare how filtering dynamics vary across different regulatory environments and market conditions. This study aims to identify both the potential benefits and the limitations of relying primarily on regulatory relief and market-rate supply expansion as affordable housing strategies. Importantly, it advances the literature by examining changes across the full distribution of rents, providing a more nuanced understanding of affordability outcomes. The findings contribute to ongoing policy discussions by clarifying whether and how supply-driven approaches can effectively address the housing needs of low- and moderate-income households.

Authors

• Andrew Jakabovics, Enterprise Community Partners
  Non-Presenting Co-Author

• Matthew David Thompson, Enterprise Community Partners
  Presenting Author