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Can Housing Filter Without the Neighborhood Filtering?: An Empirical Investigation Author: Lisa K. Bates Dissertation School: University of North Carolina at Chapel Hill Pages: 29 Availability: Access Number: 5000 Abstract: Most low-income households do not receive housing assistance or live in subsidized units. As an implicit foundation of U.S. housing policy, we rely on the market to deliver low-cost housing to these households. This delivery occurs not so much through direct construction of affordable properties, but rather through filtering, the process by which homes originally constructed for high-income households decline in value to an affordable level. The filtering process begins as older housing units age, deteriorate, and become obsolete in design, making them undesirable to high-income households who move into new, high-quality housing. This market process makes lower cost housing available by creating vacancies for households with lower incomes. The units at the lower quality levels become the affordable housing stock, which benefits low-income households y decreasing the cost burdens they face for decent quality housing (Grigsby, 1963). In theory, filtering allows low-income households to upgrade their housing conditions as better housing filters down (that is, becomes less expensive). However, the theory does not explicitly consider how the process affects and is affected by neighborhood conditions. The claim that filtering provides "better" housing fails to consider that housing quality should be viewed as more than just unit conditions, it should also include attributes of its location or neighborhood. Given the understanding of the impacts of neighborhood on individual life opportunities (Galster and Killen, 1995; Quercia and Bates, 2002), it is important to examine the relationship between the filtering of housing units and neighborhood quality changes. Even though filtering may provide affordable units, if most housing units filtered down when neighborhood conditions deteriorated, the units may not provide a better quality of life or more opportunities for families than their former units. Filtering may, in fact, be driven largely by the deterioration of neighborhoods, rather than simply by the aging of housing units and the availability of new units for higher income households. It may be unlikely for a housing unit to filter down to a low-income owner without its surrounding neighborhood having deteriorated. In order to examine this contention, this paper addresses a series of questions about neighborhoods and housing prices. First, are the neighborhoods of low-income homeowners of substantially lower quality than those of higher income families? Second, is neighborhood quality a greater factor in the determination of the value of homes occupied by low-income households than it is for higher income households--in other words, do low-income households pay a large premium to obtain housing in healthy neighborhoods? This analysis will provide some indication as to whether the low-income household can purchase affordable (that is, filtered) housing in neighborhoods of decent quality. Finally, the main question: Does filtering in the housing market occur only with a concomitant decline in neighborhood quality, and what are the reciprocal effects of declining house values on neighborhood health? These questions will be examined using hedonic modeling, logit regression, and structural (simultaneous) equations approaches with data from the metropolitan samples of the American Housing Survey. In the final section, implications for future research and policy are derived from the analysis. |
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