Sunday, January 2, 2011

The Concept of Filtering

Following an earlier post on the apparent comeback of center city American neighborhoods, it seems a good time to formally introduce a basic yardstick for measuring and understanding neighborhood change over time: the concept of "filtering."  An author writing in 1960 set forth the concept as clearly and concisely as anyone has since:
"I propose to define 'filtering' simply as a change in the real value (price in constant dollars) of an existing dwelling unit. ... To analyze filtering as a market process, its causes and consequences, four basic constructs should be kept in mind: (1) An array of all dwelling units according to their real values ... (2) An array of all dwelling units according to their quality (by some quantifiable measure other than price). (3) An array of all households according to their real incomes ... (4) An array of supply prices of new dwelling units in each quality class ...."   "Filtering and Housing Standards: A Conceptual Analysis." Ira S. Lowry, 1960.
The word "filtering" traditionally connoted a decline in relative value of a dwelling unit over time such that the unit could be said to have "filtered" downwards in status.  This idea intuitively made sense given the assumption that housing units would tend to decline in quality over time, both absolutely and in comparison to newly-constructed units.  More recently, the notion that an existing neighborhood could also filter upwards, a phenomenon virtually unheard of during the years from 1930 to 1970, has been so widely documented that it has long since earned a name of its own ("gentrification").  Nonetheless the measuring tools for detecting such filtering remain in large part those set out by Lowry: change in housing values over time relative to the city mean; change in resident incomes over time relative to the city mean, and a sense of the overall quality of the housing stock.

The mapping tool linked earlier helpfully provides the two crucial measures of change in housing value and income over time.  Absent is a measure for the quality of the housing, a question plagued by subjective judgment and complicated by limited census information on the physical qualities of housing.  Since this element is key to the why of filtering, rather than the where and how much, it will be addressed in forthcoming posts.

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