Understanding Filtering: A Long-Term Strategy to New Supply and Housing Affordability

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Canada’s housing system has a shortage of homes that are affordable to the average household. Building new homes helps increase the overall housing stock supply, which leads to a process called filtering. Filtering is when housing units gradually become available to lower-income households as newer units are built and higher-income households move into these.

Key highlights

Building mid-cost or a balanced mix of new housing cost types is the most effective way to improve affordability and well-being over the long term.
This approach allows for more low-income households to access adequate homes through vacancies created in the housing market.
Relative to a new buildings, rents tend to decrease by about 5% in the first 4 years after construction. This decline reaches nearly 20% after about 20 years. Therefore, as buildings age, they tend to become more affordable for lower-income families.
Our research and international studies highlight filtering as a long-term approach to providing more housing that is affordable.