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Filtering down refers to the organic process where housing units previously occupied by high-income households gradually deteriorate and becomes available to occupants with lower income.
This is typically gradual process influenced by various macro and micro factors.
A middle-income family might have lived in a neighborhood, and might have even spent a lot of money on remodeling and installing high-end fixtures.
But over time, they relocated for one reason or another. And most of the families in the neighborhood have done the same.
Common reasons for relocation might be:
- They became wealthier and bought a better home
- Pollution in the area
- Increase in crime in the area
- Work commitments make relocation necessary
Whatever the case, the filtering down process enables lower income groups to inhabit the properties which were once considered upmarket.
Real estate investors might sometimes find great fixer-upper opportunities with these properties.