In "Price is the Medium Through Which Housing Filters Up or Down" I walked through a description of the filtering process in an attempt to connect its existence in practice with the price and rent patterns that arise in its absence (or reversal). Those patterns are like this:
Kevin, thanks for this beautiful explanation.
Exacerbating all of this is the fact that homeowners *like it* when the cost of the existing stock increases rather than decreases over time. Why shouldn't the original owner of a second-tier unit be glad that a rich person will buy their old unit at a premium?