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A Critical Analysis of America’s Homeless Crisis

How serious is the homeless situation in America? Nearly everything about homelessness is complicated, beginning with the question of just how many Americans experience homelessness each year. The most commonly used metric comes from what are referred to as “point-in-time” counts: annual headcounts conducted by regional agencies across the country known as continuums of care. These point-in-time counts are so named because they only count the number of people who are homeless in a given jurisdiction on a particular night of the year; for that reason and a few others — including the natural difficulty associated with counting people who, by definition, have no fixed address — they tend to drastically underestimate the size of the homeless population.

That doesn’t make them useless, however. While citing a point-in-time count in isolation is usually a mistake, looking at successive counts longitudinally can provide at least an indicator of whether homelessness is rising or falling. Based on that metric, the federal government’s analysis of all the most recent counts tells us that nationwide homelessness, which had been climbing steadily since 2016, appeared to plateau between 2020 and 2022.1 The point-in-time counts registered only a 0.3 percent increase in homelessness over that period.

That’s a bit of good news, but the topline numbers mask a story that is, again, more complicated. While homelessness nationwide stayed surprisingly flat given the societal shock of the COVID-19 pandemic, decreases in many parts of the country were offset by sharp spikes in homelessness elsewhere. California’s continuums of care noted a 6.2 percent increase; smaller in relative terms than some other states, but more than enough to swamp modest reductions in the rest of the nation. In a year when the sum of all 2022 point-in-time counts recorded an additional 1,996 un-housed individuals, California alone contributed 9,973 people.

Again, these numbers should not be taken as gospel. Still, they do point to the scale of the crisis that the Golden State and a number of other regions face. California, home to about 12 percent of all Americans, is where nearly one-third of the country’s homeless population resides.

Unsurprisingly, the homelessness crisis has come to dominate urban politics in California and the other regions where it is most severe. Polling during the 2022 election cycle found that it was the second most important issue to California voters, behind inflation and the cost of living.2 Following the election, newly minted Los Angeles Mayor Karen Bass declared a state of emergency over homelessness as one of her first acts in office.3 On the opposite coast, New York City Mayor Eric Adams has gambled on a plan to involuntarily commit homeless people.4

The crisis has also produced a cottage industry of books, op-eds, and even documentaries purporting to explain how homelessness got so bad. Rampant mental illness and addiction are popular explanations. So are liberal decadence and permissiveness, according to conservative commentators: deep blue cities, the argument goes, are being hit particularly hard because the woke progressives who run them have effectively incentivized homelessness through generous welfare benefits and an indulgent attitude toward drug use. Needless to say, these arguments are particularly popular on the right — and receive regular coverage from Rupert Murdoch-owned media ventures — but it is not uncommon to hear them repeated in left-leaning circles as well.

It’s easy to see why these arguments have caught on. Those cities that face the biggest homelessness problems — San Francisco, Los Angeles, New York, Portland, and Seattle among them — are run by Democrats, and their electorates tend toward social liberalism on issues such as drug decriminalization. Weather is also a factor, according to this line of reasoning. San Francisco and Los Angeles, in particular, are renowned for their mild climates, so living on the streets in these cities is presumably less miserable. Further, the rise of homelessness in these cities has been accompanied by a commensurate rise in public drug use, along with people publicly experiencing very severe mental health emergencies. All of these are easily observable facts, and it is extremely tempting to craft a neat causal story out of any one of them. Writers such as San Fransicko author Michael Shellenberger, journalist Sam Quinones, and various fellows at the Manhattan Institute have done exactly that.

However, we should be wary of any causal reasoning about social crises that emerges out of anecdotes and folk wisdom. To be sure, the character of the homelessness crisis has been shaped by all of the above factors: substance abuse disorders, mental illness, public policy in liberal cities, and even nice weather. But a careful look at the evidence reveals that none of these things, with one exception, can be said to have caused the homelessness crisis. The exception is public policy — but even there, the relation is different from what the aforementioned writers have posited.

Let’s start with drug use. Quinones has promulgated the argument that drug addiction — in particular the proliferation of a new, especially dangerous strain of meth — is “worsening America’s homelessness problem”5 (or, as New York Magazine put it, has “supercharged homelessness”).6 He may very well be correct that this new version of meth is worse than others; while this is not my field, I feel very comfortable advising Skeptic readers not to do meth. That said, there is absolutely no evidence that meth use is in any way driving homelessness as a large-scale social phenomenon.

Determining causality for this phenomenon is difficult. Drug use, including meth use, for example, can precipitate individual bouts of homelessness. To understand homelessness in aggregate, however, it is important to distinguish between the precipitants of homelessness and the drivers of homelessness. Precipitants are particular and non-generalizable; they are the set of individual circumstances that cause a particular person to become homeless. Drug addiction is a common precipitant, but so are fleeing domestic violence, becoming unemployed, or getting hit with unexpected medical bills. Think of it like an extreme weather event: an individual spark may precipitate a major forest fire, but only under certain conditions. A key driver in this analogy is the carbon pollution that has made summers in many heavily forested areas significantly hotter and drier. Without that driver, you would still get forest fires, but they would not be anywhere near as devastating.

The precipitants of homelessness can be some combination of structural factors, personal mistakes, and plain bad luck. While one or a handful of precipitating factors can explain why a particular person became homeless, they can’t necessarily tell us much about overall rates of homelessness.

Counterfactual reasoning can be a useful tool for determining causality. You think A causes B. Remove A. If B still happens, then A was not the cause. (The rooster crows and the sun rises, in David Hume’s famous example, but no one thinks the rooster causes the sun to rise, which is easily testable by silencing the rooster and noting that the sun still rises.) Employing counterfactual reasoning here, if drug use were a driver of homelessness in aggregate, we would expect states with higher rates of drug abuse to also have higher rates of homelessness. In fact, no such relation exists between the data on drug addiction and those on homelessness: West Virginia, which leads the nation in drug overdose deaths,7 has one of the lowest rates of homelessness in the country.8 California’s overdose death rate is about one-quarter of West Virginia’s!9

Research has found that Housing First Programs are more effective than Treatment First Programs in keeping people from returning to homelessness.

Nor can state-level variation in rates of mental illness explain variation in rates of homelessness. Mental illness can be difficult to quantify, but Mental Illness America estimates that California’s rate of adult mental illness is about the same as the national average.10

The mild weather hypothesis — that un-housed individuals naturally gravitate toward balmier climes — fails on similar grounds. While it is true that West Coast cities have some of the most severe homelessness problems in the United States, a more systematic look at regional patterns of homelessness doesn’t turn up any correlations between average temperature and homelessness. Both New York and the District of Columbia have higher overall rates of homelessness than California, despite notably more inclement weather.11

To the extent that weather is a factor in homelessness, it matters because of how it affects the character of homelessness: cities with more hostile climates tend to have proportionally fewer unsheltered people and more sheltered but un-housed individuals. That is likely because colder cities tend to build more shelters in order to prevent their un-housed residents from freezing to death; and un-housed people, conversely, are more likely to seek out even substandard shelter when the alternative is potentially fatal. Nonetheless, whether sheltered or unsheltered, affected individuals are still experiencing homelessness.

So much for some of the more popular theories purporting to explain the rise of mass homelessness. Note that their failure to explain state-by-state variation in rates of homelessness is not the only failure of these theories. Each of them is also heavily reliant on individual characteristics to explain a large-scale social phenomenon. This is clearly true with the substance use and mental illness hypotheses, but it applies to the weather hypothesis as well; if California’s moderate weather were to have a significant effect on its rate of homelessness, it presumably would be because large numbers of un-housed people from around the country had chosen to relocate somewhere warm and sunny.

Almost no aggregate human behavior can be explained by a single cause. This is where the distinction between drivers and precipitants becomes critical. We should be skeptical of any explanation for a mass phenomenon that depends so heavily on the individual behaviors of hundreds of thousands of people. While personal decisions and bad luck can play a role in individual cases, it strains credulity to blame these individual factors for a decades-long societal trend. We should instead give more credence to theories that rely on systemic forces — forces that can affect hundreds of thousands of people at once, no improbable coincidences required.

If none of the above hypotheses can explain mass homelessness, what can? To my mind, the best and most thorough treatment of this question comes from a recent work of the public affairs scholar Gregg Colburn and the data scientist Clayton Page Aldern. Their answer is right in the title of their 2022 book: Homelessness is a Housing Problem.

As in the above summary of differing hypotheses, Colburn and Page Aldern tested different explanations for homelessness by looking at regional variations in homelessness rates. However, they analyzed more finely-grained data, relying on city-by-city comparisons instead of state-by-state ones. After investigating a number of non-housing explanations for large-scale homelessness — including climate, generous welfare benefits, mental illness, and substance use disorder — they concluded there was no evidence that these factors can explain why some U.S. cities have significantly higher rates of homelessness than others.

Instead, they write: “Vulnerable households live in every city of the country; the differences in rates of homelessness can be attributed to structural factors associated with the housing market.” Homelessness is most severe in the metropolitan areas where housing costs are highest, because the pricier that housing becomes, the greater the risk that people with low incomes or other serious challenges will be locked out of whatever homes are available.

This is not a new finding. In fact, it is the consensus among most serious researchers of this problem. In their definitive book on homelessness, In the Midst of Plenty, Marybeth Shinn and Jill Khadduri note that “homelessness is essentially a lack of access to affordable housing.” Similarly, an influential 2018 study by Zillow (a leading online housing information and analysis site) found that rates of homelessness increase fastest in cities where, on average, rents exceed one-third of income.12

It follows, then, that the cities with the most severe homelessness problems also have sky-high rents. The most recent Consumer Affairs ranking of U.S. cities by housing costs looks a lot like a list of places bearing the brunt of mass homelessness: San Jose, San Francisco, San Diego, Los Angeles, Seattle, New York, and Portland all make it into the top ten.13

Why these cities are so expensive is no mystery. Much as researchers generally agree that housing costs drive large-scale homelessness, the overwhelming expert consensus is that these stratospheric costs are the result of a profound housing shortage.

It then becomes predictable why so many of the country’s most expensive cities — and a disproportionate share of the country’s homeless population — are concentrated in California. For more than a century, California was at the forefront of a nationwide movement to restrict homebuilding. Berkeley, where I live, pioneered the use of single-family-only zoning in 1916; they capped residential levels at low levels expressly in order to exclude Black and Chinese people.14 More recently, beginning in the 1960s, cities like Los Angeles enacted a series of “downzonings” — zoning map changes intended to sharply reduce the number of homes that could be legally built citywide.15

Even where it is legal to build, California and its constituent municipalities have made it extraordinarily easy for incumbent landowners to veto proposed housing development — for arbitrary reasons, or for no reason at all.16 As a result, the state has failed for decades to build sufficient housing to meet growing demand. The state Department of Housing and Community Development estimates California needs to make up a 2.5 million home deficit over the next eight years.17

To arrest rising rates of homelessness, expensive cities need to relieve cost pressures by building more housing. While building more subsidized affordable housing is necessary, a growing body of research shows that even building market-rate homes makes rents more affordable for everyone.18 The relation between housing supply and homelessness is best illustrated by a striking finding from Colburn’s and Aldern’s Homelessness is a Housing Problem: rates of homelessness are lowest in the cities with the highest vacancy rates. That is because a high vacancy rate indicates that a city has a lot of housing relative to demand.

Building enough housing for everyone will do a lot to prevent homelessness. What about those who are already homeless? Here, again, the answer is housing. Homelessness experts have coalesced around a “Housing First” model that prioritizes moving un-housed people into permanent housing and providing optional “wraparound” services. This model is best understood by contrasting it with “treatment first” models that prioritize interventions such as mandatory mental health care and addiction counseling over providing permanent housing.

The conventional wisdom that mental illness and substance use caused mass homelessness has fueled support for a treatment-first approach; however, a substantial body of research has found that Housing First programs are more effective than treatment first programs in keeping people from returning to homelessness. A landmark randomized control trial in Santa Clara County, California found that Housing First programs even work for the highest-need clients — those who are chronically homeless and have severe behavioral challenges.19

While Housing First works, it can only work at scale under the right housing market conditions. That is the key finding of our recent report at California YIMBY (the acronym for Yes In My Back Yard in contrast to the opposing NIMBY, Not In My Back Yard), “Housing Abundance as a Condition for Ending Homelessness: Lessons from Houston, Texas.”20 My research for that report sought to answer the following question: How has Houston, Texas managed to reduce homelessness by more than half over the past decade, even as major California cities have seen large increases in their homeless population?

The answer is that Houston implemented an aggressive Housing First strategy and built far more housing per capita than any large California city. Houston’s abundant housing prevented people from falling into homelessness faster than the region’s homeless infrastructure could help them; it also made it cheaper and easier for homeless services agencies to locate and acquire housing for its Housing First programs.

To be clear, setting up a robust Housing First infrastructure isn’t cheap under the best of circumstances; by its nature, it requires significant multi-year investments. However, pro-housing land use policies mean that Houston is able to house people at a significantly lower per-person cost than other major cities. For example, we found that the cost of housing and providing services to a single un-housed individual for a year is more than two times more expensive in San Francisco than it is in Houston — between $40,000 and $47,000 annually in the former city as opposed to $17,000 to $19,000 in the latter. This gulf is largely a function of how much it costs to acquire or develop housing in each city.

Further, Houston’s investment in housing its homeless population may well be offset by savings elsewhere. A number of studies suggest that investing in Housing First programs can drive down the cost of caring for un-housed people through other means, such as visits to the emergency department of hospitals. One study from Canada concluded that $10 spent on Housing First programs reduced the spending required on other services for high-needs individuals by $9.60.21

The most important thing Houston’s example can show us is that good public policy can, in fact, achieve significant reductions in homelessness. Crises like those faced in Los Angeles and San Francisco are neither inevitable nor insurmountable. However, emulating Houston’s success requires that policymakers in other cities see homelessness clearly and reject simple “solutions” that place blame for a social problem on the individual failings of its victims. Most of all, policymakers need to grapple with the role that decades of failed, regressive housing policies have played in fueling the crisis. The evidence is clear on the problem of homelessness; the only question is whether voters will decide to act upon it. END

About the Author

Ned Resnikoff is the policy director at California YIMBY, a nonprofit that advocates for state laws to end the housing shortage. He was previously a journalist and has written for the New York Times, The Atlantic, The Nation, and The San Francisco Chronicle. He has also worked as an analyst for the nonpartisan Legislative Analyst’s Office, which advises the California legislature on policy and budget matters. He holds a master’s degree in public policy from UC Berkeley’s Goldman School of Public Policy.

  9. Ibid.

This article was published on May 5, 2023.

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