Why Has the US Homelessness Been Rising?

This is probably one of those boring commentaries which does not have many exciting issues which catch an Angry Bear reader’s eye. Yes and no to the premise. Just a question though:

How is it, the richest nation in the world having one $300+ billionaire and many more billionaires also has so many homeless people (~ 750,000). If you peeled off $10 billion from them all, you could set each homeless person with ~$13000. A foundation for a while.

People in California population complain about taxes. If I look at a list of states having the most to the least number of billionaires, California has 186 billionaires. New York is second, Floriday is the third and Texas is the forth. Illinois is a distance 5th with 23 billionaires. There are 760 billionaires in the US. So why do we have homeless people?

Why Has the US Homeless Population Been Rising?

– by Charles Collyns

ECONOFACT

The Issue:

Despite government efforts and a solid economy, homelessness in the United States surged again in 2024 to record levels. Moreover, over a third of the homeless were unsheltered, a rate far higher than in most other wealthy countries, even though the US has increased its provision of shelters substantially in recent years. What explains the rising trend of homelessness in the US? What policies may help address this chronic social problem? What would it take to give them another start?

The Facts:

• In 2024, the number of people experiencing homelessness in the United States on a single night was the highest since survey records began. This according to the latest annual homelessness report by the Department of Housing and Urban Development (HUD). There were 771,480 people recorded as homeless in 2024 or about 23 per 10,000 people. This represents an increase of over 18% relative to the numbers recorded in 2023. The data shows that 36 percent of the homeless were unsheltered. They lived in places not considered fit for human habitation. The remainder were living in emergency shelters, transitional housing, or safe haven programs. This survey does not count people who live in overcrowded apartments or in government subsidized accommodation as homeless. These numbers are based on a “point-in-time” survey conducted in late January each year. One third of the individuals in the count experienced chronic homelessness, that is they had been homeless for at least a year or had at least four homeless episodes over the past 12 months. A larger group experiences homelessness for one or more short periods during the year — many of this group are not captured in the point-in-time survey.

• Homelessness in the United States has been on a rising trend since 2017, with a brief respite during the COVID pandemic. Homelessness had actually declined during the recovery from the Great Financial Crisis from about 650,000 in 2007 to about 550,000 in 2017 according to the HUD survey, The number of homeless people is now well above its earlier peak (see chart). The lull during the pandemic occurred in the context of government policies such as strengthened safety net programs and income protections as well as moratoria on evictions. However, this pause proved temporary as these measures phased out.

• Homelessness is geographically concentrated. It tends to be considerably higher in coastal as opposed to interior states. It is much higher in urban centers, particularly in a few big cities including Los Angeles, San Francisco and New York (see map below). The percentage of homeless who are sheltered also varies widely. It is particularly high in New York (96 percent) where a “right to shelter” policy has been in place since a lawsuit in 1979 but very low in California (34 percent).

• Homelessness is also concentrated among minorities and groups with severe income deprivation. According to the latest survey, 32 percent of the homeless identify as Black and 31 percent as Hispanic/Latin. American Indian, Alaska Native and Indigenous populations suffer a particularly high rate of homelessness (83 out of 10,000 people in 2023). 33 percent of the homeless were in families with children, while 19 percent were under 18. A recent study found that the income of people experiencing homelessness remained persistently very low for a decade surrounding the period of homelessness, although nearly half of homeless adults had formal employment in the year they were observed as homeless and nearly all sheltered homeless adults either worked or were reached by at least one safety net program. This suggests that homelessness tends to arise in the context of long-term, severe deprivation rather than large and sudden losses of income. A recent cross-country analysis found that about two thirds of adult homeless people suffer some form of mental illness, with the rate in the US being particularly high.

• While individuals may become homeless for many reasons, overall variations in homelessness are closely associated with the availability of affordable housing. The decline in homelessness following the Great Financial Crisis of 2008 occurred alongside substantial declines in home prices and rents relative to family income. The rise in homelessness since then coincides with the subsequent sharp rise in housing costs relative to income (see chart). The geographical pattern is similar. States with high homelessness tend to be those with a shortage of affordable housing, as measured by an annual survey of the availability of affordable rental homes conducted by the National Low-Income Housing Coalition. Similar patterns have also been found in Europe, where national studies have found that rising homelessness coincides with reduced availability of affordable housing.

• Other factors are also likely to contribute to variations in US homelessness rates. Geographically, homelessness tends to be higher where the climate is more favorable to sleeping outside. The closure of mental hospitals since the 1950s is likely to have contributed to a secular rise in homelessness in the 1960s and 1970s, although many of these hospitals have been replaced by smaller community mental welfare centers. Rising drug use and incarceration may also have contributed to rising homelessness among people who become detached from families and the labor market. The rate of homelessness in particular jurisdictions reflects the intensity of enforcement of vagrancy ordinances and the support provided by community services for the homeless (or lack thereof). The recent rise in the number of homeless individuals in some communities, such as New York City, partly reflected efforts to shelter a rising number of asylum seekers. Low rates of homelessness in some states, like Florida and Texas, places where housing is expensive and the climate favorable, does not necessarily mean that the problem has been resolved. People in these places may live in substandard housing, such as very crowded apartments, or they may move to places that provide more support.

• Whatever the source, homelessness comes with high costs for the homeless themselves, for local communities, and for society at large. Homeless people have a 60 percent higher mortality rate than housed individuals living in poverty and a life expectancy 26 years shorter than the general population. They experience infectious disease and mental illness at a substantially higher rate; they have less access to primary care and use expensive hospital emergency rooms three times as frequently as stably-housed people; and they are more often the victim of violent attacks. Homelessness in childhood leads to a high incidence of mental disease. The homeless also get into trouble with the law, incurring policing and incarceration costs for the community. They require more support from social, health and sanitation services, including costs of providing shelters and support to enable a move to permanent housing. More broadly, the unsheltered homeless help to sustain the cycle of racial disparity and make the city environment less attractive to live and work in, contributing to urban blight.

• Government efforts to provide support for the homeless have been ramped up in recent years. With a shortage of affordable homes, the Federal Government and many local governments have devoted increasing budgetary resources to provide temporary shelters and supportive services for the homeless and resources to facilitate transitions to permanent housing, for example through public housing and rent subsidies. According to HUD, the total inventory of year-round beds was 1,190,565 in 2024 of which 42 percent were for temporary shelters or transitional housing and the rest various forms of permanent supportive housing (people in such housing are not counted as homeless). This aggregate figure is 80 percent higher than in 2007, boosted by a 250 percent increase in the number of permanent supportive housing beds (see here).

• There is ample evidence that well-designed programs to support the homeless make a difference – but these are not a magic bullet. An important lesson from research is that programs providing support for the transition to permanent housing should not be conditioned on prior qualification by completing, for example, drug rehabilitation or counseling. “Housing First” programs are more likely to be effective in terms of retention (i.e. avoiding future homelessness of the housed persons) than “treatment-first” programs. One good example of a successful Housing First program has been the reduction in veteran homelessness by over half since the Department of Veteran Affairs (VA) launched the “Ending Veteran Homelessness Initiative” in 2009. But programs like this are expensive. Research suggests the provision of 100 permanent homes for homeless persons may reduce the counted number of homeless by only about 10-15. One reason for this is that there are about four times more people cycling through temporary homelessness than those who are homeless at the particular moment of the annual survey. Also, access to public housing and rent subsidies for the homeless may reduce individual incentives to avoid homelessness altogether (for example, by living in multiple occupancy).

What this Means:

Rising homelessness in the US imposes heavy social costs and calls for a sustained multi-pronged response. Actions to reinforce well-designed programs to support homeless people make the transition to permanent housing can certainly help, However, they face budgetary constraints at federal and local levels. More aggressive local policing of homelessness allowed by a recent Supreme Court ruling may make the problem less visible in the urban landscape, However, it does not address the problems faced by very low-income people at risk of homelessness. An effective long-term strategy to respond to rising homelessness will need to address one of its fundamental sources by boosting the supply of affordable housing. Steps to ease local zoning restrictions on minimum lot sizes and the construction of multi-family units and to make sure that adequate financing is available for such construction could help improve housing affordability. This will take time to make a difference.