Why homelessness just hit a 15-year high, rising 12% from last year

Rising rents and low housing inventory spur an unprecedented level of homelessness in America

Jan 10, 2024

We’ve now hit more than 9,000 subscribers for American Inequality! Thank you all for being part of this incredible community and don’t forget to forward along. 🎉

Homelessness in America increased 12% from last year, now reaching the highest point since 2007. At the same time, housing assistance has reached the lowest point in 25 years. 653,104 people were considered homeless in 2023, or roughly 1 in 5,000 Americans, according to newly released data from the Department of Housing and Urban Development (HUD). Black Americans were disproportionately more likely to be homeless, representing 37% of the homeless population despite being 13% of the overall US population.

In the past 5 years, only 10 states have been able to reduce their homeless populations. As America’s housing crisis worsens with rising rents, falling inventory, and inadequate safety-net services, millions are left suffering with no roof over their heads.

While the influx of immigrants has led to some of the increase in homelessness, it has not been a leading cause as many pundits would lead us to believe. Instead, researchers at UC San Francisco conducted the largest survey of homeless people in the last 25 years and found that the leading cause was housing affordability. The overwhelming majority of the homeless population in California, for example, consisted of locals, with 90% of them losing their homes in the regions where they had already resided.

America is currently seeing an unprecedented housing crisis. Shaun Donovan, who served as HUD secretary from 2009 to 2014, shared that he had “never seen availability problems this bad. Housing has always been a top-three issue in New York and San Francisco. What is changing now is that it is a crisis in red parts of the country, rural parts of the country - in places where it’s never been an issue.” We dug into the newly released HUD report and found exactly that.

Low housing inventory and high rents push people into homelessness

Since the beginning of the pandemic, rents have increased 29.4% nationwide. Average rents in the US are now $1,982, on average, representing a 3.3% increase compared with the same time last year. Depending where you live though, these rates may have increased much faster, with Providence, Rhode Island and Hartford, Connecticut experiencing the greatest rent increases.

HUD acknowledged that rising rents have created an “extraordinarily challenging” condition for Americans and has led to the rise in homelessness.

Housing inventory has also hit a 20-year low, falling 14% in the past year alone, falling to the lowest point ever since the National Association of Realtors began collecting this data.

The combination of high rents and low inventory puts shelter out of reach for many Americans. When the new homelessness data came out, Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness, a federal agency, said, “The most significant causes are the shortage of affordable homes and the high cost of housing that have left many Americans living paycheck to paycheck and one crisis away from homelessness.”

New Hampshire and New Mexico both suffered from low inventory and high prices in 2023, causing their homeless populations to increase more than 50% in the past year.

Give a gift subscription

In New Hampshire, the housing vacancy rate has now fallen to below 1%, making it nearly impossible for families to move into new homes. New Hampshire Congresswoman Anne Kuster said her state lacks 90,000 housing units.

Meanwhile, rents in New Mexico have grown 5x faster than incomes since 2017, creating tremendous barriers to finding affordable housing. In Albuquerque, the state’s largest city, only 20% of people in the city’s homeless shelters or temporary housing successfully make the leap into permanent housing each year, far below the national average.

Cities not only need to create more housing, but also they need to create more affordable housing to help stem the tide. A few states have helped set the example for how this can be done.

Expanded safety nets and targeted outreach provide much needed aid

At American Inequality, we’ve developed an approach called “Opportunity Mapping” which helps struggling regions learn from other areas that are best addressing key social issues. For homelessness, we’re highlight 4 states.

Tennessee

In Chattanooga, the city was able to decrease homelessness by more than 40% through a combination of federally funded housing vouchers and the creation of a new partnership called the Chattanooga Regional Homeless Coalition. This Coalition brought private, public, and nonprofit actors together to help people fill out housing applications and find affordable options.
In Knoxville, homelessness fell 21% after the city invested $38 million in affordable housing efforts and leveraged $500 million in other public and private investments to create more than 2,000 units for low-income residents. Tennessee shows that an expanded safety-net and secure housing could dramatically decrease homelessness.

Texas

In Houston, officials were able to reduce the homeless population by two-thirds in the last decade and 17% in the last year by using an approach called “housing first” which is supported by decades of research and moves the most vulnerable people straight from the streets into apartments, not into shelters. Houston officials created a coalition with over 100 different nonprofits to deploy on-the-ground teams that know the different homeless communities well (largely veterans, or spanish-speaking, or struggling with mental health issues) and provides the tailored support that the group needs to find housing. The New York Times reported how Houston’s groundbreaking approach helped move 25,000 homeless individuals into their own homes, with most of them still housed after 2 years.
In Dallas, officials deployed this same “housing first” approach, chronic homelessness fell 32% the next year.
Mayors from New York City, Chicago, and Los Angeles recently visited Houston to learn more about how Houston has been able to excel in addressing homelessness.

Minnesota

In Minneapolis, the city didn’t follow the coalition approach but instead focused on changing legislation to decrease homelessness as well. The city focused on reforming its zoning laws to allow for more development and multi-family homes. Following these changes, chronic homelessness dropped by 30%. A recent Pew research study found that rents rise slower in regions that have adopted zoning reform, ultimately leading to fewer homeless people in a given region.

Pennsylvania

Pennsylvania is one of those 10 states that has managed to provide enough coverage, and in fact homelessness has been falling in Pennsylvania for some time now. In the past year, homelessness fell 1% in PA and 11% over the past 5 years. Pennsylvania has been able to reduce the homeless population largely by increasing the housing supply with a particular focus on supportive housing units that help unsheltered people get into permanent homes. The state also does a tremendous job looking through rural counties to help identify and support the homeless population. However, 18% of homeless residents in Philadelphia are unsheltered on any given night.

New HUD report only tells part of the story

The problem may be far worse than the official numbers indicate. HUD’s measures are based on a point-in-time estimate from the last week of January each year during which volunteers walk around the streets in major cities counting the number of unhoused people they see while administrators in homeless shelters and other facilities count the number of occupied beds. The agency then uses these inputs to extrapolate an overall count for the country. As a result, HUD’s data likely drastically undercounts the real scope of homelessness in America.

Thank you for reading American Inequality. This post is public so feel free to share it.

Other federal agencies show this undercounting clearly. The Department of Education, for example, estimates that there are more than 1 million homeless students in America, much higher than the 111,620 homeless children that HUD offers. While the Department of Veterans Affairs relies on HUD’s numbers, saying that Veteran homelessness increased 7.4% in the past year to 35,574, many other housing nonprofits say that the number of homeless veterans may be 3x greater.

New York City now has 119,320 homeless students according to the DOE, the highest number ever on record. Meanwhile, HUD estimates that the entire state only has 29,333 homeless children under 18. This past year, a nonprofit called Advocates for Children found that 1 in 9 New York City students was homeless, but depending where that student lived the chance of being homeless may be far worse. In one section of the Bronx, 1 in 5 students was homeless. Most officials point to the city’s severe housing shortage coupled with the huge increase in immigration.

In mid-October, Mayor Eric Adams announced a 60-day limit on how long families could stay at any one shelter, leading many advocates to worry that longer commutes could lead to more missed school time for children.

Improving the Continuum of Care and learning from successful states

While we’ve discussed some of the causes of the increase in homelessness (low housing inventory, high rents), many other inequalities plague the homeless community that prevent them from getting into affordable housing even if it did get built. Specifically, the continuum of care (CoC) that helps homeless individuals move from streets to homes is often dramatically broken. Without reforming the CoC, even a huge increase in affordable housing may not be sufficient to address the problem.

The primary resource in the Continuum of Care is shelters. There are three types of shelters: emergency shelters, transitional housing, and safe havens. In first of its kind research, we found that in California, Oregon, and Nevada, there is only 1 bed for every 2 homeless people in the state. Pre-pandemic this was even worse for several states, with California only offering 1 bed for 3 every homeless people.

Only 10 states have at least 1 bed for every homeless person. That means if a person is evicted from their home and wants to enter a shelter, that person is likely to be turned away in 4 out of 5 states.

The goal for nearly every city is to move people out of shelters and into more permanent housing, but the country’s safety net is severely lacking to support this transition. In 2023, The three main federal housing programs – Public Housing, Section 8, and Housing Choice Vouchers – that are supposed to support those most in need, actually served 287,000 fewer households than they did at their peak nearly twenty years ago. At the same time, pandemic policies that stabilized rents and helped keep struggling families in their homes have now expired, leading to skyrocketing rates of homelessness. While some states have offered renewed housing assistance to help families make it through these challenging times, the vast majority of the nation is struggling to provide that next stage of housing.

The Path Forward

HUD published a “systems response” earlier this year that recommended 19 different actions for communities to take to address their homeless crisis. We’ve distilled down the 3 most actionable ones that are well supported by the data for making a difference.

🏢 Increase the availability of affordable housing - HUD recommends following the “Housing Supply Action Plan” is the Biden-Harris Administration’s blueprint for helping to close the housing supply gap in five years through legislative and administrative actions. The program involves rewarding jurisdictions that have reformed zoning and land-use policies by increasing their eligibility for certain federal grants, while at the same time reforming the Low Income Housing Tax Credit (LIHTC), which provides credits to private investors developing affordable rental housing. LIHTC is a great program for addressing homelessness and has been one of the few programs to increase, in recent years. However, few of the homes developed with LIHTC credits have actually been affordable. Creating enough housing to prevent Americans from ever falling into homelessness, saves taxpayers $68,422 per year in shelter costs as estimated by the Coalition for the Homeless.
📊 Gather local and national data to identify households at higher risk - We love data at American Inequality and so we’re glad to see this one make the cut for HUD’s recommendations. HUD even includes a predictive questionnaire in which respondents are given a score from 0-43 about their likelihood to fall into homelessness. However, HUD’s main data right now is presented at the state level and occasionally at the metropolitan level. More detailed data is necessary to pinpoint the communities most in need. Some studies have found that increasing data collection was a key input for reducing homelessness by 40% in certain towns.
🤲 Ensure that Americans are benefiting from programs by enrolling eligible households - More than 10 million households currently spend more than half their income on housing, though the recommended limit is no more than 30%. And while 93 million Americans are on Medicaid and 41 million use SNAP, only 5 million receive housing vouchers. Housing vouchers have one of the lowest take-up rates of any social safety program because they have it has some of the most arduous application processes coupled with landlords who continually discriminate (illegally) against voucher recipients. Louisiana has the shortest wait time to get Section 8 housing at 2 weeks whereas in Washington, average wait times are 10 months. When people apply for other benefits like SNAP they should be opted-in or at least asked if they want other housing benefits and then moved swiftly through an approval process that doesn’t keep their life in limbo.

Even if states were able to provide enough affordable housing, the continuum of care that helps homeless populations move upwards from emergency shelters to transitional homes, to that permanent housing is often broken. Housing is deeply interwoven with incomes, infrastructure, and social services. Solutions to address this growing crisis require development, data, and investment. As we turn the corner on 2024, hopefully this year will yield more positive results.