Examining the Connection Between Housing Supply and Homelessness

Examining the Connection Between Housing Supply and Homelessness

Although many factors can precipitate individual episodes of homelessness, housing affordability, especially for low-income individuals and families, is inextricably intertwined with the prevalence of homelessness. On February 7, 2023, the Bipartisan Policy Center hosted a virtual panel discussion examining the effect of housing supply on homelessness. Panelists included Peggy Bailey, vice president for housing and income security at the Center on Budget and Policy Priorities; Gregg Colburn, assistant professor of real estate at University of Washington’s College of Built Environments; and Michael Tanner, senior fellow at the Cato Institute.

The Housing Supply Cause of Homelessness

Panelists acknowledged the complex causes that contribute to homelessness, including a lack of support for the diagnosis and treatment of mental illness and substance use disorder. Previous work by Colburn, however, shows that these issues intersect with, and are exacerbated by, housing shortages and that areas with the highest housing costs put more socially vulnerable people, who may be living with substance use disorder or mental illness, at greater risk for homelessness.

Tanner added that evidence from California shows that most people experiencing homelessness in a given area previously were housed in that area, suggesting a strong connection between homelessness and the cost of housing. Crucial to ensuring an adequate affordable housing supply that contributes meaningfully toward efforts to prevent homelessness, says Bailey, is ensuring that municipalities preserve existing affordable housing while making income supports available and useable. These efforts are particularly important as affordable developments created with the help of low-income housing tax credits approach the end of their 30-year compliance period.

In addition, without adequate solutions to increase housing supply, demand-side solutions, such as housing vouchers, can enter a self-defeating escalation in which higher rents require larger subsidies, which incentivizes further rent increases at taxpayer expense. This dynamic, said Tanner, is already active in health care and higher education, which have seen significant price escalations over the past several decades.

A major roadblock to increasing the supply of housing, however, has been the lack of zoning reform at the local level. Tanner argues that state governments could engage in more proactive efforts to override recalcitrant local zoning authorities, as California recently has done to address persistently inadequate policy changes. In addition, federal policies could focus on incentivizing reforms to local policy, potentially withholding funding for noncompliance.

Housing and Broader Efforts To Address Homelessness

Because inadequate housing supply is just one factor contributing to the prevalence of homelessness in an area, Bailey qualified that policymakers should couple any supply-focused strategy for preventing homelessness with investments in services. Yet, as Colburn pointed out, jurisdictions whose housing costs are already high may struggle to successfully implement approaches such as Housing First, which prioritizes connecting those experiencing homelessness to stable housing and supportive services, without requirements such as finding employment or establishing sobriety. In essence, inadequate housing supply makes the problem of homelessness worse and places the solution to the problem further out of reach. Colburn, however, asserted that the problem is not that the public is not spending significant money to address homelessness; rather, it is that jurisdictions are addressing homelessness at high cost through the justice, healthcare, and sanitation systems rather than through the housing system.

Another wrinkle is that when policymakers pursue needed short-term solutions such as shelters, any success these solutions generate can weaken public support for long-term solutions, said Colburn, who argued for a comprehensive focus on short- and long-term needs. Bailey described homelessness as a public safety issue for those experiencing the stress of homelessness and for the general public and stated that affordable housing with wraparound services ultimately promotes everyone’s well-being. Bailey pointed to successful eviction mitigation efforts enacted during the pandemic that combined rental assistance with intervention services.

Bailey, Tanner, and Colburn called for a comprehensive approach to increasing housing supply that includes increasing subsidies for affordable housing and removing obstacles to the development of market-rate units, which, through filtering, is an important mechanism for producing naturally occurring affordable housing. Although the challenges of unaffordable housing and homelessness have grown in recent years, Colburn provided a reason for hope. Colburn reminded policymakers who might be feeling pessimistic about one instance in which political will successfully coalesced around funding a specific goal: ending veteran homelessness, which has seen a 50 percent reduction over the past decade. Given similar commitments to increase housing supply and housing affordability broadly, policymakers could meaningfully reduce experiences of homelessness.