Rise in homelessness averted amidst worsening housing needs in 2021. What does this tell us about how to end homelessness in the U.S.?

Rise in homelessness averted amidst worsening housing needs in 2021. What does this tell us about how to end homelessness in the U.S.?

Solomon Greene, Principal Deputy Assistant Secretary for Policy Development and Research
Todd M. Richardson, General Deputy Assistant Secretary for Policy Development and Research
Jemine A. Bryon, Deputy Assistant Secretary, Office of Special Needs, Office of Community Planning and Development
Richard Cho, Senior Advisor for Housing and Services, Office of the Secretary

Top left to right: Solomon Greene, Todd Richardson Bottom left to right: Jemine Bryon, Richard Cho

Top to bottom: (1) Solomon Greene, (2) Todd Richardson, (3) Jemine Bryon, and (4) Richard Cho

Deciphering a Pandemic Puzzle 

Last month, HUD released a signature report on housing needs in 2021, and next month, we'll release another. Taken together, these reports suggest that a rise in homelessness was averted during the height of the COVID-19 pandemic, when low-income families faced growing housing instability risks and cost burdens, and the federal government deployed historic funding and resources to keep people stably housed.

This week, HUD released an Executive Summary of our biennial Worst Case Housing Needs report, and we will release the full report in September. Worst Case Housing Needs are the housing needs of unassisted very low-income renters that are currently housed but face high cost burdens or severely inadequate housing conditions, or both. The 2023 Worst Case Housing Needs report analyzes data from 2021 and estimates that 8.53 million housed renter households had "worst case needs" in that year, the highest number since HUD started estimating these needs in 1978. Much of this increase was driven by rising rents and severe cost burdens faced by many low-income families as the rental market tightened.

At the same time, HUD's Annual Homelessness Assessment Report: Part 2 for FY21, released last month, shows that fewer people entered a shelter program in 2021, and sheltered homelessness overall decreased by 17 percent between 2019 and 2021.

At first glance, these results may seem puzzling. We would expect a tightening housing market and a rising number of households having difficulty with rent burdens to result in more homelessness rather than less. What accounts for these seemingly paradoxical trends?

In this article, we suggest that unprecedented federal interventions to stabilize housing during the pandemic succeeded in preventing a rise in homelessness, even as housing costs and burdens increased. When those interventions and supports expired, the U.S. began to face (and continues to face) a rise in homelessness.

In other words, in 2021, rental housing costs and shortages placed more people at risk of homelessness than ever, but federal policies and programs provided a level of protection that kept many housed.

We take a closer look at the research reports and the relevant evidence on pandemic-related federal interventions to suggest how HUD and its partners in the federal, state, and local governments could make more sustained — and evidenced-based — strides in finally ending homelessness in the U.S. 

The Housing Needs Story of 2021

Two complementary signature reports from HUD discuss housing needs in 2021: (1) HUD's forthcoming Worst Case Housing Needs report, which quantifies the needs of people who are housed, and (2) HUD's recently published Annual Homeless Assessment Report, Part 2, which documents the housing needs of people who lack housing. Together they provide an estimate of the number of individuals and families most in need of housing assistance in 2021 when the data were collected.

Both reports reflect a unique time in history — 2021 — when a large share of American households faced pandemic-related health and economic challenges, but also received pandemic-related federal assistance to help them with their housing and other costs. This assistance included:

• Two economic impact payments totaling $2,000 per eligible adult and qualifying dependent for many households.

• The enhanced Child Tax Credit, which provided over $3,000 per child, 50 percent of which was through advance payments during 2021.

• Expanded unemployment benefits.

• Emergency Rental Assistance (ERA), which provided 10.8 million rental assistance payments to households to prevent their housing loss.

A national eviction moratorium was also in place in most communities until August 26, 2021. Many states and jurisdictions had additional state or local eviction moratoria that continued into early 2022.

When published next month, the 2023 Worst Case Housing Needs report will show that:

• 8.53 million housed renter households had worst case needs in 2021, an increase of 760,000 cases, compared with 7.77 million in 2019. For 97 percent of those with worst case needs, they were paying more than half their income for housing; just 3 percent of worst case needs were due to substandard housing alone. Simply put: the rise in worst case needs was largely driven by rapid rent increases and crushing cost burdens facing very low-income families during the pandemic.

• Worst Case Needs calculation of income excludes the one-time payment assistance of most of the pandemic protections noted above, except unemployment assistance. As such, in 2021 many of those with worst case needs were likely able to counter their high rent burdens with funding from the pandemic-related federal interventions noted above or forestall evictions due to eviction moratoriums in place at the time.

While this second point is an assumption, it tends to be reinforced by the Annual Homeless Assessment Report (AHAR) Part 2 for fiscal year 2021, which provides the unduplicated count of individuals and families that used shelter services during the 2021 federal fiscal year, as well as research conducted by independent researchers.

The AHAR shows a 17 percent decrease of sheltered homelessness between 2019 and 2021. Over the course of 2021, 1.2 million unique individuals (in 940,000 households) were sheltered in the homeless system in 2021, down from 1.5 million in 2019.

Of special note, families with children using shelters declined by 25 percent. Among families with children, the number experiencing first-time homelessness declined 23 percent from 2019. Single adults had a similar reduction.

During the pandemic, there was a substantial reduction in the number of people entering homelessness. However, this success was offset somewhat by fewer people exiting homelessness in 2021, likely due to the high barriers to leasing a unit in 2021. These contrasting forces of reduced inflow and slower outflow from homelessness are also reflected in the 2022 Point-in-Time count data, which found that the number of people who were in homeless shelters on a single night in early 2022 had decreased by 1.6 percent compared to 2020; fewer people became homeless during 2021, but those who became homeless remained homeless longer. The reduction in sheltered homelessness in 2021 was driven more by the prevention of new homelessness than by the number of people who exited homelessness into permanent housing.

At the same time, there was a sharp reduction in evictions — a frequent cause of homelessness — during the pandemic. According to Princeton University's Eviction Lab, evictions in 2020 and 2021 were 58 percent less than prepandemic across the communities they track.

The two interventions in 2021 that were likely most powerful in contributing to both declining evictions and fewer people entering homelessness were the eviction moratoria and the Emergency Rental Assistance program administered by the U.S. Treasury Department that helped more than 10 million households behind on rent catch up.

Recent research suggests that eviction moratoria, particularly those that halted the earliest stages of the eviction process, resulted in significant and durable reductions in eviction filing rates. Other research suggests that ERA helped families avoid evictions and had a positive impact on financial and mental well-being in Philadelphia and across the country.

What's Been Happening Since 2021?

There are several economic forces at work in 2022 and into 2023 that are affecting housing needs and homelessness. First, the good news —

• The economy has remained strong with income growth and low unemployment for those able to work.

• Rents in 2023 seem to be stabilizing as household formation is likely slowing, and the backlogged multifamily rental completions are finally entering the market.

Now, the bad news —

• Many of the pandemic income supports and protections that reduced the inflow into homelessness during 2021 have expired or been expended.

• The cost of housing and other basic needs has risen significantly due to inflation, and those who have not benefited from the nation's economic growth are at even greater risk of homelessness than they were prepandemic.

• While the Biden Administration's historic investments in eviction prevention have kept eviction filings well below historic averages over the nearly 2 years since the end of the CDC eviction moratorium when they were predicted to spike dramatically, eviction filings have returned to pre-pandemic levels in many places.

Current data from the Census Pulse Survey show that in August 2023, 5.52 million renter households are behind on their rent payment, with 1.87 million fearing imminent eviction. These figures are less than in 2021 and in 2022 (likely due to the strong economy), but they remain concerning, particularly for the 12.7 percent of renters reporting monthly rent jumps in the last year of $250 or more.

This indicates that the bad news exceeds the good news: while more people experiencing homelessness are obtaining permanent housing in FY 2022 compared to FY 2020 and lengths of homelessness episodes are shortening, the number of people who are experiencing homelessness for the first time is nearly 30 percent higher in FY 2022 than in FY 2020. In short, communities are facing overwhelming numbers of people losing their housing and becoming newly homeless, as well as many migrants and asylum seekers needing emergency shelter.

What Does the Research Tell Us About How to End Homelessness in the U.S.?

Homelessness is a housing problem. The lesson of 2021 is that we can slow the inflow into the homeless system by preventing evictions. It also shows that we can reduce the number of people experiencing unsheltered homelessness by offering non-congregate shelter options such as motel rooms.

The research on the causes and solutions for homelessness provides a very clear message about ending homelessness. The key lessons from the research are:

• Combining legal and financial support can prevent evictions and, in doing so, reduce the inflow into homelessness. Supports can take different forms — from delaying evictions or diverting them to mediation to allow tenants and landlords to work out a resolution — to short-term, emergency rental assistance.

• Landlords are an important part of the solution, and they need support to continue to house tenants when tenants are in crisis, including through emergency rental assistance payments and case management resources.

• Increasing the supply of rental housing with affordable rents is the foundation for reducing and preventing homelessness. It is not a surprise that the places with the highest per capita homelessness rate are where there are many fewer units of affordable and available housing per very low-income renters.

• Housing First works. Research shows that quickly rehousing individuals and families while also providing case management support is the most effective way to resolve situations after individuals become homeless. Key to this model is rapid rehousing and permanent supportive housing resources along with units accepting these resources. Absent other housing options, the pandemic interventions show we can get more unsheltered individuals off the street if we offer non-congregate shelter options.

• Even with available housing with modest rents, tenants with the lowest incomes still need monthly rental subsidies to fill the gap between what they can afford and unit rents. A 2023 report on a survey of individuals experiencing homelessness in California between October 2021 and November 2022 found 96 percent of people saying they would not be homeless if they had a housing subsidy. Most felt modest assistance when they were at risk of losing their housing would have kept them from losing their housing. That survey also found homelessness disproportionately impacts Black and Indigenous people and other racially marginalized communities. HUD's Family Options Study found for families experiencing homelessness offered a housing voucher, it reduced their return to homelessness after 3 years by more than 50 percent, as compared to usual care in the shelter system.

In sum, to end homelessness, the nation needs to prevent people from becoming newly homeless by creating more affordable housing options for low-income individuals and families and preventing evictions and housing loss through stronger legal protections, emergency rental or financial assistance, and case management and engagement with landlords. And we need to resolve homelessness more quickly through rapid rehousing and housing first strategies — both of which rely on more affordable housing development and expanded rental assistance programs, such as housing vouchers. These actions will help address racial inequities, especially among Black and Indigenous people and other racially marginalized communities.

President Biden has continued to request from Congress an expansion of resources to increase the supply of affordable housing, as well as to expand rental assistance. The administration has also taken steps to strengthen tenant protections to reduce evictions and housing loss. These federal policy actions and resources are part of the solution. The other parts of the solution rest with local policymakers and practitioners. The 2021 experience has provided us with a roadmap.