Housing the homeless

Lane Kenworthy, The Good Society
December 2025

Homelessness isn’t new in the United States. It has existed since the country’s founding, ebbing and flowing over the years. What’s new is the large number of homeless Americans. Beginning in the early 1980s, there was an observable increase in the number of Americans asking for handouts, sleeping in public places, wandering the streets with their possessions in shopping carts, and searching for food or cans in garbage bins. For the first time in our history, homelessness became a truly public phenomenon. Indeed, it was around this time that the term “homeless” was coined.

As Christopher Jencks noted at the time, “The spread of homelessness disturbed middle class and well-to-do Americans for both personal and political reasons. The faces of the homeless often suggest depths of despair that we would rather not imagine, much less confront in the flesh. Daily contact with the homeless also raises troubling questions about our moral obligations to strangers. Politically, the spread of homelessness suggests that something has gone fundamentally wrong with America’s economic and social institutions.”1

How extensive is homelessness? What caused it to increase in America beginning in the early 1980s? Do we know how reduce it?

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WHO IS HOMELESS?

The reasons why particular people end up homeless are varied. A fairly large share (probably more than two-thirds) of homeless adults have some disability or pathology — mental illness, alcoholism or drug abuse, poor physical health, a criminal record — that makes them less able than the average person to survive without help. Many don’t have family who are able or willing to offer them temporary support. For more than a few homeless individuals, an event of bad luck — a car accident or breakdown, stolen belongings, a work injury — provides the initial or final push onto the streets. Some people are homeless by choice, though most studies suggest that this accounts for a small percentage.2

HOW MANY ARE HOMELESS?

Careful counting of homeless Americans began only in 2007. Since then, on average, about 600,000 persons, 0.2% of the population, have been homeless on any given night, as figure 1 shows. This number is similar to estimates from the mid-1980s and mid-1990s.3 About four-fifths are adults, and one-fifth are children.

A larger number — between 1.5 million and 2 million — are homeless at some point during a year, according to available estimates.4

Figure 1. Homelessness
Homeless persons on a given night as a share of the population. The data are from counts taken in the last ten days of January each year. Careful “point in time” counting began in 2007. There was no count in 2021 due to the Covid-19 pandemic. Data source: Department of Housing and Urban Development, The 2024 Annual Homeless Assessment Report (AHAR) to Congress, exhibit 1.1.

Despite the country’s affluence, Americans at the bottom of the distribution have relatively low incomes.5 And government assistance with housing costs is scarce.6 We might therefore expect more homelessness in the United States than in other rich democratic nations. As we see in figure 2, however, the US is in the middle of the pack.

Figure 2. Homelessness
Homeless persons on a given night as a share of the population. Includes persons (1) living rough, (2) living in emergency accommodation, and (3) living in accommodation for the homeless. Data source: OECD, Affordable Housing Database, table HC3.1.1.

WHAT CAUSED THE SURGE IN HOMELESSNESS BEGINNING IN THE 1980s?

Several developments in government policy, in the economy, and in housing beginning in the 1980s put increasing numbers of Americans at risk of becoming homeless.7

Deinstitutionalization. In 1955, about 550,000 patients resided in state and county mental hospitals. By 1980, the number had shrunk to 140,000. While deinstitutionalization has been widely blamed as the main cause of rising homelessness, it’s only a partial explanation. Nearly 90% of the decline in mental hospital residency had occurred by 1975. And the best estimates put the share of the homeless with serious mental health problems in the 1980s and 1990s at around one-third. That’s not a trivial share, but neither is it an enormous one. Furthermore, even for individuals for whom deinstitutionalization was a precipitant of homelessness, its effect was likely modified or mediated by other factors.

Income declines. The US unemployment rate grew from 5% in 1973 to 7% during the late 1970s to 10% in 1982 and 1983. Stagnant wages for Americans in the lower half of the pay distribution meant that even for those with work, the ability to afford housing and feed a family was no longer a given.8 And in the 1970s and 1980s, the inflation-adjusted value of social assistance benefits (Aid to Families with Dependent Children, or AFDC) decreased significantly.9

Decline in the stock of low-income housing and increase in the cost of housing. Between 1973 and 1979, more than 90% of the nation’s housing units renting for $200 or less per month disappeared from the housing market. Many of these were single-room occupancy (SRO) units which had long housed the country’s poorest individuals. One reason is that new government-subsidized low-income housing units decreased significantly under the Reagan and (George H.W.) Bush administrations.

Recent research suggests that the high cost of housing is a key contributor to homelessness.10 The government counts of homelessness occur in 400 places, each of which corresponds to a city, a county, or a group of counties. A study of these 400 places from 2011 to 2017 finds that homelessness tends to rise as rental costs rise, and that the effect is particularly strong once rent exceeds about 30% of a typical household’s income.11 As Gregg Colburn notes, “if you are addicted or you are mentally ill in an expensive West Coast city like San Diego, you’re far more likely to experience homelessness. And that explains why Seattle, Portland, San Francisco, Los Angeles and San Diego have much, much higher rates of homelessness than Miami, or Dallas or Phoenix, for example.”12 While this isn’t surprising, it runs against the commonplace notion that the causes of homelessness are distinct from the broader housing affordability problem.13

HOW CAN WE HELP?

A strong economy? It’s frequently assumed that a key to reducing homelessness is a healthy economy. But while poor economic conditions in the early 1980s did contribute to a rise in homelessness in the United States, that was only one among a number of factors. More generally, economic health doesn’t help much in understanding the prevalence of homelessness. There is little correlation between a country’s economic performance and its homelessness rate (figure 2 above). States and cities with more homelessness often aren’t ones that are suffering economically: the rate of homelessness is much higher in California than in Mississippi, much higher in New York City than in Detroit. There was no sharp rise in homelessness as the economy moved from healthy in 2007 and 2008 to weak during the Great Recession in 2009 and 2010.14

Temporary shelter. Being homeless doesn’t automatically mean being without shelter. A host of public and nonprofit agencies exist across the country to provide shelter to persons who lack a home. About two-thirds of homeless persons are in some type of indoor shelter when the count is done in January each year.15

Since careful counting began in 2007, the number of available beds has always equaled or exceeded the number of homeless Americans.16 Why, then, are one-third of homeless persons not in shelters? There are several reasons. The beds may not be where the people are (spatial mismatch). Some people have overstayed their eligibility at the available shelter. Some have been barred for violating rules. And some homeless persons voluntarily forgo an indoor bed.

Permanent housing. In recent decades evidence has mounted that the best way to address homelessness is via a “housing first” strategy of moving people immediately into permanent housing and then, if needed, providing them with additional services. This reverses the previously dominant “treatment first” or “staircase” view that people should be given only temporary shelter until they meet a set of conditions, such as sobriety and stable behavior. The housing first approach places a homeless person or family directly into housing. It also connects them to services to address other challenges, but eligibility for housing isn’t conditional on their use of the other services or on their behavior. The record thus far suggests that housing first is more likely to result in long-term housing stability.17

Evidence from the Family Options Study in the United States suggests that a housing first approach works best when the housing is permanent. Assistance that is open-ended (rather than time-limited) and that ensures the cost of rent and utilities doesn’t exceed 30% of a household’s income is sufficient to end homelessness for most individuals and families.18

A housing first approach also tends to reduce costs, because persons and families who are no longer homeless spend less time in hospitals, substance abuse programs, nursing homes, and prisons.19

From 2007 to 2019 there was a sharp increase in the number of permanent housing beds for homeless Americans, as we see in figure 3. This is likely a key reason why homelessness decreased steadily during those years (figure 1).

Figure 3. Temporary housing beds and permanent housing beds per homeless person
Ratio of beds to homeless persons. Data source: Department of Housing and Urban Development, The 2024 Annual Homeless Assessment Report (AHAR) to Congress, exhibit 7.3.

Housing first isn’t perfect.20 Some people return to homelessness. And for some who remain in their new permanent housing, the surroundings aren’t ideal. A recovering alcoholic who ends up with neighbors that drink or use drugs is more likely to struggle. If a housing first program is underfunded, both the housing and the services may be subpar. On the whole, though, housing first has proved to be the most strategy we’ve come up with.

A special program for military veterans. Also helpful is a government program aimed at reducing homelessness among veterans. The program “uses a triage approach, calibrating aid to need. The government provides up to $4,000 in cash for those who need just a little help, for example to pay a security deposit. For those who need continuing help, there are housing vouchers. And for veterans whose economic problems are compounded by other issues, such as disabilities or substance abuse, the government provides ‘supportive housing’ — a place to live, plus counseling and care.”21 This program contributed to a decline in the number of homeless veterans from 75,000 in 2010 to 33,000 in 2024.22

Does the recent rise in homelessness require new strategies? After falling slowly but steadily from 2007 to 2019, homelessness in the United States has increased in recent years. It isn’t clear yet what the main causes are, though the loss of jobs and work hours during the Covid-19 pandemic coupled with rising prices during the higher-inflation years from 2021 to 2023 are likely culprits. By 2024 the unemployment rate had returned to very low levels and inflation had fallen nearly to its usual rate of around 2%. We should know fairly soon whether this was enough to reverse the increase in homelessness or whether its causes lie elsewhere.

WHAT SHOULD CITIES DO ABOUT HOMELESS PRESENCE IN PUBLIC SPACES?

In a number of American cities, homeless persons are a highly visible presence — on sidewalks, in tents in parks, in sleeping bags under bridges. Do these people have a right to be there? Must local government leave them alone? That seems to be the view of some. But the rationale for this approach — that every individual has a right to be anywhere they want whenever they want — isn’t especially compelling.23 If government can relocate urban homeless persons to permanent housing, that is a legitimate and sensible thing to do.

SUMMARY

Approximately 0.2% of Americans are homeless on any given night. Changes in the economy, housing, and government policy caused a sharp increase in homelessness beginning in the 1980s. The high cost of rental housing in American cities is a key reason why homelessness persists. The most effective way to reduce homelessness is provision of permanent housing for homeless persons.

  1. Christopher Jencks, The Homeless, Harvard University Press, 1994, p. v. ↩︎
  2. David A. Snow and Leon Anderson, Down on Their Luck: A Study of Homeless Street People, University of California Press, 1993; Marybeth Shinn and Jill Khadduri, In the Midst of Plenty: Homelessness and What to Do About It, Wiley, 2020, ch. 3. ↩︎
  3. Martha R. Burt, Laudan Y. Aron, Toby Douglas, Jesse Valente, Edgar Lee, and Britta Iwen, Homelessness: Programs and the People They Serve, Urban Institute, 1999; Shinn and Khadduri, In the Midst of Plenty: Homelessness and What to Do About It. ↩︎
  4. National Coalition for the Homeless, “How Many People Experience Homelessness?,” 2009; Shinn and Khadduri, In the Midst of Plenty: Homelessness and What to Do About It, p. 24. ↩︎
  5. Lane Kenworthy, “A Decent and Rising Income Floor,” The Good Society. ↩︎
  6. Lane Kenworthy, “Affordable Renting,” The Good Society. ↩︎
  7. Jonathan Kozol, Rachel and Her Children: Homeless Families in America, Random House, 1987; Snow and Anderson, Down on Their Luck; Jencks, The Homeless; Shinn and Khadduri, In the Midst of Plenty: Homelessness and What to Do About It. ↩︎
  8. Lane Kenworthy, “A Decent and Rising Income Floor,” The Good Society; Kenworthy, “Shared Prosperity,” The Good Society. ↩︎
  9. Lane Kenworthy, “Social Programs,” The Good Society. ↩︎
  10. Shinn and Khadduri, In the Midst of Plenty: Homelessness and What to Do About It, ch. 2; Clayton Page Aldern and Gregg Colburn, Homelessness Is a Housing Problem, University of California Press, 2022. ↩︎
  11. Chris Glynn, Thomas H. Byrne, and Dennis P. Culhane, “Inflection Points in Community-Level Homeless Rates,” Annals of Applied Statistics, forthcoming. ↩︎
  12. Gary Warth, “Cause of Homelessness? It’s Not Drugs or Mental Illness, Researchers Say,” San Diego Union-Tribune, 2022. ↩︎
  13. One indicator that is less supportive of the conclusion that housing costs are a key driver of homelessness is the share of American renters who spend more than 50% of their income on rent. That share has hovered around 2% of the US population since 2007, even while homelessness decreased. National Alliance to End Homelessness, State of Homelessness, “Size of Population At-Risk of Homelessness, by Living Situation, 2007–2017,” using data from The 2018 Annual Homeless Assessment Report (AHAR) to Congress. ↩︎
  14. The recession began in 2008, but the homeless count occurs in January while the economic downturn didn’t start until the fall. ↩︎
  15. Department of Housing and Urban Development, The 2024 Annual Homeless Assessment Report (AHAR) to Congress, exhibit 1.1. ↩︎
  16. National Alliance to End Homelessness, State of Homelessness, “Homeless Assistance Bed Inventory Trends, 2007-2018,” using data from The 2018 Annual Homeless Assessment Report (AHAR) to Congress. ↩︎
  17. Bloomberg View, “Proven Reforms Help Beat Homelessness Even in Tough Times,” 2013; Shinn and Khadduri, In the Midst of Plenty: Homelessness and What to Do About It; William N. Evans, David C. Phillips, and Krista Ruffini, “Policies to Reduce and Prevent Homelessness: What We Know and Gaps in the Research,” Journal of Policy Analysis and Management, 2021; US Department of Housing and Urban Development (HUD), “Housing First: A Review of the Evidence,” 2023. ↩︎
  18. Shinn and Khadduri, In the Midst of Plenty: Homelessness and What to Do About It. ↩︎
  19. US Department of Housing and Urban Development (HUD), “Housing First: A Review of the Evidence.” ↩︎
  20. Nicholas Kristof, “Here’s How Houston Is Fighting Homelessness — and Winning,” New York Times, 2023. ↩︎
  21. Binyamin Applebaum, “America’s Cities Could House Everyone if They Chose To,” New York Times, 2020. See also Jason DeParle, “Decline in Veterans’ Homelessness Spurs Hopes for a Broader Solution,” New York Times, 2024. ↩︎
  22. Department of Housing and Urban Development, The 2024 Annual Homeless Assessment Report (AHAR) to Congress, exhibit 5.1. ↩︎
  23. Matthew Yglesias, “They Have Homelessness in Europe, Too,” Substack: Slow Boring, 2022; Yglesias, “America’s Two Homelessness Problems,” Substack: Slow Boring, 2023. ↩︎