How to Fix Homelessness? Encourage Home -Building!

We're playing musical chairs, rather than adding more chairs.

I’m haunted by the case of a single mom in Beaverton, Oregon, who worked as a domestic helper and couldn’t afford decent housing. She ended up in a garden shed: Electricity came from an extension cord from the house, “running water” was a hose outside, and the toilet was a bucket. For this she paid $650 a month.

Her kids couldn’t bathe and got lice. They were bullied at school because they smelled, and her daughter attempted suicide. That brought in the child welfare authorities, who removed the children from the mom — even though the problem wasn’t her mothering but high rents.

Everybody in the United States recognizes that we have a problem with housing costs and homelessness, yet our policies haven’t worked — especially on the West Coast. Just the three states of California, Oregon and Washington together account for a majority of unsheltered homeless Americans.

California has the highest rate of homeless people who are unsheltered in America, and Oregon ties for second with Nevada. I think one basic problem s that many people, including policy makers, don’t understand the structural driver of homelessness: It’s about supply. What distinguishes California and Oregon is that they’ve made it difficult for the private sector to increase housing supply to accommodate demand for low-cost housing.

I hear a lot about how the problem is poverty, mental health and addiction, and there’s something to that. Those unsheltered on the street disproportionately are wrestling with such issues.

Yet overall, high-poverty states in America have less homelessness than rich states. States with higher mental illness likewise have lower homelessness, notes a new book, “Homelessness is a Housing Problem,” by two policy experts, Gregg Colburn and Clayton Page Aldern (it’s summarized in this good Sightline Institute essay.)

Kentucky and West Virginia have enormous problems with addiction, but low homelessness rates. That’s because in either state, you can actually find a decent room to rent for $650 a month.

This chart shows that higher poverty rates are associated with lower homelessness. From “Homelessness is a Housing Problem,” as cited by Sightline Institute.

So of course we have to do a much better job providing mental health support and addiction treatment. It’s an abomination that the main mental health treatment facilities in America today are…jails. I’m heartsick that friends with substance use disorder can’t easily get treatment. But while we have to do a much better job addressing those issues, they are not the key to solving homelessness.

In contrast, the authors find two factors are strongly correlated with higher homelessness. One is the high cost of rent, and the other is a low vacancy rate.

The higher the rent, the higher the rate of homelessness.

The biggest single reason for homelessness is simple: a lack of housing, which drives up rents. This is above all a supply problem.

Historically, many home-owners rented out rooms inexpensively (my dad stayed in such a room in Portland in the 1950s), and many people also lived in cheap rooming houses or SRO hotels with shared bathrooms and kitchens. Trailer parks also offered low-cost housing. But all these options have been disappearing.

More broadly, housing in places like Portland has been built at only half the rate at which it is needed. Here in Oregon, we’re short about 140,000 housing units.

When you’re short that much housing, many of the usual steps that are effective in general — housing navigators, eviction assistance, vouchers — don’t work. You give one person help, and then another person doesn’t get housing.

Think of a game of musical chairs. The number of people seated will depend on the number of chairs. You can offer vouchers or eviction assistance, and that will change which person gets a seat but the number seated won’t change.

So supply has to be the focus, and the needs are far too great and far too expensive for government to meet; the private sector is essential. The government can and should build shelters and can incentivize some kinds of housing, but what’s crucial is building tens of thousands of new units right away — and hundreds of thousands over a decade. That’s going to mean loosening red tape in the permitting process, and it’ll mean homeshare models.

I like the Padsplit homeshare model, which rents lockable bedrooms in a home for about $600 a month, with bathrooms and kitchens shared. People using Padsplit have incomes of about $25,000 a year, and some have eviction histories, meaning that it’s almost impossible for them to find other rentals.

We can also convert commercial to residential, convert hotels to residential, and of course make it easier for homeowners to put in ADU’s and granny flats in their basements or back yards. Minimum lot sizes should be banned or reduced, for they raise housing prices. We can support the revolution in home construction that is beginning, based on manufactured homes, prefab homes and 3D printing of homes. But the focus has to be on helping the private sector create hundreds of thousands of new housing units to keep prices affordable.

My Oregon friend Mike Stepp wrestled with joblessness, alcoholism, addiction and homelessness. He died on the streets of McMinnville in 2020

Of course there’s more. Places that have done well on housing, like Houston, tend to have clear accountability mechanisms and good metrics, as well as public-private partnerships. They have effective case workers who help people find housing, connect them to services, or find relatives they can stay with.

Policies that add to home construction make rents less affordable. Oregon created an inclusionary zoning system that sounded good but has pretty much killed construction of large apartment buildings — because they’re not very profitable to build. Instead of providing affordable housing, it has reduced it.

Repeating “housing is a human right” is not a housing policy. Neither is changing terminology to houselessness. All that is fine, and we do need to reduce stigma. But the most crucial element of a housing policy is simply housing. Rents in Portland rose 29 percent last year. That pushes more people into homelessness — or into garden sheds with their children — and that’s unconscionable.