Obstacles to building housing have created a homeless crisis in California. Can the “Golden State” find a way to house the people living on its streets?
Tents house people experiencing homelessness in the Skid Row area of Los Angeles, California on 24 November 2022. (Ringo Chiu via AP)
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Six months ago, my husband and I moved to Santa Barbara, in California — a magnificent coastal area covered by lush grass, old trees and extravagant flowers a few miles from the University of California Santa Barbara.
It is a picturesque town with art deco houses, museums, shops and a large collection of lively bars and restaurants. The area boasts scenic beaches lapped by the Pacific Ocean and lined with palm trees. On the back, wineries and huge mansions pepper the hills.
Santa Barbara is a wealthy city. While median household income isn’t quite that of people in Silicon Valley 300 miles to the north, it is well above that of the country as a whole, which has one of the highest median household incomes in the world behind only Luxembourg, Switzerland and Norway. Unemployment is low by all standards, and the minimum wage is set at $16 per hour.
But when I go shopping at a branch of a popular retail store near the university, there is often a man in his forties who lives on the sidewalk, just to the right of the main entrance. When not there, he is at the nearby crossroad begging money from passing cars.
Homelessness is a common feature across California, a result of a fundamental scarcity of housing.
“The main cause of homelessness, I think, anywhere, is a feature of very, very low housing supply. And housing cost,” said Janey Rountree, an executive director of the California Policy Lab at University of California Los Angeles.
A sharp rise in those without homes
About 11% of people in the United States live in California. But according to the U.S. Department of Housing and Urban Development, in 2023 some 181,399 of them were unhoused people. The state accounted for 28% of the nation’s total homeless population and the highest in the United States. That’s up nearly 40% from five years ago.
Rountree said that analyses by researchers Greg Coburn and Clayton Page Aldern proved that housing market conditions such as cost and availability of rental housing, provide a more convincing account than alternative causes of homelessness. “I think that anyone who studies and pays attention to this issue understands fundamentally that it’s an issue of housing,” she said.
For decades, California’s housing supply has not been large enough for the people who would want to live there, pushing housing prices and rental costs up.
“Here in California the housing is very low density, if you look at other urban areas, especially coastal areas, there’s much denser housing,” Rountree said. “We’re really behind here, and this affects people at every price point.”
While the U.S. median home price across all the United States was $433,812 in April 2024, according to Redfin, it was $817,000 in California and $1.8 million in Santa Barbara, with peaks at $4.7 million in the near-by luxury enclave of Montecito.
“The issue in the United States has been decades-long disinvestment in housing, really at every price point and especially affordable housing,” said Rountree. “The amount of federal investment in housing declined sharply after the Great Recession, which was of course, a feature in some ways of home mortgage. And then it had been compounded by red tape and difficulty in building any kind of housing, especially affordable housing”.
Zoning codes benefit property owners.
Municipal and local laws have often protected land, with the result of low-density population across the West Coast of the United States.
The housing shortage has been so bad that it has also been seen as a constraint to California’s economic expansion. Some studies suggest that a rollback of current housing regulations would result in an increase to the state’s Gross Domestic Product — the market value of all the final goods and services produced in a region that is used as a measurement of an area’s economic health.
In fall 2023, California Governor Gavin Newsom announced a set of laws that incentivize and reduce barriers to housing affordability. The legislation allows institutions like universities and religious organizations to use portions of their property to build housing and streamlines housing development.
But experts say that even if massive and effective, these measures will require decades to push prices down and provide homes to those who are now homeless.
A more rapid way to tame the issue of homelessness would be to offer subsidies to homeowners as a way to fund cheap housing for those in need, said Elior Cohen an economist at the Federal Reserve of Kansas City who has done extensive research on homelessness.
Solutions to homelessness
Cohen has studied how recent programs aimed at giving homeless people unconditioned homes proved to be effective.
“This is a recent change in the public policy spectrum on how to address homelessness, because prior to that, there was a treatment first approach,” Cohen said.
The thinking was that homeless people needed training to become ready for housing. “But this was not working because there were a lot of restrictions,” Cohen said. “For example, be sober, find a job and things like this for you to become ready to get housing, and a lot of people just dropped out.”
In the programs Cohen analyzed, providing housing without any strings attached actually keeps people in those homes. According to his research, he said, these people proved to be more unlikely to be involved in criminal activity, as well, and more likely to report being employed and have higher earnings in general.
“What was interesting is that you did not see an increase in public benefits,” Cohen said. “Most of the increase in their earnings came from employment and not from public benefits, which is an important part when you’re thinking about whether these programs are cost effective or not.”
A political reality
Providing homes to those in need, however, remains a political challenge. Many local property owners don’t want to expand the housing supply.
They fear it will reduce the value of their own homes, create more traffic and eventually destroy large green areas. Even modest developments such as turning a golf course in Santa Barbara into a housing complex has been met with criticism. At the same time, homeowners are not so keen on renting to former homeless people unless heavily incentivized to do so.
“Building more affordable housing where people can spend a much smaller share of their income on housing would have definitely helped,” said Cohen.
He said that the government needs to motivate landlords to rent units to people who are homeless.
“I think this is probably going to be much cheaper to implement than building lots of new housing units,” he said.
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Three questions to consider:
- What is one cause of homelessness in the U.S. state of California?
- Why are property owners often against the building of new housing in their region?
- If you were an advisor to the governor of California, what policy advice would you give?
A correspondent and editor in Europe and the United States for more than two decades, Tiziana Barghini has reported on Popes, mobsters and political crises. She led Reuters coverage of the euro crisis in southern Europe before moving to New York where she tackled the U.S. political economy including Detroit’s bankruptcy and the U.S. public pension system.