Despite more than $150 billion in federal spending since 2016, more than 745,000 Americans are homeless according to the latest point-in-time estimates released last week. More than 266,000 of them were “unsheltered;” that is, living on the streets. The good news is that this represents a three percent decrease in the number of homeless since 2024. The bad news is that it also marks a 27 percent increase since 2013. Pretty clearly, current policies to end homelessness are not working.
Now, the Department of Housing and Urban Development (HUD) has released plans to shift policy away from the Housing First model that has been virtually the sole focus of homelessness policy. HUD plans to devote as much as 40 percent of funding to transitional housing and support services, such as mental health and substance abuse treatment. Today, those activities receive less than one percent of federal funding.
This change will include $4 billion in grants, for Continuum of Care organizations (CoC) to provide transitional housing and support services.
In addition, grants will be awarded on a competitive basis designed to stimulate innovation and new ideas. Even more important, funding will be tied to performance rather than automatic renewals regardless of outcomes which is too often the practice today. Currently, nearly 95 percent of CoC contracts are renewed, despite a clear lack of success. Further, success will be defined, not just as putting a roof over someone’s head, but also measures outcomes such as reducing drug use, treatment of mental health issues, increased employment, and whether people are able to move from subsidized to unsubsidized housing. HUD will also strengthen efforts to reduce fraud, waste, and abuse.
The new HUD policy is a strong and overdue step in the right direction and has the potential to reshape the way policymakers approach homelessness in positive ways.
Many of those experiencing homelessness, often the most visible, are indeed, as HUD Secretary Scott Turner has noted, suffering from addiction and mental illness. They pose real and significant quality of life issues for communities. More importantly, their own health and safety are often at risk.
“Housing First,” emphasizes providing these individuals with permanent housing without preconditions. The idea assumes that only after individuals are placed in a stable housing situation, will they be able to deal with other problems such as joblessness, substance abuse, or mental illness. The cost of such permanent housing is often prohibitively expensive and is rarely accompanied by services needed to address the underlying problems that led them to become homeless in the first place. Studies have shown that Housing First programs have little or no impact on drug use, alcohol consumption, or psychiatric symptoms.
HUD’s new policy recognizes this failure and offers a better alternative.
Still, it is only a partial answer to the problem of homelessness. As I wrote in the FREOPP white paper, Reimagining the Policy Approach to Homelessness, there are really two disparate homeless demographics. Many indeed suffer from mental illness and substance abuse. The HUD policy directly targets this problem and it has also promised to address the difficult issue of involuntary institutional commitment soon.
Although policies to deal with the mentally ill and substance abusers are essential to any strategy to combat homelessness, those groups represent a minority of those dealing with homelessness. The majority of the homeless are simply unable to afford housing.
Bringing down the cost of housing will require substantial deregulation of the housing market.
During President Trump’s first term, he issued an executive order establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing that calls out federal, state, and local governments for erecting host of regulatory barriers to building more housing: Overly restrictive zoning and growth management controls; rent controls; cumbersome building and rehabilitation codes; excessive energy and water efficiency mandates; unreasonable maximum-density allowances; historic preservation requirements; overly burdensome wetland or environmental regulations; outdated manufactured-housing regulations and restrictions; undue parking requirements; cumbersome and time-consuming permitting and review procedures; tax policies that discourage investment or reinvestment; overly complex labor requirements; and inordinate impact or developer fees.
A similar commitment to affordable housing is needed now as well.
There is a tremendous need for new approaches to the tragedy of homelessness in America. While incomplete, HUD is off to a good start.