The Coming Crisis in California Homelessness
Skating To Where The Puck Has Been
The biggest local story in Los Angeles recently has been the clearance of a large homeless encampment in an iconic downtown park, Echo Park [LA Times]. The city cleared it with an LAPD sweep a week ago that arrested nearly 200 residents and used violence that many allege to be excessive [LA Times]. The growing encampment in the shadow of downtown, and its violent closure, have been taken by many to be symbols of a growing crisis of homelessness in Southern California. So I wanted to dig a little deeper into the data to explore what homelessness in Los Angeles really looks like and how it has been affected by the pandemic.
Unfortunately, the data on homelessness on LA County in March 2021 induces a similar feeling to looking at the data on Covid-19 a year ago. There is a huge and clearly foreseeable disaster coming our way, and the government’s response is mainly to pretend that it won’t happen. Even as the county government promises new, ambitious, and inadequate plans, they are aiming to tackle the problem as it exists today rather than dealing with the reality that the problem is getting more serious every day. Much like seemingly every policy phenomenon in Southern California, making serious progress would require fixing the extremely limited supply and extremely high cost of housing.
Who is experiencing homelessness in Los Angeles County?
As of the last data (early 2020, so pre-pandemic) there are 63,706 people currently experiencing homelessness in Los Angeles County [LAHSA]. By my count, if the homeless residents of LA county comprised their own city that would mark it as the 28th largest city in the county, just after Redondo Beach [Wikipedia]. 17,616 (28%) of those residents currently have some type of shelter, and the remaining 46,090 (72%) are living on the street. The homeless population grew 54% over the five years between 2015 and 2020. Homeless residents are primarily located in Central and South Central Los Angeles (figures here are from the LA Homeless Services Authority).
Most of those experiencing homelessness do not accord with the popular images of chronically homeless people on Skid Row. Most homelessness is temporary, and federal estimates are that approximately 27% of California’s homeless population is chronic [USICH]. Instead, most people experiencing homelessness are simply unable to afford a home. Low-income workers tend to have much more unstable housing situations, move around much more often, and a job loss or illness can easily nudge someone from “working but housing-insecure” to “between apartments" to “couch-surfing for a little” to “living in a car” to “living in the street” [Understanding Homelessness].
With this lens in mind, it should be obvious that California’s sky-high housing costs have played a central role in worsening this crisis. With rents and housing costs as unaffordable as they are, it’s far easier for someone to slip from housing-insecure to homeless with the loss of a job. Even worse, while urban rents have fallen slightly during the pandemic, this appears to mainly be driven by dropping rents in high-end properties while the most affordable housing has gotten less affordable [Washington Post]. This is another face of the k-shaped recovery, with household budgets for poorer residents getting squeezed with lower income and higher costs.
Why the problem is poised to get worse
You might think that as the Covid-19 recession passes that homelessness will fall as well, but this intuition is probably wrong. Homelessness can - and does - rise in good economic times, often even faster than in bad times, as housing costs escalate [UC Berkeley]. While many people experiencing chronic homelessness have issues beyond simply affording a house, housing costs appear to be a major driver on the margin between people who are housing-insecure and those who find themselves homeless.
Housing costs in Southern California have skyrocketed despite a terrible economy, and do not appear likely to moderate anytime soon. At the same time, many lower-income workers have lost their jobs and accumulated large arrears of back rent, a leading indicator of eviction and homelessness. This is why the Economic Roundtable anticipates that chronic homelessness in Los Angeles is likely to skyrocket at the same time as the economy recovers, rising an estimated 86% over the next four years [Economic Roundtable]
Unfortunately, the county does not appear to be proactively planning for the expansion of the homelessness crisis. The innovative “Project Roomkey” which provided housing in rented-out hotels is not being expanded, but is instead being wound down [LA Times]. The option of simply building housing for the homeless is not being seriously considered, as housing construction for the homeless suffers from the same runaway cost inflation as the rest of Los Angeles construction, with huge permitting and approval barriers to build anything at all. A 2016 measure to build 10,000 units, a count far inadequate even at the time, has since then produced only 228 units at a staggering cost of $746,000 per unit [LA Times]. A major culprit:
Galperin says the rising cost of building housing for the homeless is due partly to the red tape involved in getting projects approved.
The county is rolling out a new, $800M plan to house the homeless [LA Times] but it should be obvious that the math would not pencil out to build housing. At $746,000 a unit this would pay for just over a thousand new units. To be fair, the county is not actually proposing to use all of the money for constructing units (it would include rent subsidies, rehousing services, etc). However, given the economics and the results that the county has shown recently, a plan this size is grossly inadequate to helping the huge and growing needy population. You’d need to fix the cost side first before throwing money at the problem will make a dent.
I’m not the person to tell you how to fix homelessness - but the data clearly indicates this problem is bad and is only going to grow if the drivers remain in place. LA County’s plan may help, but even if executed perfectly it would only house 15,000 people out of the 64,000 currently experiencing homelessness. By the time the plan “succeeds” there will be even more Angelenos on the street than when it started. Without addressing the extreme cost of housing in Los Angeles, the problem will only get worse no matter what mitigation strategies are adopted.