At first glance, it seems obvious why California has such a disproportionate number of America’s homeless. Housing is very expensive in California. But why should expensive housing cause homelessness? If houses in Nome, Alaska were as expensive as in Los Angeles, would Nome have as much homelessness as LA?
Commenter CaliNice had an interesting comment about the housing situation in California. Here’s an excerpt, although you may want to read the whole comment, which makes some other interesting points:
Not that all the low income people are pushed out, as there are lots of poor people in California, but poor people have to work very hard to afford rent in California, and many people with serious social problems(drugs, addiction, mental illness, criminality) tend to just be priced out of the state since they don’t care to put in the extra work to afford rent. The poor in California who survive high rents are much more law-abiding and pro-social than those that get priced out. Therefore, the more exclusionary the zoning, the more desirable the location. The reverse is true for cities becoming cheaper, with social problems rising the cheaper the rents, causing a negative loop with respect to demand. . . .
That’s also why the homeless problem is so bad in California. California just doesn’t enforce rules very much, but that is mitigated by the fact that the high rents have kept enough people with issues out so the state’s social situation is on average better than it would be (TX has a higher rate of crime than CA). Homeless people circumvent the issue of high rents completely, so the lack of enforcement becomes the defining factor, hence why the state has such a severe problem
Thus expensive housing and homelessness are linked, but not because the homeless can’t afford housing. Rather the correlation occurs because the homeless in expensive areas are not in the market for housing. For the homeless, the relative cost of living on the street in Los Angeles (relative to an apartment) is much lower than the relative cost of living on the street in Arkansas. So it would be rational for a homeless person to relocate from Arkansas to LA.
Here’s a more intuitive way to see the point. Ask yourself why housing in California is so expensive. There could be many reasons, but some combination of good climate, well paying jobs, and constraints on building probably are the key factors. Perhaps a lower crime rate than Texas. But in a sense it doesn’t even matter what the reason is; the high prices are telling you that California is perceived as a very desirable place to live, at the margin.
So why don’t poor Arkansas people currently living in homes move there? Because they’d be homeless. But homeless people in Arkansas are already homeless, so they benefit from all of the positive factors that make LA a desirable place to live, without the drawback of paying high prices for an apartment.
You might respond that while California has a nice climate, all those good paying media and tech jobs are of no value to the homeless. Not so. The same factors that make housing really expensive in California also make it easier for the homeless to get some money. In a rich place there is more public welfare, more private charity, and higher pay on part-time low skilled jobs. Some of that wealth really does “trickle down”. These pecuniary advantages are small comfort to working class people who can’t find reasonably priced homes in LA, but a real benefit to homeless people that aren’t paying a mortgage.
I favor YIMBY policies in California, but they will have only a very limited impact on homelessness.
PS. This argument may sound insensitive, as I’m sort of claiming that the homeless benefit from “free street accommodation” in LA. I do understand that they are often preyed upon, and are subject to cold weather at night. I probably wouldn’t even survive. Then the question becomes whether the negative factors associated with being a homeless person in LA are worse than being homeless in other states. I’m no expert on that issue, but there is presumably some sort of equilibrium where the increasing number of homeless in California eventually makes street life just undesirable enough to stop any further inflow.
PPS. I don’t think this model provides a complete explanation for California demographics. Both African Americans and Hispanics have somewhat below average incomes, on average. California’s black population is declining, which is consistent with this model (recall that the vast majority of poor people are not homeless.) But its Hispanic population has been rising. So there are a significant number of poor and working class people that are willing to live in California (in houses) despite high prices. House prices in Hispanic areas of south and east LA (or Orange County) are quite high by national standards, albeit low by LA standards.
I don’t claim to know how working class Hispanics can afford those pricey homes. It can’t all be explained by the fact that some were purchased at lower prices in the past—something is holding up the market on newly sold homes. And it can’t all be due to gentrification; the sprawling working class parts of LA County are huge compared to the relatively small areas impacted by gentrification. LA County alone has 4.8 million Hispanics, roughly the same as the total population of Harris County, Texas, America’s third most populous county. Picture all of Houston and its inner suburbs—that’s just the Hispanic neighborhood of LA.
As always, further research is needed. . . .
PPPS. Parts of LA are surprisingly beautiful. Check out the four pictures in this Nolan Gray tweet.
READER COMMENTS
Market Fiscalist
May 23 2022 at 9:58pm
‘Parts of LA are surprisingly beautiful. Check out the four pictures in this ‘
I have lived in Los Angeles for 20 years after having previously lived in many other cities including London, Madrid and Auckland.
Los Angeles is amazingly beautiful. Even the urban bits (not really captured in the link) can be very picturesque – I was walking on Sunset at the weekend (not the Strip but the other end near Thai Town) and looked up at the Hollywood Hills , Griffith Park and the Observatory and was blown away by how the light and the landscape combine to make one feel one is in a Matisse (or more likely a Hockney) painting.
If I were homeless I would live here over Texas or Arkansas!
Mark Brophy
May 23 2022 at 10:11pm
When I was in Santa Monica long ago, the homeless were there because the government in Santa Monica gave out better food than the government in Venice. In those days, the real estate in Venice was cheaper than Santa Monica, Venice was a slum that refused to forget Jim Morrison.
Pete S
May 23 2022 at 11:24pm
Again, a very interesting piece.
The analysis on the incentives to be homeless in CA seem spot on.
To a non-American the level of homelessness in the US has long been surprising. But 20 years ago while it was substantially higher than in London or Australia it was nothing like it is now.
Fentanyl seems to have kicked things up to a new level. Sam Quinones’ books on the subject are really interesting.
The videos on Youtube of the tents and homeless in the US, particularly on the West Coast and even more particularly in CA are really something. My partner just got back from the US and she remarked on how different the level of homelessness is now in the US and again, particularly in CA.
Michael Shellenberger’s very interesting book ‘San Fransicko’ is well worth a read. It will be interesting to see how his attempt to be governor in CA goes and if the government in CA starts to respond differently.
Perhaps during Covid there was a reluctance to enforce laws against sleeping on the street. It seems that Seattle is now starting to make a push to clean things up. It will be interesting to see how much difference that makes.
Scott Sumner
May 24 2022 at 2:54pm
“To a non-American the level of homelessness in the US has long been surprising.”
Keep in mind that this is a big country. I almost never see homeless people in Orange County. Many other parts of America are the same. When I go to Europe I am stunned by the number of homeless, but that’s because I’m visiting places like Paris, not ordinary towns.
Not saying you are wrong, just that perceptions can be misleading.
Jose Pablo
May 24 2022 at 7:40am
I don’t know.
The model implies that homeless people “search” for “the best place to live if you are homeless” (btw, if you do this search the two best cities are in Texas, Houston and Austin, and the third one is Salt Lake City).
But, in any case I very much doubt this is the last search that “homeless to be” people do while they still enjoy internet access and a computer.
I don’t think either that the Californian homeless attractiveness can spread by word of mouth among “homeless people networks” which are, I assume, inexistent.
And even if the homeless, somehow, get the information about California attractiveness, how would they act upon this information? With no money to move and not access to the credit market, they simple can move, they are “public-transportless” too
I guess your “model” lack the “signals” to provide homeless with the required information and the mechanism for them to act on this information that they don’t have.
[The empirical approach would be asking Californinan homeless whether they are local or not]
Jon Murphy
May 24 2022 at 8:08am
The homeless population are people, just like everyone else. They are very entrepreneurial and do make rational choices like where to live.
And I will contend getting to CA, if a person made that choice, is fairly easy. Panhandling for a few days can get one enough money for bus fare.
Jose Pablo
May 24 2022 at 6:11pm
Jon, “if getting to CA by panhandling for a few days to get enough money for bus fare” is “fairly easy”, how would you describe flying first clase to San Francisco buying your ticket online using your credit card?.
Jon Murphy
May 25 2022 at 3:31pm
Also fairly easy. I don’t understand the point of the question.
nobody.really
May 27 2022 at 12:13am
Ok, smarty-pants. But what about flying out to LA, but then renting a jeep one-way and driving down to San Diego to fly home on a different airline where you’ll have to sit in the middle seat and get cajoled into checking your carry-on bag at the last minute, only to discover that the airline is re-routing you to make connections in Atlanta with a 57-min. layover–and you’re paying for the whole thing using your spouse’s frequent flying miles, so when the airline texts you updated information, it’s going to your spouse instead, and she can’t forward it to you because you forgot to turn off Airplane Mode–how easy is THAT?
And I’ll bet you STILL don’t see the point. Typical white man.
Jon Murphy
May 24 2022 at 9:51am
By the way, you may be interested in this article by Peter Leeson, August Hardy, and Paola Suarez. They find that panhandlers do, indeed, maximize their returns.
Johnson85
May 24 2022 at 10:26am
“I don’t think either that the Californian homeless attractiveness can spread by word of mouth among “homeless people networks” which are, I assume, inexistent.”
I think you are wrong on this.
There are homeless people that are homeless by choice and they do essentially wander. I’m not sure of the dynamics between those homeless and the ones that are on the streets b/c of addiction versus those on the street because of mental illness, but you have homeless encampments more or less everywhere and I suspect you probably do get people that have been different places talking about which ones are best.
If you’re on the street because of drugs and are cut off from your family and social circle because of it, and you’re sitting in either cold weather or in extreme heat with humidity, and listening to somebody tell you how great XYZ place is, I would think you would have people that would decide they want to go try out a nicer place.
Not sure how significant a factor that is, but the majority of homeless people I have interacted with are not local (I think that’s probably because the vagrants/vagabonds are more functional than the ones on the street because of drugs or mental illness), so I could see it being a decent sized factor.
Jose Pablo
May 24 2022 at 5:59pm
the majority of homeless people I have interacted with are not local
According to L.A.H.S.A.’s 2019 homeless count “only” 19% of the Los Angeles County residents experiencing homelessness had lived out of state before becoming homeless.
pg 24
https://www.lahsa.org/documents?id=3437-2019-greater-los-angeles-homeless-count-presentation.pdf
Scott Sumner
May 25 2022 at 1:14am
Keep in mind that only a small percentage of people regarded as “homeless” actually live on the streets. I was thinking of those who live on the streets.
Henri Hein
May 24 2022 at 2:47pm
I know from my time on the road, plenty of people hitch-hike long-distance.
Jose Pablo
May 24 2022 at 6:05pm
Sure they do.
I am not saying that doing such a thing is impossible. All I am saying is that it is very unlikely this very inefficient way of moving around being a major force explaining the extend of the homeless problem in California
And in fact, it does not seem to be.
Scott Sumner
May 24 2022 at 2:56pm
Jose, I think you grossly underestimate the ability of the homeless to learn about different places and move to different places.
Jose Pablo
May 24 2022 at 4:39pm
That could certainly be the case, Scott.
I was just trying to point out that your “homeless model” requires some “signals” and some “mobility” that are not self-evident to me. Granted they could still be there, but …
From a different perspective: if your model is right them, we should expect:
a) A significant proportion of Californian homeless should have become homeless somewhere else
b) The number of homeless relative to the total population should be higher in San Diego and LA (since, after all, you can relate to Mark Twin when he said that the “coldest winter I ever spent was a summer in SF”
It would be helpful to have an “alternative model” to see if it could best fit the available data. For that, we can assume a very simple “alternative model” where people become homeless due to “local circumstances”. In this model, under similar “Californian circumstances” the number of homeless should be related to the total population).
Now, fast checking some data:
a) https://www.nytimes.com/2019/11/06/us/homeless-population.htmlThis article in the NYTimes seems to support the idea that homelessness is locally grown
b) The number of homeless is about the same in San Francisco than in San Diego (Mark Twin will be puzzled by this). Both have the same “density” of homeless per 100,000 residents … about 260
LA have a higher “density” but one almost identical to New York (around 395) and I don’t think Mark Twin would have loved New York winters either.
http://www.citymayors.com/society/usa-cities-homelessness.html
Scott Sumner
May 24 2022 at 7:25pm
Any model includes multiple factors. Thus the homeless do better in an urban environment than a suburban environment. That’s why Orange County has many fewer homeless than San Francisco or New York. People living on the street in LA or San Francisco are not living there because they couldn’t afford a house in those places, but could afford one in Orange County.
Eric Johnson
May 25 2022 at 1:10am
People living on the street in SF indeed can’t afford housing there or in Orange County, but they did not come from out of state. They became homeless in California, and then gravitated towards the place where it was easiest to live homeless. Can’t be homeless in the Sierras; harder to be homeless in Modesto (too hot) even if they might have a better chance of affording rent eventually if they’re working; harder to be homeless in OC (too spread out, too hostile); so they come to LA and SF (and also Modesto, and OC, and literally every other CA population center that doesn’t freeze). Of course there are more homeless in cities, but they are mostly local, or from nearby counties.
The model being proposed here is fatally flawed, because it is simply not supported by the data. From the SF homeless survey 2019:
“Seventy percent (70%) of respondents reported living in San Francisco at the time they most recently became homeless. Of those, over half (55%) reported living in San Francisco for 10 or more years. Six percent (6%) reported living in San Francisco for less than one year. This is similar to survey findings in 2017. Eight percent (8%) of respondents reported living out of state at the time they became homeless. Twenty two percent (22%) reported living in another county within California. The California counties in which respondents reported living at the time they most recently became homeless included Alameda County (8%), San Mateo (2%), Marin (2%), Contra Costa (1%), and Santa Clara (1%).”
So it’s 8% in SF. Apparently 19% in LA, which sort of supports the model. But for this model to really be valid, CA’s overall homeless population can only exceed the average by a max of say 15%. But CA’s numbers are much higher. Could it be higher rates of addiction due to lax enforcement? Sure, but CA doesn’t even crack the top 25 for drug use and drug problems – https://wallethub.com/edu/drug-use-by-state/35150. Or could it be that there’s a direct correlation between housing cost and homelessness, as borne out by the most expensive states like NY, CA and HI having the most homeless? Sometimes a clever model is helpful, and sometimes is just the same ol’ supply and demand.
Scott Sumner
May 26 2022 at 3:43pm
Are those survey’s of homeless people or street people? Most homeless people do not live on the streets.
Those survey’s don’t address the complexity of the situation, with people moving back and forth between living on the streets and in precarious housed situations.
NYSHLONSF
May 24 2022 at 11:45am
Only 18% of LA’s homeless were homeless before coming to CA. (https://www.google.com/amp/s/www.nytimes.com/2019/11/06/us/homeless-population.amp.html )
Now you could speculate that it’s better to be homeless in LA than homed in Arkansas, but I think that’s not really the case – not in an objective sense of better for longevity, better for personal safety, etc. Maybe it’s easier to be an open and continuous drug user on the streets of LA than in a cheap neighborhood of Arkansas, but I would say any person making that particular choice (with its likely fatal consequences) is not a rational actor. In fact the most visible homeless I encounter are clearly not rational actors. These are not idealistic hobos travelling the rails to sunny California; these are profoundly unstable individuals, becoming even more unstable through easy access to meth and fentanyl (not alcohol – too expensive and regulated). I just can’t see them having a cogent cost benefit analysis of various geographies. The people moving to California for the amenities are highly educated – hence the housing cost (extremely exacerbated by supply constraints).
Tim R
May 24 2022 at 1:05pm
For a different view, read Homelessness is a Housing Problem by Gregg Colburn and Clayton Page Aldern, which relies on data rather than anecdotes.
In Homelessness Is a Housing Problem, Gregg Colburn and Clayton Page Aldern seek to explain the substantial regional variation in rates of homelessness in cities across the United States. In a departure from many analytical approaches, Colburn and Aldern shift their focus from the individual experiencing homelessness to the metropolitan area. Using accessible statistical analysis, they test a range of conventional beliefs about what drives the prevalence of homelessness in a given city—including mental illness, drug use, poverty, weather, generosity of public assistance, and low-income mobility—and find that none explain the regional variation observed across the country. Instead, housing market conditions, such as the cost and availability of rental housing, offer a far more convincing account. With rigor and clarity, Homelessness Is a Housing Problem explores U.S. cities’ diverse experiences with housing precarity and offers policy solutions for unique regional contexts.
I have only listened to a podcast with the authors so can’t vouch for the analysis.
Mike73
May 24 2022 at 1:34pm
While this applies to a large population, it is not completely accurate. Look at the Sacramento area where housing has risen exponentially in recent years. Not everyone is able to adjust with such rapid expenditures on housing, let alone the worst gas prices in the country. People are, in fact, being priced out of places are seemingly being pushed into lower-income and higher crime rated areas. This is exactly why the “California Dream” is now dead.
Philo
May 24 2022 at 3:53pm
An illuminating post. Don’t worry about sounding insensitive: few readers of EconLog are squeamish.
Nicole
May 24 2022 at 6:36pm
I don’t agree completely with this. I’m homeless and have a job. My job pays $14.50 an hour and prices for a studio are $1100. I also have 4 kids I’m trying to raise. I’m doing the best that I can but no matter how I do it there simply isn’t enough money to afford housing. Not all homeless people are mental, or on drugs or alcohol as this article make it sound. Getting a second job means having to lose precious time with my kids and they are growing up so fast as it is. There has to be some Balance in life and it sounds like cause I don’t work 2-3 jobs that I want to be homeless. That’s not the case. I guess its easy for someone not going through this or has never been homeless to claim to know why there’s so many homeless people but there’s a lot of hard working people with full time jobs homeless in California. This article blames the homeless people for their situation and makes it sound like we are all lazy, which is far from the truth. Everyone wants someone to blame so blame the homeless who ate already down and out. .
Bobster
May 24 2022 at 11:12pm
Homelessness is highly correlated to housing costs.
I recently traveled to Ireland and was surprised to see so many homeless. Well, they also have skyrocketing rents.
An easy way to see this is in Texas. Austin implemented all types of progressive housing policies (read: price controls and supply restrictions). As a result their median home price is double that od Houston and Dallas, and now they have a much higher homeless rate.
I read an article that Finland solved homelessness through social housing. Well, their homeless rate is comparable to Houston as well as much of the South and flyover America.
People bring up drugs and mental illness. Well, West Virginia has a higher fentanyl death rate than California. But they dont die on the streets because they can still afford rent.
So I agree yimby fixes the problem, if by yimby you mean increasing market rate supply so that rents approach the cost to build housing. If you mean things like rent control, social housing and inclusionary zoning, then the problem will get worse.
Michael
May 29 2022 at 6:46am
They put more people in the same house than the whites are willing to do. Often they do this in violation of occupants-per-household laws.
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