California housing prices and homelessness
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.