The Failure of Public Housing

Originally posted on Quora September 5, 2022

Sources: In San Francisco Hundreds of Homes for the Homeless Sit Vacant, These 95 Apartments Promised Affordable Rent in San Francisco. Then 6,580 People Applied., Los Angeles Spending 700K per Homeless Resident

As the city of Las Vegas recently demonstrated, housing regulations such as R1 zoning and minimum unit size requirements are literal barriers to universal housing. In an earlier era most of the mentally ill drug addicts on the streets today would be confined to SROs, since destroyed by urban renewal. Hell, where I live they typically live in trailer homes, which though not ideal is leagues above pitching a tent under an expressway. Yet despite abundant evidence that artificial scarcity is the single largest contributing factor to the affordability crisis, restricting supply and subsidizing demand still seems to be the default position of municipalities and counties across the country. The same institutions tasked with creating artificial scarcity in the housing market and maximizing the profits of real estate speculation are also tasked with alleviating the same problems they create and doing so with much worse results. Instead of taxing the land rent that accumulates to landlords whenever populations grow, new industries blossom and public services are improved a litany of demand side subsidies and band aid policies are put in place to placate the dispossessed and avoid addressing the root of the problem. Perhaps the worst, aside from rent control and vouchers, is public housing. Public housing would work smoothly if the demand for it were as inelastic as the supply of land, but there is no fixed supply of homeless and poor. People move to new places and new people fall through the cracks all the time. Government bureaucracies have no feedback loop to meet constant fluctuations in demand because 1) they depend on a legislative body who could take several months to several years to deliberate on spending and policy 2) instead of using price or some other feedback loop bureaucrats allocate housing on a need basis inevitably pursuing endless oppression Olympics and paperwork. This is how a so-called housing department can have a $600 million budget and still make people wait up to 2 years for housing, while refusing service to most who need housing, despite having several hundred vacancies for their supportive housing. The end result is that public housing becomes a lottery draw.

All of the 1,633 people in line for a permanent supportive housing unit (out of 8,000 homeless in SF) had to answer a series of questions to determine who is most vulnerable and therefore most in need of housing. Every year, more than 3,000 people take this assessment, called “coordinated entry,” which takes into consideration, among other things, how long they’ve been homeless, if they have any mental or physical disabilities and if they’re addicted to drugs. Those who score highly by the city’s complex algorithm — in theory the most vulnerable — are marked “housing priority status,” and are then put on a waitlist for permanent supportive housing.

And those who do not qualify for the queue have to wait 6 months for the next assessment. So much for housing first.

After years on the streets, Ladybird committed herself to finding a home. She said she took the coordinated entry assessment for housing three times — going through a mandatory six-month wait between attempts. She was finally approved in November.

“Six months is a long time,” she said about the time between applications. “You basically have to be sitting out here waiting to be raped every night.” (A University of California San Francisco study found that 32% of women living outdoors reported instances of sexual or physical assault.)

Of course, there is also the problem, usually never accounted for by social planners, of personal incentives. What if people don’t want your housing units? What if they prefer the first place you put them during the lock-down?

From the get-go, the policy of reserving housing for people in hotels was difficult to implement. Although residents knew the hotels were temporary and could close at any time, many were reluctant to move from free, modern rooms with private bathrooms into small, older units with bathrooms down the hall, at a cost of 30% of their income. All of a sudden, one housing provider said, three applicants for housing had to be referred in order to fill one vacant room.

In the first seven months after the policy was implemented, supportive housing vacancies jumped 61%, from 600 units in November 2020 to 964 in June 2021, a period when the city was also adding new units.In February 2021, the homelessness department reported that 70% of shelter-in-place hotel residents who were offered a spot in the Granada Hotel, a newly purchased permanent supportive housing building, had rejected the placement.

And what would you know? Bureaucracy is slow and cumbersome. Organizations with more moving parts are always more susceptible to entropy and dead-weight loss.

In large part, that’s because the homelessness department’s process for reviewing and selecting unhoused people for referral is slow. And in the period when Stroud was waiting, things were markedly worse. In October 2020, 32% of vacant units had no pending referrals for a resident. In January, that ratio had more than doubled, to 66% of available units, according to the city’s own data. The department did not respond to questions about why this might be.

SF homeless department boasts an average wait time of 82 days with a target wait time of 30-45 days which is still a very long time to be exposed to cold fronts and heat waves and the occasional marauder who sees you as an easy target for some quick cash or sexual relief.

Even when governments build new affordable housing units and limit them on a means tested basis demand still far outstrips supply.

For each, San Francisco’s housing crisis had meant living without essential elements of home. A large affordable housing development rising downtown promised what they did not have: 95 complete homes, one-, two- and three-bedroom apartments with privacy, a sense of peace, a place to cook.The development, Natalie Gubb Commons, was reserved for households with incomes up to 50 percent of the local median. The applications were open for three weeks last fall, and 6,580 households applied for a chance to rent there, or nearly 70 for each unit.

And let’s not forget about costs. The housing isn’t free. There is a price tag and often it is more than what the market would bear. For instance, Los Angeles spent up to $700,000 per studio apartment for homeless people, which is far more than the median single family house in the US. Not only was the cost absurdly high but it took the city 6 years to build 1200 housing units, with $1.2 billion in funding, for a homeless population that had ballooned to 41,000. And cities aren't trying to tackle this problem on their own. This year congress appropriated a record 51 billion for homeless services yet homelessness has drastically increased this year.

As I pointed out 4 years ago in Allow Homesteading on Public Land , quicker results could be achieved much cheaper by allowing non-profits to build tiny house villages of 100 to 120 square feet on public land. This would come in at an estimated cost of $2500 per unit and though not ideal would be more humane than making people wait 3 months or as long as two years for housing.