Funding Cuts to Homeless Housing Programs Raise Concerns
The Trump administration recently announced a significant reduction in funding for permanent housing aimed at the homeless, slashing it from about $3 billion to $1 billion for 2026. This has raised alarms among nonprofit organizations, who fear that the number of people experiencing homelessness may rise again.
Ann Olivia, the CEO of the National Alliance to End Homelessness, expressed her concerns, stating that these changes pose serious risks for those without stable housing. She emphasized that the new funding priorities set by HUD are alarming for its providers and communities. “This reckless decision will only increase homelessness,” she warned.
However, some argue that these concerns may miss a crucial point: the fundamental issue at play is not merely the funding but the high costs associated with housing. Critics contend that these programs have inadvertently fostered an expectation of permanent government assistance rather than addressing the actual need for affordable housing options.
A study conducted by my colleague and me revealed that, between 2007 and 2017, federal, state, and local funding for homelessness programs saw an increase from roughly $2 billion to $5 billion annually. This surge escalated dramatically during the COVID-19 pandemic, peaking at about $16 billion in 2022 and remaining high since then.
Interestingly, despite this influx of funding, homelessness has not decreased. In fact, the number of people without homes reached an all-time high.
This trend is noticeable in states with some of the highest homelessness rates, such as New York and California. Both states contributed over $30 billion between 2007 and 2024 but saw a rise in homelessness during that same time frame. In contrast, states like Texas and Florida, which invested fewer than $5 billion, successfully reduced their homeless populations.
These observations are consistent whether considering total funding or funding per homeless individual.
This leads to a compelling question: How can we explain the differences in homelessness across states if funding is not the primary issue? Research suggests that Texas and Florida have made substantial strides in building more housing, while New York and California have not kept pace.
Further evidence can be found in the work of authors Greg Colburn and Clayton Aldern, who argue in their book that homelessness fundamentally stems from issues related to housing. They highlight that structural factors like high housing costs and limited availability are far more significant than individual issues such as poverty or mental health challenges.
In high-cost areas like California and New York City, housing is simply out of reach for many. The need for more affordable housing is crucial; without it, the situation will only worsen.
Research shows that in Japan’s current housing shortage, low-income areas are experiencing the highest rent increases, while places with significant new housing construction are seeing more stable rates. Findings suggest that building new, even expensive, market-rate homes can help lower overall housing costs for low-income residents and help reduce displacement risks.
There are also less obvious benefits to increasing the housing supply. One theory suggests that when more homes are available, costs decrease, enabling people to rent homes with extra space. This allows those at risk of homelessness, like someone who has recently lost their job, to find temporary shelter with friends or relatives.
Although homelessness is on the rise nationally, solutions do exist. My organization has drafted state-level reforms that could enhance housing availability and affordability.
By taking these steps, states can work toward making housing more accessible for all, allowing focus on actionable measures to combat homelessness effectively.
