1% of San Franciscans — about 8,000 people — are homeless. It’s a very visible problem, dehumanizing for those living on the streets and disheartening for all residents.
Wanting to understand this key problem of our city better, I spent several weeks digging into reports, research papers and newspaper articles. Here’s my summary of the situation.
Sources of the problem
Homelessness has been a problem in SF since the 1970s, but has become particularly poignant today: SF now has the highest rate of unsheltered homelessness of any city in the US. Why is this?
1. Shortage of housing
At $3,000 per month for the average 1 bedroom, SF also has the highest rents of any city in the US, making it unaffordable — in a very literal sense — to many. It’s caused by an extreme mismatch between housing supply and demand.
Supply crunch. Bound by the ocean, bay and parks, San Francisco’s geography limits its outward sprawl. Restrictive zoning and construction regulation hampers it from building upwards, too. SF has had a century of such restrictions — without them it would have looked more similar to Manhattan today, housing hundred thousands additional residents.
Demand boom. Being one of the world’s strongest economic regions (4 of the top 10 most valuable global companies are located in the Bay Area), combined with the desirability of its geography (ocean, mountains, parks, climate) and cityscape, San Francisco is also a city in high demand.
This low-supply high-demand mismatch has led to even the cheapest 1 bedroom apartments costing $1,500 per month. For low income San Franciscans hitting a streak of bad luck, like losing a job, getting evicted, having a falling out with cohabitants or getting addicted (all the most common triggers for homelessness), housing quickly becomes unaffordable. Many move away, some end up on the street.
2. Lack of shelter space
San Francisco is also unique in the US for its lack of emergency shelters: New York, Boston and DC have a similar homeless share of the population, but over 90% of them sleep in shelters. In contrast, San Francisco provides shelter space for only 36% of its homeless, around 2,400 people (vs. 60,000 in New York), and not due to a lack of need: SF shelters consistently have a waiting list of over a 1,000 people. There’s just not enough of them.
New York also has laws that push the homeless into either shelter or jail. Regardless of ethics, SF does not have enough shelter to support such a law.
3. Limited social infrastructure
On a federal level, the provision of social safety nets is limited, though more is provided at state and city level. The majority of SF’s unsheltered homeless struggle with mental disorder, disability or drug addiction and sufficient care is often not available. Similarly, despite state-level programs, for some without health insurance serious illness can mean loss of income & savings, again leaving them unable to pay for housing and becoming homeless.
To note: it is often said San Francisco attracts people who became homeless elsewhere, which is true — 30% of the city’s homeless population wasn’t previously housed in SF. However, this primarily reflects the pull of big cities, with other major US cities seeing directionally similar rates of 20%. It’s a contributing factor, but not a primary cause of SF homelessness.
Solutions
Understanding the sources of the problem, what are the main solutions?
Building housing
Ensuring more housing is built in San Francisco (with a focus on low cost housing) is the most structural solution. It is direly needed and requires zoning and regulation change. Given today’s extreme supply-demand mismatch, it requires a consistent, large increase in building pace over the course of many years.
Providing shelter and supportive housing
While shelters are of temporary nature and a less desirable option than housing, they can soften the acute problem of street homelessness, as they do elsewhere in the US. Adding 1,000 shelter beds (from 2,400 current) would help significantly.
Supportive housing, which is subsidized low cost housing with on-site social services, is a better long-term option, in particular for the chronically homeless. However, cost is an important factor: a new unit of supportive housing can cost $500k to build, while even “high-end” shelters like SF’s Navigation Centers cost closer to $50k per bed (annual operating costs for the two are similar, about $30k per year). I.e. expanding shelter space is more affordable than expanding supportive housing.
Improving social infrastructure
Better unemployment benefits, health care, mental care and substance abuse programs would soften the problem as well. Most of these are ideally set up at federal or state level, though where lacking, the city can fill the gap.
What is being done?
A lot, recently.
Investment in shelter & supportive housing
Most importantly, San Francisco city is planning to significantly expand its supportive housing stock from 8,000 to 10,000 units over the next two years. It will also modestly expand its shelter space from around 2,400 to 2,600 beds this year, by building more Navigation Centers: short-term, high-service shelters with the immediate goal of getting the homeless housed (often outside of the city). The focus on supportive housing over shelters represents a “housing first” approach.
To fund such initiatives, the city has doubled its investment in Homelessness and Supportive Housing in the last 5 years to around $200M (i.e. costing about $220 per SF resident) annually, in addition to receiving $100M in federal and state support, totaling $300M per year.
Similarly, the city aims to start providing better mental care to the homeless and uninsured through the new Mental Health SF initiative, budgeted at around $100M per year.
Non-profits help out
A large array of non-profits help in the city, primarily by helping coordinate city efforts and softening hardships, though they are more limited in their power to provide structural solutions (housing, shelters, social policy) themselves.
A substantial boost from private initiatives
Highly impactful is also San Francisco’s new “homeless tax” on large businesses (sponsored by Salesforce CEO Marc Benioff), put on the ballot in 2018 as Proposition C and passed by voters. It provides an additional $300M in annual funding to counter homelessness, with a primary focus on supportive housing and secondary on mental health services and shelters — i.e. boosting the city efforts already underway. The large size of this fund implies a step change in San Francisco’s ability to address the problem. While initially blocked by lawsuits, the funds became available in September 2020.
Willingness to spend
It should be clear that none of this is free: there’s no easy way out of this crisis, alleviating homelessness comes at a cost to residents & businesses. The area’s economic prosperity is one of the causes of its homeless problem, as well as a potential solution to it, if sufficient willingness exists among residents. The above increase in investment, all directly or indirectly voted for, suggests that such willingness does indeed exist.
Building still limited
All the above being said, the pace of building new housing in SF is still low at 4,000 units per year (primarily new high rises in SoMa), and increasing only modestly: while some legislature is being passed to support building, it looks like the structural supply crunch is not getting solved anytime soon.
COVID impact
Fueling the fire, COVID-19 has had a number of effects on the situation, the most important of which are:
- Shelter space reduced to avoid outbreaks (1,000+ people lost shelter)
- Unemployment increase (2% February to 11% July)
- Federal & state emergency resources (around $500M over two years)
- Eviction moratorium until December 2020
- Hotel rooms used for housing (2,500 rooms temporarily available, 300 permanently converted)
- Rents down (-15% August 2020 vs. August 2019)
- Various large companies adopt remote work indefinitely
There are a number of competing forces here, but most structural is the increase in unemployment, which — after eviction moratoriums end — could cause 1,000s more to lose housing. On the other side, the exodus of remote workers contributes to housing affordability, already seen in the 15% drop in rents, and emergency funds help provide temporary and permanent shelter solutions.
Will San Francisco homelessness be solved?
Looking at all of the above, my conclusions are:
1. Homelessness will remain part of an expensive city
The extreme supply-demand mismatch is too strong of a force to be fully countered by the building of housing (in particular as the city still builds at a low pace) or by the dampened demand as more people start working remotely. Rents may come down, but SF will remain a very expensive city to live in. Many low income individuals striking misfortune will continue to end up homeless, at least temporarily.
2. Homelessness may get worse in short term
Short term (next 6 months), increased unemployment means more people won’t be able to pay rent, some of whom will end up on the street. Emergency measures, such as the eviction moratorium and hotel room availability, may not be able to sufficiently mitigate the effects of this large economic downturn.
3. Homelessness will likely improve in the following years
Longer term things look more positive: the significant increase in supportive housing and mental care, strengthened by the homeless tax and federal support, will result in a meaningful improvement in the city’s ability to mitigate the most acute problems. Rent growth will likely remain dampened due to remote work policies and a (slowly) increasing building pace. Combining these, San Francisco’s homeless problem may very well look better in 3 years than it does today.
In sum: many decades of bad housing policy and extreme demand have entrenched a deep, systemic housing crisis. But the city is starting to take big swings to address its most dire effects, and (slowly, but steadily) increase its pace of building. The results will play out in the many years to come, but as far as crises go, there is reason for hope.