The United States is facing a historic homelessness crisis, with figures reaching alarming heights. A recent report from Harvard's Joint Center for Housing Studies reveals that in January of last year, approximately 653,000 Americans reported being homeless in 2023. This figure represents a 12% increase from the previous year, marking the largest single-year surge ever recorded. The report highlights a 48% increase in homelessness compared to 2015, as reported by the Daily Wire.
Many have been sounding the alarm on the crisis for a while. Forbes reported in late 2023 that the housing supply had hit an all-time low. The report noted a total drop of 14.2% year over year in housing supply, with only 910,100 houses on the market. National Association of Realtors (NAR) Chief Economist Lawrence Yun said he expects the crisis to take years to correct, so buyers looking to own a home should be in for the long haul.
Despite rising rates, investors haven't stopped buying houses. All-cash buyers, who are typically investors, increased to 23% in December, up from 19% the previous year. This continues to put a substantial strain on the housing market.
While this is a large issue, a lack of new supply is becoming a bigger problem. Hundreds of pages of regulations, specifically for new homes for Americans, often mean projects are delayed with massive added costs. This is especially true for companies attempting to produce houses en masse to help solve this issue.
Veev, a modular home builder that raised $600 million to help solve the housing crisis, announced it was going out of business in late 2023. Boxabl Inc., another modular housing startup, has struggled with regulators across various states. Boxabl is creating factories to churn out houses like automakers churn out cars - a new house every few minutes, built in a factory and ready at your location in seconds. Boxabl Co-Founder Galiano Tiramani regularly highlights the difficulties associated with a product like Boxabl. Namely, each state has its own complex housing code, so producing a one-size-fits-all house for every state isn't as easy as it sounds.
"The states modular house laws require us to hire a 3rd party inspector to sign off on our factory and product. Apparently, we have to do these inspections 40 different times for each of the 40 states to certify the same 1 product and 1 assembly line," Tiramani posted on X.
In other posts, Tiramani called out to favorable state regulators who would be willing to work with Boxabl to help ease the housing crisis in their respective states.
"Homelessness is at the highest rate it has ever been in the USA with increasing migrant populations that now exceed the birth rate," Tiramani told Benzinga. "The situation is going to get worse, not better. The only path to solving this is both regulatory reforms that are restricting housing and changing the way we build by bringing mass production into housing at Boxabl. We believe we have solved a lot of the problems that stopped housing from being compatible with the factory environment."
The root of this crisis can also be partially attributed to the skyrocketing rent prices and inflation, exacerbated by the termination of pandemic relief measures, including eviction protections. The median rent in the U.S. stands at $1,964 as of December, a 23% hike since the pandemic's onset, according to Rent.com. Although the rental market is showing signs of cooling, rent prices remain significantly higher than prepandemic levels, while wage growth lags. Government data indicates that median weekly wages grew 1.7% between 2019 and 2023.
The Harvard report points out a significant increase in the number of "cost-burdened" renters, particularly those earning between $45,000 and just under $75,000 annually. In 2022, about 41% of these renters were allocating 30% to 50% of their monthly income to housing, a considerable rise from prepandemic figures and almost double the rate in 2001.
Compounding the issue is the disappearance of low-cost rental units. The market saw over 500,000 apartments with rents under $600 vanish between 2019 and 2022. States like Arizona, Ohio, Tennessee and Texas experienced notable spikes in homelessness because of rising housing costs.
The situation is particularly dire in states like California and Washington, both grappling with chronic homelessness and overwhelmed shelter systems. In 2023, Los Angeles County saw a 9% increase in homelessness, with an estimated 75,000 people without homes. The Bay Area reported about 38,000 homeless individuals on any given night, a 35% jump since 2019. San Francisco alone accounts for over 7,000 homeless people.
Issues like crime and open drug use, particularly the fentanyl crisis, are exacerbating the situation and leading to a decline in business activity in city centers like downtown San Francisco. This trend is not isolated to California. Cities like New York and Philadelphia face similar challenges.
In Washington state, the number of homeless people rose by 11% last year to 28,036, although state data suggests this might be an undercount.
This record rise in homelessness across the United States underscores the urgent need for effective solutions to address the housing affordability crisis and provide adequate support to those affected.