Housing the Homeless: Why the Most Humane Solution is Also the Most Economically Responsible

Communities often struggle with the human costs of homelessness, seeing illness and injury on the streets, whole families displaced to encampments, and people sleeping in doorways. What’s less visible is the staggering economic cost of homelessness. Between hospitalization, medical treatment, mental health treatment, police intervention, incarceration, institutionalization, and emergency shelter, expenses to local government add up quickly.

Public systems are already paying an increased cost for people who are unhoused. The Economic Roundtable calculated the annual cost of homelessness in Santa Clara County at $520 million annually. And that’s not even counting the environmental impact of urban camping and the effect a large homeless population can have on small businesses.

The increased costs from serving chronically homeless individuals often exceed the cost to house them. Sleeping rough often means malnutrition, dehydration, and a lack of access to outpatient and continuing care. All of these exacerbate medical issues, making recovery difficult and slow.  Stable housing with supportive care systems in place can drastically reduce the costs of public services spent on the chronically homeless. The Economic Roundtable study tracked the service costs for homeless individuals across all County services.

103 individuals in the top 10% of service utilizers were given permanent housing, over the course of a year these individuals experienced a 68% reduction in service costs for an average reduction of $42,706 per individual, exceeding the cost of housing those individuals.

This means that, in many cases, keeping people homeless is more expensive to communities than housing them. By making the cost of housing lower, Affordable First makes housing an increasingly cost-efficient strategy for addressing homelessness, potentially saving local public systems millions of dollars. This strategy is especially viable for those with the greatest need for care.

The challenge with implementing housing as a viable strategy to solve homelessness in many of our cities is the lack of supply of housing and the lack of a dedicated funding stream for housing. Affordable First helps to address both of these problems. Affordable First developments use the profits from market-rate units as a built-in funding stream for permanent, supportive housing. Leveraging these profits to address homelessness can result in much larger economic savings for public systems, making the most humane course of action the most financially responsible for the community.