This week, Gregg Colburn, co-author of “Homelessness is a Housing Problem,” joins Nick and Goldy to dissect the complex factors fueling America’s homelessness crisis. Colburn presents compelling evidence that challenges common misconceptions around homelessness, revealing that it stems primarily from the rising costs of housing rather than issues like addiction or mental illness. He explains that evidence shows comprehensive strategies—combining affordable housing, rental assistance, and supportive services—can meaningfully reduce numbers in the unhoused population. While acknowledging the long-term nature of the challenge, Colburn reframes housing as essential infrastructure, calls for big investments in building more housing units, and offers a compelling, data-driven case for rethinking America’s approach to homelessness and housing affordability.
Gregg Colburn is an associate professor of real estate at the University of Washington’s College of Built Environments. He publishes research on topics related to housing and homelessness and is co-author of the book Homelessness is a Housing Problem: How Structural Factors Explain U.S. Patterns. Professor Colburn is co-chair of the University of Washington’s Homelessness Research Initiative and is a member of the National Alliance to End Homelessness Research Council.
Further reading:
Homelessness is a Housing Problem: How Structural Factors Explain U.S. Patterns
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Speaker 1:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
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It’s time to build our economy from the bottom up and from the middle out, not the top down.
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Middle out economics is the answer.
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Because Wall Street didn’t build this country, great middle class built this country.
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The more the middle class thrives, the better the economy is for everyone, even rich people like me.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Goldy :
Today, Nick, we are having our second conversation in a series on housing, the affordable housing crisis in America, how to fix it, and today we’re looking at homelessness…
Nick:
Yeah, which is definitely one of the most…
Goldy :
In a way that will surprise a lot of people as to what the cause of homelessness is. I don’t know. Spoiler alert, it’s the title of the book we’re talking about today. Homelessness is a Housing Problem.
Nick:
Yeah. And today our guest is Gregg Colburn, who’s a professor at the University of Washington here who works on housing and homelessness and real estate and stuff like that. It’s his practice and he and his colleague, Clayton Aldern wrote this fantastic book. It’s a couple of, three years old that takes a very data centric approach to analyzing the causes of homelessness. And I know that every single listener we have, Goldy, has had a conversation in their lives about homelessness and the causes of homelessness and where it comes from and whose fault it is. And there’s this list of excuses. It’s the weather, it’s the liberals, it’s the drugs, it’s the mental illness, all these things.
Goldy :
It’s the laziness of these… If only they would just go and get jobs, right?
Nick:
Or if our police were just meaner to them.
Goldy :
Right. We didn’t provide such generous public benefits, we’re just incentivizing people to live in tents on the streets.
Nick:
Yeah. And what’s just truly incredible about what these guys have done in their book and in their analysis is one by one knocked all of those excuses and claims down. And at the end of the day, Homelessness is a Housing Problem.
Goldy :
It’s the cost of housing.
Nick:
It is the cost of housing. And anyway, Gregg is so articulate, why don’t we just jump in and talk to him?
Gregg :
Hi, my name is Gregg Colburn. I am an associate professor at the University of Washington, and I teach classes in housing, urban economics and finance, and I am the co-author of the book Homelessness is a Housing Problem, How Structural Factors Explain US Patterns.
Goldy :
Yeah, well, I think the title of your book goes straight to the thesis, so if you could just lay it out as simply as possible.
Nick:
Let me just interject and say that we have been told time and time again that homelessness is a drug addiction problem or a mental health problem. There are all these narratives.
Goldy :
Yeah. A police being too nice with homeless encampments problem. If we just did some more sweeps, we’d get rid of it, but that’s not what the title of your book says, so tell us what you looked at and what your conclusions were.
Gregg :
Yeah, so I moved to Seattle in 2017 and I’m a second career academic. My first career was in finance. I was an investment banker and private equity investor and so I bring a market perspective to my work, but I care deeply about housing and people having access to housing. And so I got invited to a lot of meetings in Seattle when I moved in 2017. And my motivation for writing the book was an observation that our community didn’t really understand what was going on. We all agreed that there was a problem. We all agreed that the problem was getting worse, but there was not a firm understanding among civic leaders, elected leaders, the media, my social circle, there was not an understanding of what was driving the crisis. And the academic literature is pretty clear about the structural drivers of homelessness. And so I wanted to write a book that would explain that for a general reader who’s walking around Seattle saying, “Why is homelessness so bad here? I was just in Chicago and it wasn’t like this.”
So that was really the motivation behind it. In terms of what we found, one of the purposes of the book was to dissect the somewhat complex causality of homelessness in the sense that if you were to pull people on the streets, a lot of people would say, “Well, homelessness is caused by addiction and mental illness”, and that’s not an incorrect statement. That is true at the individual level that if I, Gregg Colburn, am experiencing a crisis of mental illness, or if I’m addicted, I’m more likely to experience homelessness. The academic literature is clear on that. And so we could think of that as an individual risk factor or an individual cause of homelessness, poverty being another one for example. But at the community level, why does Seattle have so much more homelessness than Indianapolis or Chicago or St. Louis? It is not the prevalence of people with certain risk factors. What we find in the book and what is supported in the academic literature is that there’s an economic argument in the sense that when housing is scarce and expensive, levels of homelessness tend to be much higher.
Goldy :
And this is an important point you make throughout the book, this distinction between the individual level and the community level, that while you might, as you said, mental illness or addiction will of course increase your likeliness of homelessness, there really is no correlation between the amount of addiction or mental illness within the community and the level of homelessness within it.
Gregg :
Yeah, that’s exactly right. Probably the biggest head scratcher is the poverty one. Of course, homelessness is a poverty problem, but the most impoverished cities in the United States, Detroit and Cleveland have far lower rates of homelessness than our richest cities, Seattle, San Francisco, and Boston. And when you move to mental illness and addiction, what you’ll see is there are people experiencing those crises in every state and city in the nation. There’s some variation in those rates and that variation bears almost no relationship to rates of homelessness. And this is when I start to get angry emails from people who walk by Joe on the street and there’s a needle next to Joe on Third Avenue, and they’ll send me emails saying, “How dare you suggest that this isn’t a drug problem? I just saw someone on the street who’s addicted.” And so I understand why people’s emotions and fear drive them to that conclusion, but the data don’t support that.
And what I’ll push back, drugs is usually the one that people get most upset about. And I’ll just say, “Do you think people use drugs in Chicago?” And the answer to that question is, yes, they do. And when you think about drug crises in the United States, Appalachia, West Virginia for example, is the home of the opioid epidemic for the last 20 years, has ravaged that state, and one of the consequences of that tragedy has not been really, really high rates of homelessness. And so if this fundamentally at a community level, were driven by drugs, West Virginia, Tennessee, Arkansas, Louisiana should have really, really high rates of homelessness, yet they don’t.
Nick:
So Gregg, is there a pretty much, if not perfect, direct correlation, inverse correlation between the amount of homelessness and the price of real estate?
Gregg :
Yeah. So the measures that we test in the book that have a far more convincing explanation than anything else is absolute rents. So it’d be the gross rent in the community and their rental market vacancy rate. Those are the two factors that have certainly not a perfect explanation because in the social world, we never have perfect causal explanations, but a far more convincing explanation is just the level of rents and rental market vacancy rate. And those two, there’s a causal link between those two variables. Obviously as rents, as vacancies go down, rents go up.
Goldy :
You’re saying supply and demand.
Gregg :
Well, yeah. It’s…
Goldy :
If rents are high and there’s very few vacancies, it suggests that we don’t have enough housing.
Gregg :
It suggests that we’ve got, yes, we’ve got a lot of demand for housing and not enough of it for sure. And that then exhausts a really big cost on everyone in society. But if you’re living on the margins, that is a really difficult circumstance for you, and that’s why we have the homelessness crisis that we do in our most expensive cities.
Nick:
Is it fair to say that even among expensive cities where it’s most expensive homelessness is even worse?
Gregg :
Yeah, I think that’s fair to say. One of the challenges we have with counting homelessness is some places count at the county level and some count at the city level.
Nick:
Right, yeah.
Gregg :
And so what we’re really careful about in the book is making sure that we don’t compare apples to oranges. And so when you look at the counties that have really high rates of homelessness, what you see, it’s LA, it’s LA County, Santa Clara County, Multnomah, which is Portland, and then King, which is Seattle, and there’s a little variation in rents there, but on a per capita basis, those per capita rates are pretty close. And then in the cities, it’s New York, Boston, DC and San Francisco, and those are all pretty high. San Francisco is a little bit higher than some of the others, but generally speaking, their per capita rates are pretty similar. And so there’s not… An extra $200, I can’t tell you that that’s going to cause X percent increase in homelessness. What I can tell you is you get above 2000 a month, you’re going to have a problem with homelessness, and you’re going to look a lot more like DC and San Francisco than you are Cleveland, for example.
Nick:
Okay. What are the national differences between, what was the phrase you used, ‘absolute rent’?
Gregg :
Oh, yeah. So our data ends in 2019, and so median gross rents were probably…
Nick:
It’s got to be way worse now.
Gregg :
Oh, no. It’s way worse now, for sure it is. But at that time, let’s just say that you’ve got Cleveland, Detroit, St. Louis in the 7, 800 bucks a month range, and then you’ve got Palo Alto, San Francisco, Seattle, everyone, those folks are… Well, Seattle at that point wasn’t above 2000, but those other cities were above 2000, so let’s say there’s a 3x difference between low and high jurisdictions in terms of rents…
Nick:
Okay. What are absolute rents in places like Houston or Dallas, in Texas?
Gregg :
Yeah, they’ve actually been increasing. Houston probably has been relatively affordable for a really big city. So they were probably hovering in the high hundreds, approaching $1,000 a month. Dallas is probably going to be at the time of our book in the 11, 1,200 range would be my guess.
Nick:
But half as much as Seattle or San Francisco.
Gregg :
Yeah. Exactly, exactly.
Nick:
And obviously it’s probably nonlinear, right? Twice the absolute rent does not give you twice as much homelessness. It probably gives you 10 times as much homelessness or four times, some…
Gregg :
Exactly.
Nick:
Right?
Gregg :
Yeah.
Nick:
Yeah, because it’s nonlinear.
Goldy :
So it’s not relative rents in terms of relative to income. And I suppose, I don’t know what your data shows, is that due to the wage compression at the low end of the scale?
Gregg :
Yeah. That was a surprising finding. So the term we use for that is ‘cost burden’, housing cost burden, so it’d be the percentage of a household income that you spend on rent. And so we tested that both at the median, at the 25th percentile and the 75th percentile to just see if there was a relationship and we didn’t find one. And the way that I explained that finding, because a lot of people will say, “Well, this has just got to be about cost burden”, and in fact it’s not. Ultimately the absolute rent matters more than the burden percentage. And the reason for that is that housing markets adjust to prevailing wages in the community. And so if you want to wow someone at a really boring cocktail party, you can ask them what city has higher housing cost burdens, San Francisco or Detroit? And of course everyone’s going to say San Francisco, and in fact the answer is Detroit.
What’s Detroit’s issue? Their housing’s really cheap, their incomes are unbelievably low. It’s really shocking when you look at it. And so even in Detroit, those households have relatively high cost burdens. San Francisco is terribly expensive housing, but their wages are really high at the minimum wage and obviously moving up super high incomes. And so what we found is that the variation in housing cost burden is not as dramatic as one might expect. The variation really comes in absolute rents. And so you might be highly cost burdened in Detroit, but if you need to get to 700 bucks, you might be able to get there through public assistance, through familial support, through low wage labor, and there’s vacancies. And so you fall on tough times, you might be able to figure that out. If you fall on tough times in San Francisco, low wage labor, familial assistance, public assistance, that’s just not going to get you there. And so that’s how we explained that finding.
Goldy :
And in fact, cost burdens, I looked at data a few years ago and it appeared to me that the 50 largest cities’ cost burdens were pretty equal. About half of all renters were cost burdened almost regardless of where they lived.
Gregg :
Yep. The variation in cost burden is not that dramatic just because as I mentioned, I just think it’s housing markets adjust to whatever people are earning in a given market.
Goldy :
So let’s talk about some of the other factors. Obviously people think of mental illness and drug addiction, but we also hear here in Seattle, we need to be tougher on the homeless encampments and sweep them out. That’s what the current city council seemed to have run on. But you don’t see that as a correlation either.
Gregg :
Yeah. So the second category of explanations we test are landscape factors. So it’d be what’s going on in our community that’s producing this crisis and as you indicated, these are prevalent explanations for homelessness. So there’s among these categories, you’ve got the weather, you’ve got benefit generosity, you’ve got policing or enforcement, and you’ve got local politics. And so taking these one at a time quickly, the number of times that I’ve heard “Gregg, well, it’s warm in LA and it’s cold in Chicago, of course LA is going to have more homelessness”, thousands of times. And when you look at overall rates of homelessness, which is people in shelter and people who are unsheltered, and you test weather in January, which is when we count homelessness in the United States, there is no statistical relationship. So we can’t blame Mother Nature because there are warm locations with low rates of homelessness and then Boston and New York are chilly in January and they’ve got really high rates of homelessness. So that doesn’t really hold up.
Goldy :
And Gregg, as somebody like you who’s a transplant to Seattle, I always find it fascinating when people argue it’s our mild weather because we all know how much fun it is to sleep outside in the rain for nine months out of the year.
Nick:
You can die of hypothermia in 45 degrees and raining too.
Gregg :
Absolutely. I’ve always said 30… I think I’ve looked this up because I’ve heard this at so many gatherings in Seattle. I was like, the average high is 40 in January and it’s raining. Come on. So San Francisco does not equal Los Angeles or Phoenix, that’s for sure.
Nick:
Are the absolute rent numbers by city published annually? Where do you get that data?
Gregg :
We use the American Community Survey, which is developed by the US Census Bureau, and we just use I think it’s median contract rent using the one-year estimates. And so you can get that for every city, county MSA in the United States going back a long way. And then I pull the vacancy rates from the American Community Survey as well. And so every time I go to a city to give a talk, I just pull up their data. And it’s an interesting look into what’s going on in the housing market, and it’s actually shocking at how tight markets are getting around the country post-COVID. It’s really alarming. It’s very different than what we had when we first published the book, which explains why this is growing.
Nick:
It’s getting worse and worse and worse.
Yeah. How about the idea that good services draw homeless people to, this idea that the more services we provide to the homeless, the more homeless people will come.
Gregg :
Yeah. So the welfare magnet, the homelessness magnet argument is prevalent. I’ve heard this in so many cities. I first heard this in Minneapolis when I was working on my PhD, and people were blaming folks from Chicago for the homelessness problem in Minneapolis. And we studied that there and didn’t find much evidence of this magnet idea, magnet there being Minneapolis being a generous place, and therefore it’s attracting people who are experiencing homelessness. And when I moved to Seattle, literally my first meeting, someone suggested that that was the problem in Seattle. And I just said, “Oh, well, that’s interesting. I just heard that in Minneapolis.” And so what the data show is that this is not a mobility story. And what we do in the book is we test the relative generosity of TANF, which is the primary federal welfare program typically for women and children. And so when people refer to welfare, they usually refer, what they mean is TANF.
And TANF came into being under Clinton’s welfare reform in ’96, it gives states a lot of latitude in terms of determining their benefits, and so you have stingy states and you have generous states. And so we can just test and see are people congregating in generous states who are experiencing homelessness? And the answer to that question is a clear no, there’s no relationship. And this doesn’t mean that benefits aren’t important, and I support generous welfare benefits. But what this suggests is that people are not making locational decisions based on relatively modest benefits. People aren’t sitting in Los Angeles saying, “Look at the TANF benefits in Iowa. I’m going to move to Iowa City.” And why is that? Because moving’s hard, we moved a family of four to Seattle.
Nick:
And the data is not easy to find.
Gregg :
Well, no, it’s not easy to find. But even if you had perfect information, social networks are important to all of us. If you’re at the end of your rope, are you going to move from Seattle to Topeka Kansas because it’s more generous…
Nick:
On the hope that the benefits are possibly there.
Gregg :
Yes. Or cheaper housing or whatever the case may be. And so low-income mobility, this is actually a really interesting stat. Low-income mobility is actually quite high because people tend to be renters and leases are one year. And so there’s a lot of cycling in the rental market, but that mobility tends to be local mobility. So within a city, within a metro area, low income mobility is actually higher than it is for higher income folks. But state to state mobility is much lower for low income people because of the challenges of moving. It costs a lot. It’s traumatic. You have to leave social networks, all this kind of thing. And so we make that argument in the book.
My friend and colleague, Margot Kushel, who’s at the University of California, San Francisco just published this huge study of homelessness in California, really, really excellent study. And what they found was 90% of the people experiencing homelessness in California are from California. And so the way I describe in my talks is, is there an anecdote to the contrary? Is there some person from Indiana who moved to LA to experience homelessness? Probably.
Nick:
Of course.
Gregg :
Probably. There always is an anecdote, but we shouldn’t legislate or make policy based on anecdote. This is a homegrown problem. We have to look in the mirror and acknowledge that and recognize the fact that we have created the conditions in our community that have produced this crisis and we need to work our way out of it.
Nick:
Yeah. But of course, many of the conditions that created this crisis did not originate, for example, with the Seattle City Council, right?
Gregg :
No. These were long-standing.
Nick:
These were long-standing mostly federal policies that have influenced the degree to which we built the housing in different places. And of course, the problem with economies is they’re collective action problems, and it definitely makes less sense for one place to try to solve the problem then if every place tries to solve the problem simultaneously. So let’s rotate a bit to…
Goldy :
Yeah, I was going to get there, Nick. We should talk to the solutions side of this, and you have a number of them in the book, and there’s a clear dividing line, and I want to start with the market solutions, which is what we usually hear about. What can we do to make the market work better, to bring down the cost of housing and thus bring down the incidence of homelessness?
Gregg :
Yeah, I think there’s a number of things, and I think if I could briefly just respond to Nick’s comment there, which I agree with, is the federal government has not been helpful over the last 40 years in terms of housing policy in the United States and has created the conditions for this crisis to blossom, unfortunately. But I think it’s also important to note that there are local decisions at the state and local level that have been made that have exacerbated this crisis. We are a fast-growing jurisdiction. We have not created sufficient housing, and that has created a housing crisis. There are places like Charlotte, North Carolina that have grown very rapidly and they have built a lot of housing and therefore have avoided a housing crisis. And so while the federal government deserves most of the blame, I don’t think we can exclude people who’ve been in positions of authority over the last 40 years in Washington and King County and Seattle. They’re not immune from some blame here.
Nick:
Yeah, yeah, yeah.
Gregg :
I think that’s really important. And these are people that I support and I think they’re good people, but I think we’re recognizing that some of the decisions we’ve made have exacerbated this crisis. And so what can the market do? I think fundamentally we have a need for greater housing capacity. We have a city of Seattle that zones 70% plus single family. And so it’s illegal to build anything other, we have ADUs now, and so we can build ADUs in the backyard now, but which helps on the margins.
Goldy :
Well, I see it in my neighborhood, Gregg. And what they’re building are these giant houses with expensive ADUs attached, nothing’s affordable.
Gregg :
No, it’s not. And so ultimately we have to rethink our land use. And people get very upset about this. We don’t want our neighborhoods to change. And I live in a single-family home, so I’m not disparaging single-family homeowners, but Seattle is a global city. And if we want to be a global city and continue to be a global city, we probably need to look more like global cities. And global cities tend to be much denser than US cities are. And so even New York City, which is dense by US standards is not dense on global standards. And so we can’t layer a tech boom on top of the land use that we have and tell people “Here, there are 25% of the parcels that you can live on.” That just doesn’t work. And so the idea being that we need to create conditions that allow for the market to build more housing, does it need to be easier…
Nick:
So what did Charlotte do? Surely, I suspect, I haven’t been to Charlotte in a long time, but I think they have more room than we have, don’t they?
Gregg :
Totally, totally. Yeah. The problem that we have in our coastal cities is we have inelastic housing markets. And so this is a really important point that we make in the book, which is the two drivers of market elasticity, supply elasticity, which would mean how much housing you built when prices change is the regulatory environment and topography. And so if you have mountains and water, it’s harder to build more housing. That’s Seattle and San Francisco. And then if you have a really strict regulatory environment where it’s difficult to build housing for regulatory reasons, you end up with inelastic housing. And when you layer a tech boom on top of an inelastic housing market, you get Seattle and San Francisco. So it’s tragic.
It’s had huge consequences, but it was 100% predictable. And so the difference between the Sun Belt and Seattle is they’re not topographically constrained and they don’t have regulatory constraints because you can just sprawl. People commute an hour in a car, and these are things that we don’t value in our region, but it does show that if you build the units, you can absorb population growth. And so we’re not going to sprawl, one, because we can’t and two, we probably don’t like that from a policy standpoint. And so that then forces us to say, well, then we have to create capacity. How are we going to create capacity? We’re going to go up. That’s our answer.
Nick:
Either up or out.
Gregg :
That’s exactly right.
Nick:
You could go down, but that’s expensive.
Gregg :
That would be really expensive.
Goldy :
That’s what your billionaire buddies are doing, building their apocalypse bunkers.
Nick:
Yeah. 10 stories down.
Gregg :
Yeah, exactly. So those are our options. And from a regulatory standpoint, some people will say, “Look, well, Gregg, what about regulations?” And I say that I think there’s a role in society for good regulation. We want our ground beef to be safe. We want people to live in good housing. We want to be good stewards of the environment. I totally agree with all that, but we also, it doesn’t need to take two years to get build housing, which is what’s happening in San Francisco right now.
Nick:
Yeah. Which is just stupid.
Gregg :
Right. We need to figure that out. We can be good stewards, we can be good citizens while also getting housing built much more quickly and cheaply. And so hopefully we could activate the private market to build a lot more housing and then have the conversation of there’s still going to be people who can’t afford that housing. And so in the first half of the conversation, I get accused of being a corporate shill because I’m trying to make it easier for developers and people get upset with me, in the second half of the conversation, then people call me a socialist because I’m saying they’re going to be some folks who can’t afford that market-rate housing and there’s a role for subsidy in society. And I don’t think that’s socialism, that’s just mathematics. There are people who can’t afford that housing, so what are we going to do? And so it is, we have to do both-and.
Nick:
Well, there is something you can do. There is something you can do, which is require companies to pay people enough so that they can afford the housing.
Gregg :
There you go.
Nick:
Yeah. So let’s circle back to what we do.
Goldy :
Solutions.
Nick:
In fact, yeah, the benevolent dictator question. If we put you in charge, Gregg, of a region, like our region, what would you do?
Goldy :
And feel free to make the federal government contribute as it needs to.
Gregg :
Yeah, so it’s interesting that you ask this because I just got back from DC, I was invited with about 15 other people to meet with the HUD secretary, acting HUD Secretary, Todman, two weeks ago. And our task, my task was to write a three-page paper saying, how do we end homelessness in the United States? And I presented that at HUD, and that was a difficult task, and we’re now writing a longer version that we’re going to publish, my colleagues and me. So I’ve been thinking about this a lot in the last two weeks and writing a lot on this. The way that I positioned this for publication is that, let’s think about two different states. You’ve got one state in which the federal government continues as it has been, the existing policy framework, which will then put a lot of pressure on the state of Washington, King County and the city of Seattle.
And so we can talk about what the solutions are there. Then there’s a second state, which is what I would call an expansionary policymaking framework, where the federal government actually provides rental assistance or vouchers to everyone who needs them. Right now, one in five people get support. That changes the dynamic dramatically if the federal government gets involved. I think the likelihood of that is relatively low, but I’ll quickly speak to that and then we’ll go back to the former case. So if they were to expand rental assistance at the federal level, that then creates a lot of purchasing power in local jurisdictions. And then at the state and county and city level, we can focus on how do we then create the housing capacity where people can use that purchasing power? And that would really be about activating private market development, making sure our regulatory framework is in place, thinking about our land use, and then creating capacity such that people can use those vouchers.
To me, I’m a pragmatist, that is feasible in the United States. I don’t think we’re going to build lots of public housing anytime soon, so to me, among ambitious but plausible outcomes, that’s one. And then we can start to think about a homeless response system that is really focused on people who have severe needs that aren’t being met through rental assistance. So that takes care of the people who are serving coffee at Starbucks, who are living in their cars. That is completely unnecessary and our homeless response system shouldn’t be dealing with those folks. They should be housed easily. There’re going to be other people that are going to be harder housed, and then we can focus on that so that would be that state, expansionary state. The former one where we don’t get any help from the feds, this puts a lot of pressure on local jurisdictions.
And so if I were governor or county exec or mayor, what we need to be thinking about is what revenue sources do we have to create more rental assistance? Either subsidies to developers or rental assistance to individuals. And we do have those resources. We don’t have a state income tax in Washington. There are plenty of resources that could be generated to support that, in essence, to step into the shoes of the federal government if the federal government wasn’t acting. And then we still need to do all of this work in terms of creating a housing market, a housing system that creates more capacity. And then in terms of the crisis response, I think the real tension here is the short versus long. If you’re mayor of Seattle and you say, “I want to build housing, it’s going to take five years to do that, in the interim, Rome is burning.”
We have to think about what is the right balance between short-term crisis response and long-term. You have to do both. I think there’s probably a need for more shelter capacity in Seattle compared… East Coast Cities shelter a large percentage of their homeless population, we don’t. I do think that there is a demand from the public for cleaner streets and shelter capacity could help in that respect. But that’s not enough. We can’t just build shelters like New York did and warehouse people for their entire lives. And so we have to create this system such that people flow through the shelter system into permanent housing that will require more housing units.
Nick:
Can I ask a clarifying question, Gregg?
Gregg :
Sure.
Nick:
What proportion of homeless people are employed?
Gregg :
The last numbers that I’ve seen in Seattle was it was approaching, it was around 50%.
Nick:
Yeah. So half of our homeless people, they just literally can’t afford a home.
Gregg :
That’s right. That’s right.
Nick:
Well, what proportion of the homeless people are in desperate need of services like mental health and addiction services and stuff like that?
Goldy :
Yeah, permanent supportive housing.
Nick:
The people we see wandering the streets of Seattle and San Francisco.
Gregg :
Yeah.
Nick:
What proportion of folks is that?
Gregg :
Depending on the data source and depending on your definitions, I would say that the chronic unsheltered homeless population is anywhere from 10 to, let’s say 33% of the population in a city like Seattle. But it’s disproportionately visible. And so I just got back from Europe at the Homelessness Conference in Europe, and what’s interesting is they have homelessness in Scandinavia, but the homelessness in Scandinavia are people with super high acuity. There are people who have slipped through the cracks, slipped through the income and housing supports that exist in Scandinavia, so they have far lower rates of homelessness than we do in the United States. And the people who are homeless have really big challenges. So homelessness in Scandinavia is focused on serving those folks. They don’t even think about people serving coffee living in their cars. That’s just not part of their homeless response system.
Nick:
Well, because people who serve coffee don’t have to be living in their cars.
Gregg :
That’s right. Because there’s income supports, there’s housing supports, et cetera. And so it’s not going to mean that we won’t ever have challenges and there won’t be people with acute needs, but then we could focus our time and attention on those folks that we see on the streets right now as opposed to trying to figure out how do we get people earning 20 bucks an hour housed, which is what we’re doing right now. And so I described the homeless response system in Seattle as the Carnival Act where they have the plates spinning. You’ve got plates spinning all over the place and just trying to keep all these plates going. It’s incredibly difficult work that we’re pushing down on this system. It really frustrates me when people say they don’t know what they’re doing. It’s like, well, we haven’t given them enough resources and they’re basically dealing with the biggest challenge, all of the societal issues that we have flow down into this population. And then we’re saying, “You’re not good because you haven’t fixed this.” It’s like, well, it’s a totally unfair accusation in my opinion.
Nick:
Right.
Goldy :
So we could address half to two thirds of our homelessness crisis through housing affordability, but the rest of it will require services.
Gregg :
Yeah. That’s a great point. And the other thing that I would say is the best success story that we have in the United States over the last 15 years is the case of veteran homelessness. So in the aftermath of Iraq and Afghanistan, we have men and women coming back from those wars. We decide that we don’t want to replicate the experience of the Vietnam generation, which was typically men at that time who came back, who were grossly overrepresented in the homeless population, lots of behavioral health challenges. That was a stain on the United States. So leaders of both political parties, Republicans and Democrats said, “We don’t want to repeat that mistake. Let’s make sure that we don’t have high rates of homelessness among veterans.” And so what happened? We cut veteran homelessness by 50% in 10 years in the United States from 2010 to 2020. And how did we do that?
We used the federal government provided resources to HUD and the VA system, and we got people housing and provided services, and many of these people had really acute behavioral health challenges, PTSD, et cetera. So when people say, “Gregg, I don’t think this is going to work.” I just laugh and say, “We literally just did it. We just made it a federal priority and we pumped billions of dollars into these systems and we cut homelessness by 50%.” And so the idea that this is impossible is laughable because we literally just did it. We just haven’t extended that logic beyond people who are veterans. And my dad’s a veteran, grandpa’s a veteran. I’m all for supporting veterans. I’m all for supporting veterans but we’ve drawn the line there, and that’s the reason why we continue to have these problems. If we drew the line somewhere else, we could have a very different outcome in Seattle and San Francisco and everywhere in the United States.
Goldy :
Can I ask you just point-blank, can the market alone, whatever we do, supporting the market, make it easier to build, lift land use restrictions, all that? Can the market alone address the affordability issue? Does the market alone address that anywhere? Or do we need to have affordable housing permanently outside of the market?
Gregg :
I don’t believe that the private market alone can fix this, and I used to work at Goldman Sachs, so I do believe in markets, but I don’t believe that given land costs and everything that this can work. Are there situations where we can create affordable housing through market mechanisms? Yes, we have some micro units that are being built without subsidy in Seattle that are relatively affordable. And that’s great. That’s great. I think at a large scale though, it’s going to be really tough for markets to do this. Where we see really affordable rents in the United States that are unsubsidized, it’s places that are basically, its industrial decline. And so has the market produced affordable housing in Detroit? Yes, it has. Why? Because they lost 30%. They lost 30% of their population. And so no mayor is going to stand up and say, “We aspire to be Detroit and Cleveland.”
And so it’s like what we haven’t figured out as a nation is how do we grow and prosper and still allow incumbent residents to enjoy the places where they’ve lived? We’ve priced people out of Seattle, that’s what’s happened here. And so can the market do a lot more than it has with proper regulation? Yeah, I think so. I think so. But is that solely, can that fix our problems? Probably not, but I don’t know that a lot of people out there, and there are some people saying that, but I think a lot of people understand that there’s a role for government, that the private market isn’t going to fix every problem, and that’s not socialism. It’s just a recognition that there are certain services and needs that are met better by the government, and that’s okay. That’s okay. When people accuse me of that, I was educated in public school. I’m not a socialist, just that’s a service that the government provided and it served me and my family well.
Goldy :
This is why I hate the term ‘social housing’. I love social housing, I hate the label. It’s not descriptive. We like to call it a public option for housing, whether that’s the right phrase for it or not, but just like a public school, it’s a public option.
Gregg :
Yeah.
Goldy :
Do you think that social housing model is a necessary part of the solution in places like Seattle?
Gregg :
I’m a big believer that if we had more housing that was outside of the private market, it would help a lot. And so the academics would call that decommodified housing in the sense that it’s no longer a commodity, it’s owned by an entity that isn’t a profit maximizer. So that could be a social housing model, like what’s being proposed now. It could be housing that King County Housing Authority has acquired, it could be the housing that Bellwether Housing has developed. I sit on the board of Bellwether. It’s a nonprofit housing developer, that’s decommodified housing. It’s not sitting in the market. And so I am to a certain extent, I have my own personal opinions, but as a scholar, I’m somewhat agnostic what entities own and operate that housing. But I do think having more housing outside the market would be helpful. In Northern Europe, that number is between 15 and 30%. In the United States right now, it’s less than 1%.
Nick:
Yeah. We are big fans of this idea.
Gregg :
Yeah.
Nick:
We think this is the only scalable way to solve the problem, mostly because you don’t have to mobilize tax dollars. You can mobilize borrowing capacity, which is free for taxpayers.
Gregg :
That’s right. And this is one thing that we talked about in DC was if I were secretary of the Treasury or King for a day, hopefully benevolent, getting 1% money to jurisdictions to help them build housing would be huge.
Nick:
Oh my God. As long as they keep it out of the market. Right?
Gregg :
Yeah. That’s right.
Nick:
If you build it at scale and then hold it in a public entity forever while you hold the rents down to whatever it costs to maintain the property. Right?
Gregg :
Right.
Goldy :
Hell, 2%, whatever, but low interest money to housing authorities or other public entities to…
Nick:
Yeah, we could fix this really fast.
Goldy :
Right. Because the county has a huge amount of untapped borrowing capacity because it doesn’t have any tax revenue to bond against, but it can bond against rents.
Gregg :
That’s right. And I think we lack imagination on housing. And so I know you’ve had Governor Inslee on your show, and I’m a big fan of Governor Inslee. I’ve been meeting with him, I don’t know, after the book came out and we were chatting about housing, and it was interesting. It was at the point where he was proposing his $4 billion bonding proposal that went nowhere for housing. And what was interesting is after we left that meeting, I was on my way home and I was reflecting on my conversation with the governor and I was like, we passed 50 plus billion dollars for transit in our region, and it was a fight, but ultimately it didn’t change anyone’s life. You might pay more when you park at a Seahawks game or whatever, but we figured out where that money came from. When the governor proposed 4 billion for housing, it was like, oh my gosh, this is radical. That [inaudible 00:41:25].
Nick:
It’s crazy. Yeah.
Gregg :
It’s crazy. It’s infrastructure. Housing is infrastructure as is transit. And when you reframe it that way, $4 billion for the state of Washington is frankly not that much money. And so we just have to figure out how to reframe this conversation such that we can start to make those investments that we can afford. We can do that even without the feds, we can create a lot of housing capacity.
Nick:
Absolutely. Because the state has a huge amount of borrowing capacity and the ability to tax.
Gregg :
That’s right.
Nick:
But if you marry those two things, we’re home free.
Gregg :
Yes.
Goldy :
Yeah. Speaking of reframing conversations, we’ve taken this conversation way long. Do you want to ask the final question, Nick?
Nick:
Yes, sir. Why do you do this work?
Gregg :
I give one of two answers. One is, I think housing’s fundamental from a Maslow perspective. If you want a kid to learn geometry, let’s make sure that kid’s housed. If you want an elder to be healthy, let’s make sure that that elder is housed. When I’m feeling less benevolent, my answer to that question is because outraged that in the wealthiest country in the history of this planet that we allow homelessness to persist at this level.
Nick:
Yeah, that’s a great answer.
Goldy :
Good answer.
Nick:
Well, wonderful to have you on, Gregg, very cogently argued.
Gregg :
Thank you. Thank you. I appreciate you having me.
Nick:
I just love how precise Gregg is in his thinking and his analysis, and the book was based on 2019 data. I’d just love to see some 2024 data because it’s got to be so much worse.
Goldy :
Right.
Nick:
Right?
Goldy :
Of course, you can’t look at the data from 2019 to 2021 because like all data, the pandemic skews everything.
Nick:
Yeah. Everything.
Goldy :
But we’ve seen it all grow worse over the last few years, both housing costs and the amount of homelessness, both sheltered and unsheltered.
Nick:
Yeah, absolutely. Absolutely.
Goldy :
I think my biggest takeaway from this, and this is to me the only surprise in the book, because look, we’ve been looking at this a long time, and we know that there’s this correlation between housing price increases and increases in homelessness. That’s something that has been known across the board and pretty widely within this area of focus. But the fact that it’s absolute housing costs, not relative housing costs should be an eye-opener for a lot of people.
Nick:
That’s right. Not just that, Goldy, but it’s the cost plus the vacancy rate.
Goldy :
Right. Right.
Nick:
Right?
Goldy :
Yeah.
Nick:
Obviously those are correlated.
Goldy :
Right.
Nick:
Vacancy rate and cost, but they’re not perfectly correlated. In other words, it is possible to have a relatively expensive place with a relatively higher rate of vacancy.
Goldy :
And so he pointed out Miami is an example of that very high cost, but a high vacancy rate, so not as much of a homelessness problem. Whereas in places like Seattle, and look, I don’t want to dump on Seattle. A lot of this book, this book does focus on Seattle for a couple of reasons. It focuses on other cities, but there’s a lot of Seattle here, partially because the authors are at the University of Washington, and so they’re living here, they’re working here. They’re very familiar with the problem, but it’s also because we have very high housing costs and a big homelessness problem.
Nick:
Yeah.
Goldy :
And so it’s an obvious place to focus. So I don’t want to dump on Seattle. We have, compared to San Francisco, we have been building housing much faster than really almost any other big city in the country. We have been building a shit ton of housing over the past 10 years, and it’s not enough. We’re not building it at a scale necessary to address our population growth, let alone the existing problem.
Nick:
Much less than… Yes, exactly. But at least we’re building. At least we’re building. And for people who don’t live in Seattle, I can assure you that on every corner there is an apartment building being built. It just, it’s unbelievable.
Goldy :
Right. It’s a city of five over ones just…
Nick:
Yeah, just everywhere.
Goldy :
Block after block of it, that’s what’s been going up. So we’ve been adding about 10,000 units a year for a number of years, and that’s a lot. It’s just about…
Nick:
But it’s about a third of what we need.
Goldy :
Right. And this brings me to something which he mentioned almost in passing when he’s talking about a mayor saying, “I’m going to address this in five years”, but what people want is it to be addressed now. Right?
Nick:
Yeah.
Goldy :
What they want is not to see homelessness anymore. Some people don’t want to see it because it’s an inconvenience. Some people don’t want to see it because they actually have compassion. Sometimes it’s a combination of both. But the problem is as I see it as the political scale versus the pragmatic scale, and that is you can’t fix this problem in five years. You can’t fix it in one year. You can’t fix it in five years. Probably can’t fix it in 10 years. This is, to really get this problem under control at this point in cities like Seattle and Los Angeles and San Francisco and elsewhere, this is a multi-decade solution because it takes a long time to build housing. You couldn’t possibly build it all at once because your constraint then is the capacity of the construction industry to build all this housing, even if you had the money without driving up the cost due to a shortage of labor and supplies.
So it’ll take 20, 30 years to really completely address this problem, and no politician can propose a 30-year solution. We did it with light rail, and people are endlessly angry about how expensive it is and how long it takes to build. And the thing about infrastructure, these big, long-term infrastructure projects is that the people who are paying for it now are not the ones who will benefit from it. It’s generations in the future are the ones who are going to benefit from the infrastructure we build now. And that’s true in every major city, that’s true throughout the country, and it’s really difficult to get political support behind something that the politicians pushing it are not going to benefit from.
Nick:
Yeah, absolutely. That’s a tough problem. And like a lot of these things, we spend a long time digging ourselves a deep hole.
Goldy :
Right.
Nick:
It’s going to take a long time to get out.
Goldy :
But again, if you are looking to refute the arguments of people who say, “Oh, this is just the homelessness problem. We just need to crack down on them and sweep those homeless encampments”, or, “Oh, this is just a drug problem. We need to deal with the fentanyl crisis, and then we won’t have all this homelessness.” I urge you to read the book. We have a link in the show notes. Homelessness is a Housing Problem, very data-driven, very compelling, really irrefutable argument.
Speaker 7:
Pitchfork economics is produced by Civic Ventures. If you like the show, make sure to follow rate and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads @pitchforkeconomics. Nick’s on Twitter and Facebook as well @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website Pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.