Increases in Homelessness on the Horizon

Icon

Report | September 28, 2011

Files: PDF | 434 KB | 8 pages

Summary

Based on new evidence about increased poverty and future economic trends, the Homelessness Research Institute at the National Alliance to End Homelessness estimates that in the next three years homelessness in the United States could increase by 5 percent, or 74,000 people.

This is the projected increase if additional intervention does not occur. Based on evidence from past interventions, however, it is likely that continued investment in successful homelessness prevention and re-housing activities could curtail any recession-related increases in homelessness.

Background

The lingering effects of the recession have pushed more and more Americans into precarious financial situations. Perhaps the most ominous indicator with respect to homelessness is the continuing rise in deep poverty, which increased to a record level of 20.5 million people in 2010. This marks the fourth consecutive annual increase in deep poverty and raises the deep poverty rate to 6.7 percent.

While recent years have been economically challenging for many Americans, the most vulnerable populations have been hit the hardest. The average income for working poor people decreased more than 2 percent in the last year. Nearly 6 million poor households are severely housing cost burdened, meaning about 3 out of every 4 poor households pay more than 50 percent of income on rent. The number of people in poverty has increased to a record 46.2 million and the poverty rate of 15.1 percent is the highest on record since 1983.

These challenging economic indicators are forecast to remain bleak in the near future, according to sources as varied as the Congressional Budget Office (CBO), the Office of Budget and Management (OMB), and the Economist Intelligence Unit (EIU), a leading private sector research and analysis firm. For example, in response to new data on GDP growth, investment markets, unemployment, and other economic health indicators, both the CBO and OMB in their respective economic outlook reports have revised their forecasts to reflect the worsening economic conditions across the country. The expectation is that the country will continue to see poor economic conditions for years to come with, for example, the unemployment rate projected to hover near 9 percent until 2013 and then not reach pre-2007 to 2009 recession levels until 2016 or 2017. The continued poor economic conditions likely means high levels of poverty and deep poverty will remain. In fact, the Brookings Institution projects poverty will continue to increase through 2012 and that the poverty rate will stay above 15 percent through 2014. The Brookings’ research predicts poverty will stay above pre-2007 to 2009 recession levels through 2020. Deep poverty follows a similar trajectory, so it is predicted that the deep poverty rate will remain at levels not seen since before the current economic downturn.

Projections

ProjectionsTo project what the impact of the economy might be on homelessness, the Homelessness Research Institute examined previous evidence of the relationship between unemployment and poverty and the relationship between rates of deep poverty and rates of homelessness. Based on this, it projects that increases in the number of people in deep poverty will result in a significant increase in homelessness.

HRI projects the overall homeless population could increase by nearly 5 percent in the next three years (2010 to 2013). The baseline, 1.6 million people, is the number of people who were homeless from October 2009 through September 2010, as documented by The 2010 Annual Homeless Assessment Report to Congress (AHAR). Based on this, the projected increase in homelessness over the next three years, due to the recession and continued economic downturn, is 5 percent, or 74,000 people. This would be the largest increase in homelessness since regular reporting on the size of the homeless population began in the 2007 AHAR, which documented the people who were homeless during the period from October 2006 through September 2007. The next largest increase was 2 percent as documented in the 2010 AHAR. (See Figure 1 for projections of homeless population change.)

There are factors that support a concern that this projected 5 percent increase is a conservative estimate. First, it should be noted that homelessness is a lagging indicator, meaning it can take several months or years following a recession before homeless population increases are realized.10 Second, this projection does not take into account the deep cuts to state and local government programs, and any future cuts to federal programs, that protect people against homelessness and help them when they are homeless. Finally, the projection does not take into account the rising cost of housing, which is statistically linked to homelessness.

Emerging Evidence of Increases in Homelessness

Evidence of increases in homelessness is already emerging. Communities across the country are required by federal funding programs to conduct point-in-time (PIT) counts of the homeless population every two years, and many conduct them annually. While complete data for the 2011 PIT counts are not yet available, the Alliance has compiled data from over 100 communities. These data include counts from urban, suburban, and rural communities in 34 states plus the District of Columbia. Although based upon a non-representative convenience sample, these data show homelessness increased in these communities from about 295,000 in 2010 to about 302,000 in 2011, or 2.5 percent. Fifty-five percent of these communities have seen an increase in their homeless population.

Intervention Needed

The projected increase in homelessness is not inevitable. Due to innovative, federally-funded approaches focused on preventing homelessness and quickly and appropriately re-housing those who do become homeless, homelessness declined by 2 percent from 2008 to 2009. Even during the recession and economic downturn to date, homelessness increased only 2 percent from 2009 to 2010. It is clear that by using evidence-based, cost effective interventions, such as prevention, rapid re-housing, and permanent supportive housing, homelessness can be reduced. However, these current interventions must be maintained.

In addition, $1.5 billion was provided to a new Homelessness Prevention and Rapid Re-Housing Program (HPRP) in the American Recovery and Reinvestment Act specifically to prevent a massive increase in homelessness resulting from the recession. The latter intervention has been successful, but the funds are largely depleted, and all will be spent by fall 2012.

To combat future increases in homelessness, additional intervention of the type supported by HPRP will be needed. In 2009, the HEARTH Act was passed into law. HEARTH re-tools the US Department of Housing and Urban Development’s (HUD’s) major homelessness program, allowing it to provide just this type of prevention and re-housing assistance, in addition to other proven solutions such as permanent supportive housing. However, to date, adequate funds have not been provided to fully implement these provisions.

To prevent an increase in homelessness due to the recession and poor economy, increasing poverty and deep poverty, and sustained high unemployment and high housing costs, the following are recommended.

Continue the cost effective investment in homelessness prevention and rapid re-housing, initiated by the Homelessness Prevention and Rapid Re-Housing Program.

Continue investment in homeless programs that have proven to end homelessness, and provide resources to fully implement the HEARTH Act, which will significantly improve the outcomes of federal spending.

When setting spending priorities, ensure that a top priority is to protect the most vulnerable. This means shoring up programs that provide a safety net for extremely poor people including mental health treatment, housing, health care, employment and training, and Temporary Assistance to Needy Families and Supplemental Security Income for vulnerable families and people with disabilities.

Ensure that any jobs initiatives also prioritize the most vulnerable people, including those with disabilities and long-term unemployment histories.

Homelessness is a preventable and solvable problem. Allowing over a million people to become homeless every year has enormous economic, social, and human costs. The nation can learn from recent successful initiatives, and prevent the economic downturn and increasing poverty from creating a new class of homeless people. If it does so, cost effective efforts to end homelessness will proceed apace. If it does not, at least 74,000 more people will become homeless.