Recent Cato research finds that “Housing First” policies have been unable to reduce or mitigate a rise in the chronically homeless population in Utah and California. Home prices have risen dramatically in both states, and providing permanent housing to the homeless population has proven increasingly difficult. Given Utah and California’s disappointing results, Houston, Texas, poses somewhat of a mystery: it appears to have substantially and successfully reduced homeless numbers since adopting the philosophy in 2011.

Houston is part of a Continuum of Care (CoC) known as The Way Home, a regional entity that receives federal funds and administers a homelessness response. The Coalition for the Homeless, a non-profit organization that helps coordinate the efforts of public and private stakeholders, leads the region’s efforts. Houston adopted a Housing First approach to homelessness in 2011 with a successful pilot initiative focused on housing homeless veterans. It subsequently expanded the program to focus on the broader chronically homeless population.

In 2020, regional partners invested additional money to fund Housing First projects with the Community-wide COVID-19 Housing Program (CCHP). Phase One included a 2‑year, $65 million budget with the objective of housing 5,000 individuals.[i] Phase Two, announced in January of 2022, put $100 million towards the goal of housing 7,000 more individuals.[ii]

In contrast to California and Utah, Houston data shows chronic and overall homelessness declined following policy implementation. Chronic homelessness fell substantially in the years before Housing First was implemented, but the downward trajectory continued after the introduction of Housing First, in contrast to California and Utah. Chronic homelessness declined by 68 percent since policy implementation in 2011 (Figure 1), and although numbers began to rise again after 2017, Houston had reversed the trend by 2022.

Houston data shows a similar trend among overall homelessness. Overall homeless counts fell before policy adoption but increased sharply between 2010 and 2011. However, overall homeless numbers fell again after the implementation of Housing First: between 2011 and 2022, overall homelessness in Houston fell by 63 percent. Remarkably, this is despite the Houston area adding additional counties to its CoC in 2014 and 2017. [iii]

Houston’s outcomes are markedly and directionally different from those in California and Utah. So, what explains Houston’s seeming success? One possibility is that Houston has better coordinated efforts over a considerably smaller geography.

Comparing Houston’s response with California’s, a report by California YIMBY noted, “Houston’s approach to reducing homelessness relies on extensive coordination between various actors, overseen by one presiding body, the Coalition for the Homeless of Houston/​Harris County. In contrast, California’s homeless services system is highly fragmented.” This is somewhat understandable given that Houston’s homeless approach is implemented over a single CoC, where the state of California has 44 distinct CoCs, all with local governments, counties, law enforcement agencies, and state departments of their own.

In addition to differences in coordination, other researchers have suggested that Houston’s “compassionate enforcement” policies that prohibit public camping, and politicians that discourage panhandling, have helped improve homelessness in Houston. Of course, clearing encampments only reduces the homeless population if individuals have somewhere else to stay. In 2019, Houston spent about $3.4 million clearing encampments, but the city ensured that affected residents had access to either permanent supportive housing or a housing voucher.

Likely more significant than either coordination or compassionate enforcement efforts are Houston’s underlying housing fundamentals. Average home values in Houston ($255,921) are a fraction of those in San Francisco ($1,287,792), the state of California ($716,909), or Utah ($500,077).

Improved housing affordability helps to reduce homelessness in at least two ways. First, in the context of Housing First, affordable housing makes it easier to buy or build permanent supportive housing units. This makes a Housing First approach more sustainable in Houston than in other places. For example, due to the availability of low-cost housing, Houston spends between $17,000 and $19,000 to house an individual for a year, while San Francisco must spend between $40,000 and $47,000 to do the same.

Likewise, Houston was able to move 1,080 people into permanent supportive housing, provide short-term rental assistance for 3,180 people, and stabilize 2,780 people on the verge of homelessness with the $65 million spent on homelessness during Phase One. In contrast, Los Angeles reportedly spent almost $13 million buying motels to house individuals experiencing homelessness, an investment that resulted in just 39 units.

The second way affordable housing reduces homelessness is by making it possible for people on the margin of the housing market to stay housed to begin with. In line with this, studies have long found a positive relationship between housing prices and rates of homelessness. For example, the book How to House the Homeless found that rent costs explained about 40 percent of the variation in homelessness rates. In a recent book, authors Gregg Colburn and Clayton Page Aldern found that the supply of affordable housing was a more accurate predictor of homelessness rates than mental illness, substance abuse, or poverty measures.

Given the relationship between housing affordability and homelessness, it is not surprising that some research has also found an association between housing regulation and homelessness. Comparing the Wharton Residential Land Use Index with changes in homelessness at the metro level, an article found that areas with greater housing regulation have experienced more growth in homelessness. A 2019 CEA paper titled The State of Homelessness in America found that “if the 11 metropolitan areas with significantly supply-constrained housing markets were deregulated, overall homelessness would fall… by 31 percent in these 11 metropolitan areas, which currently make up 42 percent of the United States homeless population.” Notably, Houston is the only major city that lacks a traditional zoning code, and low regulation is likely a significant factor driving its success.

While homelessness is a complex issue, and housing affordability is not the only contributor, it is clear that high home prices play an important role. Fortunately, there are many ways to improve housing affordability, including reducing regulatory barriers. If cities and states want to reduce homelessness, they should consider Houston’s example and pair efforts to address homelessness with reforms to increase housing supply and reduce housing costs.

[i] Note that not all funds from phase one were used for Housing First initiatives: a portion went to rapid rehousing and homelessness prevention.

[ii] More than a third of this budget ($35 million) came from federal funds provided under the American Rescue Plan.

[iii] Fort Bend County and Montgomery County, respectively.