Los Angeles Is in Crisis. So Why Isn’t It Building More Housing?

A few short months ago, Eric Garcetti, the mayor of Los Angeles, was giving serious consideration to running for the Democratic presidential nomination. Now he finds himself in the midst of a homelessness crisis that could doom his political future.

If you were to conjure up the ideal California politician, you could do worse than Garcetti, a Jewish-Mexican-American Rhodes Scholar with a gift for gab, in English and Spanish, and a winningly unpretentious style. As if channeling a young Barack Obama, the mayor is fond of invoking storied moments from the American past—the Great Depression, the Second World War, the Civil Rights movement—to suggest that if previous generations were able to turn daunting challenges into historic accomplishments, then we ought to hold ourselves to the same exacting standard, a welcome alternative to the sourness and fatalism of other politicians on the left and right. But when it comes to Los Angeles’s long-running battle with homelessness, the mayor’s rhetoric looks more delusional than inspirational.   

A month after Garcetti delivered his rousing State of the City Address, California released its annual homelessness count, revealing that after an encouraging 4 percent drop from 2017 to 2018, Los Angeles’s homeless population grew by 16 percent in 2019, bringing post-2011 growth up to 52 percent. These numbers would be alarming in any city, but in Los Angeles they are especially so because the city is the epicenter of a particularly brutal style of homelessness. Seventy-five percent of the city’s population is unsheltered, typhus and typhoid threaten to create a public health emergency, and a growing number of homeless people are either the perpetrators or the victims of violent crime.

The mayor’s response has been to increase public spending on homelessness sharply, but he’s had frustratingly little to show for it. When the homelessness issue burst onto the front page a few years ago, Garcetti jumped into action with an ambitious plan to build emergency shelters in all 15 districts of the city. But as the mayor soon discovered, the issue with an “emergency” plan oriented around construction is that Los Angeles is a far cry from Bob Moses’s New York. Eighty percent of the shelters have been held up by red tape and community resistance. The short-term measures, then, must take the city’s built environment as a given.

A new sales tax boosted the city’s budget for dealing with homelessness to over $600 million, or $20,000 per homeless person, while a bond issuance brought in $1.2 billion to go toward constructing an estimated 10,000 housing units over the next decade, all of which would be preserved for people transitioning off the street or in danger of ending up there. Los Angeles has taken about 16 percent of the funds from its recent sales tax increase and packaged it as vouchers to offer to a share of its homeless population, allowing them to buy into the rental marketplace with the understanding that their subsidy will fade over the course of the year, shifting the burden onto the new renter.

While Los Angeles is right to want a program that moves people toward self-sufficiency—both for the sake of the homeless themselves and to protect the city’s coffers—the steep monthly increases as the vouchers fade out often outpace the low-wage, part-time work the recipients are able to find. Unsurprisingly, for an alarming share of recipients, the program is more of a one-year reprieve rather than the start of a new, stable life. Short of doing something serious about the underlying cost of housing in Los Angeles, a limited pool of voucher dollars will forever chase rising rents.

Before the city’s new homelessness count was released,the mayor had been touting the 20,000 people the city had moved off the street and into some form of housing. What we now know, however, is that while the Garcetti administration was helping to move 380 people off the street each week, some 480 others were joining the ranks of homeless Angelenos. Put another way, until someone does something about the city’s larger housing crisis, homelessness will be as much a part of the city’s landscape as Runyon Canyon.

Would building more housing bring an end to homelessness in L.A.? That might be too much to ask. As in most U.S. cities, a large share of the city’s homeless are thought to be emotionally or mentally ill. The slice of Los Angeles’ homeless population dealing with mental illness is believed to be about25 percent—relatively modest when compared to San Francisco, where an estimated 35 percent are struggling with mental illness, but still a substantial portion of the total.

Moreover, the city’s mild climate makes living outdoors a more viable option than in colder communities. The notorious encampments at Skid Row and in Venice Beach do not have counterparts in Manhattan, and it is safe to assume that a large number of seriously mentally ill people live in these parallel communities. Los Angeles also attracts an enormous number of homeless young adults from elsewhere in the United States and abroad. Among the18- to 24-year-olds living on L.A.’s streets, whose numbers grew by nearly 25 percent this past year, a disproportionate share are newcomers to the city, who don’t have strong ties to the region.

These populations present knotty issues for city officials. Still, the fact that these populations are a distinct minority ought to give us hope that the majority of the city’s homeless can be reached through conventional public policy—that is, through reforms designed to increase the supply of housing, including low-cost, no-frills housing that can meet the needs of the very poor. If 10 years down the road, Los Angeles’s median rent has been pushed downward as a result of denser building, Skid Row might very well still exist as a home to people facing down hellish battles with mental illness and addiction. But at that point, the city would have the breathing room to focus on helping the hardest cases. Getting there is the hard part.

One of the ironies of this unfolding humanitarian disaster is that homelessness is a problem most pronounced in successful cities, where dynamic economies all too often meet rigidly regulated housing markets. As my Manhattan Institute colleague Stephen Eide observed in National Affairs, homelessness is not the product of poverty per se. Rather, homelessness is no small part an artifact of being poor in a place where ferocious competition for a severely constrained supply of homes drives up rents. To offer one example of this dynamic at work, Detroit’s poverty rate is twice that of New York City’s, but because of its notably inexpensive real estate, it maintains a homelessness rate a third the size.

Los Angeles offers an example of this dynamic in extremis. In his incisiveAmerican Affairs essay on L.A.’s homelessness crisis, Jacob Siegel highlighted a study by Zillow which showed that you start to see a rising rate of homelessness once a city’s average rent reaches 22 percent of median income, and an even more rapid rate of increase once that number hits 32 percent. In Los Angeles, the average rent is 49 percent of median income. Some studies have shown that the city has as many as 600,000 people who regularly put as much as 90 percent of their monthly income toward rent. Simply put, these people need a lucky bounce to not end up homeless.  

This lucky bounce might have come from California’s state government, where ambitious fixes to the statewide housing shortage have been in play. Earlier this year, to his credit, Governor Newsom set the goal of building 3.5 million new housing units in California over the next seven years, an implicit acknowledgment that insufficient housing supply was the driving force behind the state’s ruinously high rents.