Houses, Not Shelters

September 2018
By Mark Funkhouser  |  Former Publisher
Former publisher of Governing and former mayor of Kansas City

Mattie Quinn’s feature in this issue examines another variant in the increases in homelessness that cities are struggling with, in this case a surge in the number of people living in their cars. The situation is particularly troubling when you consider that the economy seems to be doing very well:  We’re in the second-longest economic expansion in modern history, with joblessness at historic lows.

If homelessness is a problem in good times, what will happen when the business cycle turns and the economy heads south? In the last recession, new housing starts dropped dramatically and have not recovered to anything near their pre-recession levels. Housing inventories are at historic lows. And too much of the housing we do have is vulnerable in a downturn. In July, the American Enterprise Institute (AEI) reported that its National Mortgage Risk Index “shows that if we have another stress event, like the one from 2007, more than 27 percent of [Federal Housing Administration]-insured loans would be expected to default.” That’s about 2 million homes at risk.

City leaders are under enormous pressure to try to do something to “solve” the homelessness crisis, and not just out of compassion for those forced to live in shelters, on the streets or in their cars. Residents and businesses have escalated their complaints about the negative impact of widespread homelessness on the quality of life. Some of the strategies governments have tried have worked to a certain extent, but as long as market forces remain as they are, the overall impact of these programs will be negligible.

Actions that would work with the market -- changes in land use policies and zoning -- have failed to gain much traction in the face of residents’ objections to changing the character of a neighborhood or city. “We simply need to allow market actors, by right, to build economical housing in much greater quantities than we currently permit,” says Lynn M. Fisher, co-director of the AEI Center on Housing Markets and Finance. “Even incremental density increases -- upzoning from single family to duplexes or four-unit to eight-unit buildings -- can make a big difference for the ability of a community to accommodate households at a wide range of prices and rents.”

Public officials need to recognize that as the character of the country changes, with the proportion of people living in urban areas increasing dramatically, so must its cities. It’s time to create the political will to redesign cities to house the people who need to live in them today.