Homelessness Likely to Grow as House Prices Continue to Rise
Get ready to see even more homeless people on the streets of America’s major cities in the months ahead.
The reason: House prices have resumed their relentless rise upward and are continuing to reach record highs, with few signs of a downturn in view. The more house prices and rentals go up in price, the more the number of people will increase who find themselves unable to afford to live anywhere except in tents on sidewalks or in their cars.
High prices and a resulting lack of affordable housing translate directly to high rates of homelessness in most of the nation’s biggest cities, according to an analysis by Clever Real Estate.
The value of a typical home across the country recently exceeded $350,000 for the first time ever. Rental prices continue to rise, too, making them less and less affordable.
Declines Unlikely
Any significant declines are unlikely until more homeowners list their homes for sale and so increase the overall supply, says Jeff Tucker of real-estate company Zillow. Such a growth in listings seems unlikely as there are now about 28% fewer house listings than there were in mid-2022.
Fewer listings mean less supply and therefore greater demand which can only chase prices ever upward.
Another factor is that homeowners appear to be holding out for even higher prices before they sell their homes, Tucker adds.
Pullback Has Reversed
The pullback in prices late in 2022 has fully reversed itself, according to the latest Home Price Index from data and analytics company Black Knight. In some of the larger markets prices are setting new highs, the report shows.
Prices are likely to trend sharply higher in coming months, says Andy Walden, president of enterprise research at Black Knight.
So, it seems, will homelessness.
Correlates With Homelessness
The compilers of the report at Clever Real Estate point out that their analysis found that poverty rates are not a good indicator of the rates of homelessness in a city. New Orleans has the highest poverty rate (18.4%) of any city included in the report, but the city’s homeless rate stands at 96 for every 100,000 people, which is half the national average.
The reason might be that residents can afford housing in spite of lower incomes, the report compilers suggest.
Homelessness and Rentals
The report by Clever Real Estate analyzed the 50 most-populous metropolitan areas in the United States and found a strong link between home values and the costs of rents on the one hand, and rates of homelessness on the other hand.
When it came to rental prices, the report found:
• In cities with high homeless rates the average rental price is $2,274
• In cities with below average homelessness the average rental price is $1,596.
• The average rent across the United States is $1,843. The typical monthly rentals in these cities is nearly $700 a month higher than the national average—$2,274 as against $1,596.
The Correlation: Homelessness and House Values
Here is a breakdown from Clever Real Estate of the cities with the highest typical home values and the rates of homelessness for every 100,000 people in that city:
1. San Jose, California
Typical home $1,388,268—homeless rate 636.8
2. San Francisco, California
Typical home $1,112,005—homeless rate 508.8
3. Los Angeles, California
Typical home $839,426—homeless rate 501
4. San Diego, California
Typical home $794,389—homeless rate 256.4
5. Seattle, Washington
Typical home $670,6728—homeless rate 408.9
6. Boston, Massachusetts
Typical home $577,160—homeless rate 90.6
7. Denver, Colorado
Typical home $559,309—homeless rate 231.6
8. Sacramento, California
Typical home $649,079—homeless rate 415.7
9. New York, New York
Typical home $533,574—homeless rate 340.7
10. Portland, Oregon
Typical home $617,529—homeless rate 240.3
National average: Homeless rate 175.5—typical home $301,466
One of the exceptions to the correlation of higher home values and homelessness is Boston. A reason might be the weather. Living on the streets in a city with mild winters such as San Diego, for example, is a lot easier to tolerate than on the streets of a city such as Boston that is considerably colder in winter.
This factor might be a contributory reason, too, that the top four cities with the highest rates of homelessness are in California. The weather also is possibly a contributory reason that home prices are so much higher in that state, too.
The pattern that higher home prices correlate to rising homelessness and will continue to drive homelessness higher holds true for most other major cities, however.
Lowest Rates of Homelessness
The cities with the lowest homeless rates are:
Atlanta, Georgia—32.8
Pittsburgh, Pennsylvania—37.4
Chicago, Illinois—40.7
Houston, Texas—43.3
Cincinnati, Ohio—47.8
Detroit, Michigan—51
Richmond, Virginia—52.6
Milwaukee, Wisconsin—53.1
Charlotte, North Carolina—65.2
Buffalo, New York—73.6