Lots has been written in terms of the social context of homelessness. Often attributing the causes due to mental illness, previous criminal activity and addiction.

I've been wondering, how much of a role (if any) does home price or rent play into the phenomenon of homelessness?

Im guessing estimates will be different depending region, but I'd like to know if the relationship is consistent across the board.

  • $\begingroup$ By homeless do you mean to include or exclude people who live in shelters? $\endgroup$
    – BKay
    Jan 9 '20 at 14:24
  • $\begingroup$ @BKay include them and "couch surfers" $\endgroup$
    – EconJohn
    Jan 9 '20 at 16:46

This paper is close to what you want.

It is generally believed that the increased incidence of homelessness in the United States has arisen from broad societal factors, such as changes in the institutionalization of the mentally ill, increases in drug addiction and alcohol usage, and so forth. This paper presents a comprehensive test of the alternate hypothesis that variations in homelessness arise from changed circumstances in the housing market and in the income distribution. We assemble essentially all the systematic information available on homelessness in U.S. urban areas: census counts, shelter bed counts, records of transfer payments, and administrative agency estimates. We estimate similar statistical models using four different samples of data on the incidence of homelessness, defined according to very different criteria. Our results suggest that simple economic principles governing the availability and pricing of housing and the growth in demand for the lowest-quality housing explain a large portion of the variation in homelessness among U.S. metropolitan housing markets. Furthermore, rather modest improvements in the affordability of rental housing or its availability can substantially reduce the incidence of homelessness in the United States.

Quigley, John M., Steven Raphael, and Eugene Smolensky. "Homeless in America, homeless in California." Review of Economics and Statistics 83.1 (2001): 37-51.

The results in table 5 provide the strongest evidence that housing market tightness is an important determinant of homeless. For permanent caseloads, vacancy rates have a strong negative and statistically significant effect (at the 1% level) on the incidence of homelessness. Moreover, these elasticity estimates are quite similar across specifications. In the two specifications including fair market rents (specifications (1) and (3)), rents exhibit a significant positive effect on the incidence of homelessness as predicted by theory. In addition, the specification including the ratio of rents to income indicates a strong positive effect. Hence, for homelessness, as measured by the incidence of homeless house-holds seeking permanent assistance, measures of housing market tightness consistently exhibit strong and statistically significant effects, which is consistent with the predictions of theory. We also find a negative and significant effect of per capita income. There are no important effects of county unemployment rate s and no consistent and significant effect of the SSI populations across specifications. Similar to the results from the S-night and continuum-of-care data sets, the results in table 5 also indicate that warmer weather is positively associated with homelessness

The key results table:

Tabel 5 of the paper

Open access version?


So answers for this topic will be a bit... for lack of better term, murky.. or "grey area".

The pricing of homes (or rent) is the strongest correlated factor to homelessness. For example, you can have a great job, make erm... $100k a year salary... and have no debt. But if housing prices are in the multi millions across the board and rent is super high because of it... your salary doesn't matter at that point. Nor does an addiction. Or a mental illness. Yes they have a factor of correlation statistically, but the overwhelming correlative factor is income vs price. If you can't afford it, you wont have it. It gets real grey area when you factor in things like, "well maybe he/she cant afford it because they spend too much on drugs". That is definitely a factor, but the statistical correlation will almost always be a lower significance than the price of not being homeless(aka a house or apartment).

So to answer your question directly: The relationship is highly consistent across the board; but of course you will have your outliers.

  • $\begingroup$ House prices are not God-given, if nobody can afford the house you're ought to sell, you'll sell it for less. $\endgroup$ Jan 9 '20 at 12:16
  • $\begingroup$ That's nice. Not sure what relevance it has to any of the above topics though. :) $\endgroup$ Feb 21 '20 at 21:44
  • 1
    $\begingroup$ You seem to say that if house prices are high enough, the salary doesn't matter. I say that houses, like any other commodity, are priced according to the law of supply and demand. If you're in a business of selling houses and houses are not affordable, you'll find a way to lower the prices or will go bankrupt. $\endgroup$ Feb 24 '20 at 8:32

Often attributing the causes due to mental illness, previous criminal activity and addiction.

Such attribution is more of a way to blame the homeless for their own actions than a real explanation of the phenomenon, which is specific to the housing market and housing market alone. Mental illnesses, criminal activities and addictions are surely bad things, but they are ought to affect all aspects of life. Nevertheless, the poor (at least in developed countries) are adequately dressed (the fashion statement may not be there, but they're not naked), adequately nourished (again, their diet may not be great but they're not starving), they typically have access to at least basic emergency healthcare, and so on. Yet, some of them are homeless, meaning they lack any sort of permanent shelter whatsoever, and some of them die from the lack of it every winter.

does home price or rent play into the phenomenon of homelessness?

Rents indeed play the crucial role (specifically those of basic accommodations), while house prices only correlate with homelessness as far as they affect rent prices. Think of a homeless who finally got a stable income source: they will immediately look for a place to rent, they won't be shopping for a house right away.

Another part of the correlation between homelessness and house prices comes from the fact that many homeless beg for money or food, which works much better in crowded cities where house prices are also higher. This is a correlation without causation: if the house market in such a city sinks (which doesn't immediately affect the rents), the number of homeless will not change substantially.

For instance, according to Wikipedia the number of homeless per 100'000 in England was steadily decreasing between 2003 and 2009, while the average house prices were growing until 2007 and then sank rapidly in 2008 and 2009.


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