Biden Administration Tries Focusing on Homelessness

A new report from the US Interagency Council on Homelessness (USICH) is a stated attempt across 19 federal agencies to reduce homelessness 25% by January 2025, so effectively two years from now.

Built around “equity, evidence, and data evaluation” and offering three solutions — “housing and supports, crisis response, and prevention” — President Biden in a letter that’s part of the plan admits that it is “ambitious” and is not something that the federal government can do by itself.

“We need partners at the State and local levels, in the private sector, and from philanthropies to all play a part in meeting this goal,” Biden wrote.

The question is what tools are available for a strategy to work. As the document states, “Upon release of this plan, USICH will immediately begin to develop implementation plans that will identify specific actions, milestones, and metrics for operationalizing the strategies in close partnership with its member agencies and other stakeholders representing a broad range of groups and perspectives, including people with lived experience.”

With end-of-year holidays and normal pace of bureaucratic progress, definitive implementation plans could take months, cutting the timeline down to maybe 18 months.

That leaves many questions about the expectations of the private sector, which largely means commercial real estate. Even for the most willing in the industry, costs are challenges.

Costs of housing have gone up, including, crucially, the cost of building it. Even with the Producer Price Index down in November, the latest available numbers,  overall final demand year-over-year construction increases were 19% and for private capital investment, 20.4%.

To get a sense of the accumulated impact, look at the November final demand year-over-year construction increases in 2020, 2021, and 2022. The unadjusted percentage change from 2019 to 2020 was 1.2%. From then to November 2021, there was a 12.3% jump. Next, 19% to 2022. Apply each of the increases and you get a 35.2% jump in those delivered buildings between November 2019 and 2022. A unit that might have cost $875,000 in 2019 now runs $1,183,000. Which is a lot to pass on or pencil in a deal.

While Congress passed the 2021 infrastructure bill that Biden signed, social spending, including increased funding to address affordable housing and homelessness, were cut. To discuss such things as an increase of the “supply and impact of permanent supportive housing for individuals and families with complex service needs—including unaccompanied, pregnant, and parenting youth and young adults” is impossible without considering costs.

More relevant details will have to wait until more specifics come out.