Why Homelessness Is Worse in California Than in Texas

Homelessness has been rising in America's West Coast cities for more than a decade. Entire blocks of Los Angeles, San Francisco, and Portland are occupied by tent encampments plagued by violence, drug overdoses, and disease.

But the problem is concentrated in a handful of cities; nationwide the homeless population has been shrinking for a decade. To figure out why some places are so much more successful than others, we took a trip to Texas where the homeless population declined almost 30 percent over the last decade. (It grew by more than 40 percent in California in that same time span.) Today, the Lone Star state counts 90 homeless people per 100,000 residents. In California, the problem is almost five times as bad.

Not only does Texas have vastly different politics and policies from the West Coast, but it's also home to three large cities with three very different approaches to homelessness: Austin, San Antonio, and Houston.

From a privately run village of tiny homes just outside Austin to a nonprofit serving San Antonio's homeless with an intensive, no-excuses treatment and skills training program to a single, centralized provider in Houston that's streamlined its approach to quickly house thousands of the city's homeless residents, what we found in Texas was innovation.  

But the federal government doesn't fund innovation. For decades, it's committed to a one-size-fits-all approach known as "Housing First." States like California have followed suit, leaving many charities with a choice to either fall in line or turn down millions in federal and state grants.

The result: More people living—and dying—on the streets as governors and big city mayors promise that the much-awaited free, permanent housing is just around the corner.  

Our first stop was the city of Austin, where progressive activism exists in the shadow of a conservative state house. It's a boom-and-bust town—a magnet for business and tech innovation, which has lured some of Silicon Valley's top performers. When the ultrarich moved in, housing prices started to resemble San Francisco's, and the homeless population climbed.

Policy-wise, Austin has a lot in common with West Coast cities, which helps explain the huge encampments here. But Austin has an advantage that San Francisco and Los Angeles don't: When you walk over the city line, you're in a more typical Texas municipality, where light-touch regulation allows innovative approaches to thrive.

The outskirts of Austin are home to Community First! Village, a 51-acre community of tiny homes. The project doesn't rely on federal money and, therefore, isn't bound by rules imposed by Washington.

Alan Graham, who founded Community First! Village, attributes homelessness to a lack of a supportive network of friends, family, and neighbors. He seeks to rebuild that network by giving formerly homeless people the opportunity to live in a community again. The homes are intentionally designed with large front porches within a walkable community to encourage socialization among neighbors.

"The single greatest cause of homelessness is a profound catastrophic loss of family," says Graham. 

To live here, residents have to respect the law and follow rules like keeping pets leashed, keeping junk off their driveways, and keeping drug use out of the common areas. But behind closed doors? That's their business.

"What we always wanted is for people to live the way that people want to live," says Graham. "Here in the United States of America, we have an extraordinary number of freedoms. We don't want people coming into our homes seeing what we do in the privacy of our own homes."

Graham says there's one rule above all others: You must pay rent. The monthly rent for one of these houses is between $240 and $440 depending on the size and amenities, which residents typically pay out of their monthly social security or disability benefits. Graham says that before the pandemic, they collected 99 percent of rent owed.

"It turns out that people that have skin in the game are bought into the game far more than people that don't have skin in the game," says Graham.

Mobile Loaves & Fishes, Graham's nonprofit, launched Community First! Village with about a dozen homes in 2015 and has since expanded to more than 300. The goal is to reach 500 units by the end of this year to meet the growing demand, while also breaking ground on 127 acres across the street and inside Austin, an expansion underwritten by $35 million of funds from the federal American Rescue Plan Act that will eventually make way for 1,400 more homes.

Community First! Village is located just outside Austin city limits. Graham says it would have been impossible to build it on the other side of the line.

"We are blessed with the reality that there is no zoning, no discretionary land use authority outside of a municipal boundary," says Graham. "And that's a big deal because that's the only tool that NIMBY[s] can sink their teeth into." 

"NIMBY" stands for "not in my backyard"—a term used to describe activists who lobby to block new real estate development. Within Austin city limits, developers have to contend with zoning restrictions and preservation laws which have made it hard to meet the huge increase in demand caused by wealthy professionals fleeing coastal cities.

Residents thwarted plans to rewrite the zoning code, which would've allowed more vacant or underutilized properties to be transformed into multifamily housing units with nearby retail. In contrast, existing strict business and residential demarcations make such mixed developments more difficult.

A common refrain among urbanists and disgruntled residents is that Austin is like San Francisco in the '90s: Those who migrated to the city and bought houses early stand to gain from the soaring prices, but many others are getting priced out or pushed farther from the city center.

"The city of Austin itself, which is probably where the most [local] demand [for housing] would be, is hyper NIMBY," says urbanist Scott Beyer, who has studied the interaction between zoning laws, housing prices, and homelessness. He points out that Austin's suburbs have stayed relatively affordable despite large population growth.

Still, many Austinites don't appear to see the relationship between the zoning and land use changes they oppose and the fact that affordability is getting worse and worse.

But such land use restrictions—especially zoning—shaped the ability of each city we visited to respond to its homelessness problem.

Another crucial aspect was the strings attached to government funding. As the operator of a faith-based charity not reliant on federal funding, Graham is free to experiment, including by coming up with cheaper ways to build his tiny homes. Some tiny homes are 3D printed, while others are prefabricated, and still others are bare-bone shacks that don't contain any plumbing and require residents to use shared kitchens and bathrooms.

"People want our government to be risk-free, and as a result of asking [the government] to be risk-free, it lacks innovation," says Graham. He says the average unit in Community First! Village costs about $80,000.

Federal funding requires that homeless service providers conform to the policy approach of Housing First, which focuses on getting clients into apartments as quickly as possible. Services can then be offered as an option, but they're not stipulated, nor is "readiness" for independent living assessed. Graham says this approach is limiting.

"[Housing First is] an important piece of the puzzle, but it can't possibly be the only piece of that puzzle," says Graham. "We need community first."

But Community First! Village may have its own limitations. The pandemic put extra stress on them as an eviction moratorium made enforcing basic rules more difficult, and one resident told us safety concerns have grown along with the population of the neighborhood, raising questions about whether or not to hire a security team, which would be costly and could change the entire nature of the community.

And although they are quickly scaling up, Community First! Village only serves a fraction of Austin's estimated 4,600 homeless population. The city of Austin's lead homelessness agency accepts money from the Department of Housing and Urban Development (HUD) and is therefore subject to the same federal mandates that operators in California are.

Most concerning for many Austinites is the growing visibility of the unsheltered homeless population. In 2019, before the pandemic, the City Council repealed Austin's 23-year-old anti-camping ordinance, which led to so much street camping that voters reinstated the ban with a 2021 referendum called Proposition B.

Austin's combination of street camping, artificially constrained housing supply, and a network of homeless service providers hamstrung by federal guidelines has led to the city beginning to resemble some of the worst failures of the West Coast.

And that brings us to San Antonio, which blazed its own path for helping the homeless.

"We weren't so interested in feeding someone overnight or putting them up overnight…. Our goal was to make them different people, have a different life, and be able to participate in our society," says ​Phil Hardberger, who served as San Antonio's mayor from 2005 to 2009, a period in which the city's homeless population grew by about 1,000.

But he helped to reverse this trend by partnering with Valero's founding CEO Bill Greehey to build a nonprofit homeless service provider called Haven For Hope on a 22-acre lot owned by the city. To build the campus, Greehey raised more than $100 million, mostly from the private sector, and contributed lots of his own fortune.

Today, Haven For Hope offers room and board, health care, child care, and even a kennel, as well as a comprehensive life skills program that includes job training, mental health counseling, and addiction treatment.

To live in the dorms on the main campus, residents have to agree to learn practical life skills, make it to class, attend counseling, stay clean, and continue along the path to independence.

For people unable or unwilling to follow the program, or who just need immediate assistance to get off the streets for a night or two, there's a separate area called the Courtyard, which offers security, heat, food, laundry, and a shared indoor space with beds. The same counseling and treatment services are offered on this side, but they aren't mandatory.

The nonprofit serves about 85 percent of San Antonio's homeless population, serving about 7,000 people a year. According to internal reports, Haven re-houses about 1,000 clients a year. Ninety-one percent have stayed in their new homes after a year.

Kim Jefferies, Haven for Hope's president and CEO, says that private funding has given them the flexibility to offer services better tailored to the needs of their clients.

Shelters that rely heavily on federal funding are subject to more restrictions because of the one-size-fits-all "Housing First" mandate championed by Democrat and Republican administrations.

The Housing First movement started in the 1980s and took off amid the George W. Bush administration's "compassionate conservatism" agenda.

President Barack Obama completed the pivot to a federal Housing First policy with the HEARTH Act of 2009, which made focusing on rapid re-housing a requirement for those receiving federal funds

The result was predictable: Federal money was spent on pricier permanent supportive housing, and the use of temporary emergency shelters decreased. Facing a critical lack of beds, shelters started turning people away.

In 2018, the 9th Circuit Court of Appeals upheld a ruling that enforcement of anti-camping laws in cities lacking emergency beds was cruel and unusual punishment and thus unconstitutional. With major cities lacking adequate beds and therefore the legal right to prohibit street camping, entire neighborhoods of Los Angeles and San Francisco turned to squalor.

San Antonio doesn't allow street camping, though like in any large city, it's possible to find encampments nestled beneath overpasses. Jefferies says they work with city officials to notify homeless individuals of their options in advance of an encampment sweep.

"And so [San Antonio doesn't] allow [street camping]. So I think that is helpful in our success in getting people off the streets," says Jefferies.

Beyer says that there should be "a hundred different models" for homeless provision because homelessness is complex, is caused by many different factors, and often requires different solutions. In a recent policy report he co-authored for California's Independent Institute, Beyer analyzed some of the problems with Housing First.

"The intentions were good, but I think also the outcomes could have been quite predictable in a sense," says Beyer. "If you're funding people to live on the street in a state of disrepair… and you say that even despite living like this, you're gonna get free housing… it seems like you would encourage a lot more of that behavior."

Beyer argues that mandating Housing First has crippled policy innovation in major West Coast cities and that the nonprofit sector would benefit from more experimentation in their approaches to mitigating the problems that lead to homelessness.

"I think a lot of that innovation is getting squelched when we have a federal government that only allocates grants based on this one very specific model that we call Housing First," says Beyer.

Jefferies estimates a Housing First approach would work for about 15 percent of the approximately 7,000 homeless individuals who come through Haven For Hope every year.

"[The other 85 percent] need different kinds of stability before they move into that model," says Jefferies. She says that because San Antonio invested heavily in emergency shelter beds in contrast to HUD's shift towards Housing First, the city was better able to adapt. "The approach followed the funding, and so we can have different interventions for different people because we're not totally reliant on the federal government to fund it."

Three years after L.A. voters passed a $1.2 billion bond measure to help the city's homeless population, the city had completed just 1 percent of the promised 10,000 units. And the average cost of building each apartment was about half a million dollars. At the high end, the cost of each exceeded $800,000.

Union Rescue Mission, one of the city's largest and oldest homeless service providers, didn't get any of that funding—because it didn't conform to the Housing First approach mandated by the state of California. Union Rescue Mission CEO Andy Bales told Reason in 2019 that city officials laughed at him for suggesting a different approach.

"Some of my counterparts who depend on [voter-approved referendum fund] money, they're afraid to speak the truth," says Bales. "They can't speak the truth, otherwise they would get in great difficulty and be defunded…. I think pride and arrogance is really holding us back from doing some of the needed things we need to do to immediately solve this issue."

But the winds have changed. In late 2021, an L.A. County supervisor appointed Bales to help oversee the county's response to homelessness.

"Don't be afraid of the dogmatic Housing First, permanent supportive housing people," advises Bales. "Don't be afraid of the NIMBY."

There is one city in Texas where Housing First is working well.

As The New York Times reported last year, Houston has reduced its homeless count by more than 60 percent over the past decade, while placing more than 25,000 people in permanent units.

So how did America's fourth largest city succeed by going all in on Housing First while Los Angeles, San Francisco, and Portland have failed so miserably?

Ana Rausch, vice president of program operations at the Coalition for the Homeless of Houston and Harris County, says it partially has to do with appointing a single agency as the first point of contact for any homeless person seeking help. While many cities have several organizations in this role, Rausch says this centralization makes it easier to efficiently route clients where they need to go and to track outcomes.

She says that the housing readiness approach in San Antonio, which has a metro region population about​ one-third the size of Houston's, wouldn't scale.

"You're basically paying to leave people homeless in a courtyard [in San Antonio]," says Rausch. "See which costs more. I've been doing this for 23 years, and the Housing First approach works." 

Several studies have shown that Housing First does better at keeping chronically homeless people with serious mental illness off the street than more intensive "housing readiness" interventions.

But other research has cast doubt on its effectiveness, its impact on health outcomes, and whether its results hold up over time.

Besides limiting innovation in homeless services, governments also make housing artificially expensive. Rausch says that the reason Housing First works in Houston but not in Los Angeles has everything to do with the cost of building.

"You can't have your cake and eat it, too, and that's what's happening in L.A.," says Rausch. "They need more affordable housing. They need more physical units built, but they can't do it because they're in their own way."

Houston is famous for not having zoning. Townhouses run up against multifamily apartment buildings sitting atop ground-level businesses. A crematorium neighbors high-end condominiums. Skyscrapers loom over single-family neighborhoods in a city where you just don't have to ask much permission to build.

"We really have never cultivated this sort of NIMBY mechanism in Houston," says Tory Gattis, an urbanist who specializes in Houston land regulation. The result of the city's laissez faire approach is that despite massive population growth over the past decade, housing prices are stable. That's because it's difficult for interest groups to stop a development project.

Houston also has no urban growth boundaries, unlike its West Coast counterparts, meaning that in addition to growing upward, housing can easily spread outward to accommodate both affordable city and suburban living. Without zoning, growth boundaries, or excessive environmental review laws, neighborhood groups can't easily block new housing projects on adjacent land, but master-planned communities and longstanding neighborhoods can create and enforce private deed restrictions to prevent homeowners from suddenly turning a single-family house into a four-story building without community input. Gattis says this is a compromise that more cities would be wise to pursue.

"Protect your single-family neighborhoods. That's where your biggest political opposition's going to be, and that's what Houston's allowed with the deed restrictions," says Gattis. "But then let all the rest of your land open up, whether it's commercial or industrial. Let it go multifamily. If that's what the market needs, let it go."

So a major reason Texas has a lower homeless population than California traces back to zoning and construction costs. Housing First works in Houston because it's so cheap to build. Austin is expensive like a coastal city, but the unincorporated swath of Travis County outside of city limits provided Alan Graham with a spot for his tiny home community.

What's also working in Texas is a willingness to give local social entrepreneurs the flexibility to craft policies that best serve their homeless populations, instead of adhering to one-size-fits-all federal policies.

"The whole regime of government funding of homeless [response] I think drives out a lot of private philanthropy," says Beyer. "I think there would be a lot of market appetite for solving homelessness from the philanthropic sector. That does not happen because people just assume the government is supposed to do it."

Graham believes that there's a role for government but that it shouldn't be micromanaging through overly restrictive grants.

"We believe that government should play a subsidiary role to we, the people in mitigating these profound human issues that are out there like homelessness," says Graham. "But we've abdicated this to the government as a society, and we're reaping what we're sowing." 

Music Credits: "Inborn" by Piotr Hummel via Artlist; "Crossing the High Desert" by Lance Conrad via Artlist; "Kill or Be Killed Showdown" by Lance Conrad via Artlist; "Hope and Heisenberg" by SPEARFISHER via Artlist; "Crystalline" by Leroy Wild via Artlist; "Diamonds" by Livingrooms via Artlist; "Deadman Pass" by The Talbott Brothers via Artlist; "Beer House" by Alex Grohl via Artlist; "Martha" by Swirling Ship via Artlist; "Wanderer" by The Talbott Brothers via Artlist; "Finding My Memories" by Yehezkel Raz via Artlist; "Railroad" by Max H. via Artlist; "Who Goes There" by Falconer via Artlist; "Ross Landing" by David Benedict via Artlist; "Country Roads" by Kick Lee via Artlist; "Grey Shadow" by ANBR via Artlist

Photo Credits: DPST/Newscom; John Marshall Mantel/ZUMAPRESS/Newscom; JIM RUYMEN/UPI/Newscom; TERRY SCHMITT/UPI/Newscom; Mike Kane/SanAntonioExpress/ZUMAPRESS/Newscom; Bob Daemmrich/ZUMAPRESS/Newscom; Scott Coleman/ZUMAPRESS/Newscom; Taylor Jones/ZUMAPRESS/Newscom; FRANCES M. ROBERTS/Newscom; RICHARD B. LEVINE/Newscom; Mario Cantu/Cal Sport Media/Newscom; Jana Birchum/Polaris/Newscom; Bob Daemmrich/Polaris/Newscom; Curt Teich Postcard Archives / Heritage Images/Newscom; Jamal A. Wilson - Pool via CNP/Newscom; Michael Ho Wai Lee/ZUMAPRESS/Newscom; Brittany Murray/ZUMAPRESS/Newscom; Wu Kaixiang / Xinhua News Agency/Newscom; Julie Edwards / Avalon/Newscom; David Crane/ZUMA Press/Newscom; Peter Bennett/Citizen of the Planet/Newscom; Facebook/Haven for Hope; Facebook/Coalition for the Homeless of Houston; Flickr/Eric Garcetti (CC BY-NC-ND 2.0); Flickr/Steve Shook (CC BY 2.0)

• Video Editor: Danielle Thompson
• Graphics: Isaac Reese
• Additional Footage and Graphics: Justin Zuckerman
• Audio Production: Ian Keyser
• Camera: Andrew Miller