In the past year, many major U.S. cities have reported significant progress in housing for their homeless.1 While homelessness has been on the decline nationally, the trend, unfortunately, does not hold true in several major cities. In Los Angeles, the number of homeless people increased by 12 percent in LA county and 16 percent in the city last year. According to the county’s Homeless Service Authority, they helped 21,631 people into permanent housing during 2018, yet economic conditions forced thousands more into homelessness due to economic forces and the interlocking systems of foster care, mental health, criminal justice, and the housing market.2
The Los Angeles figures are not alone as other cities in California also struggle to address a lack of affordable housing. Buffy Wicks, an Oakland, California assemblywoman, explained that this issue is due to a correlation between an increase in the homeless population and a rising cost of living.3 Rising costs of living are surpassing the wages of lower-income people. A recent report released by a team of researchers from the University of Pennsylvania, Boston University, and the University of New Hampshire suggests homelessness issues are probable in cities where people spend more than a third of their income on rent.4
And it’s not just major cities that are facing a homeless crisis – small cities are starting to face the same challenges as larger ones. Rising rents and displacement are spreading from America’s biggest cities to those in its middle tier. And it’s likely to only get worse. As the poor get pushed inward from the coasts and as young workers seek out the few affordable places left, they will arrive in America’s smaller cities ― which may not be ready to house them.5
The preservation and growth of affordable housing is critical nationwide and investors can play a role in its sustainability. For nearly two decades, we have been investing in securities that create and preserve affordable housing for low- and moderate-income families and individuals. Affordable housing continues to be our largest impact theme among our 18 themes and we believe it is still one of the most important.
While it might not sound as exciting as some other hot topics like gender lens investing or green investing, it is fundamental as its core to improving homelessness in our country.