How California Can Solve the Housing and Homeless Crisis

“Homelessness is a national crisis, one that’s spreading across the West Coast and cities across the country,” proclaims California Gov. Gavin Newsom. “The state of California is treating it as a real emergency.”

Newsom wants to spend $750 million to help homeless people get off the streets. To that end, the governor has signed an executive order for a homeless “strike team” and mandating the identification of state properties that can be used for emergency shelters. According to the Sacramento Bee report, Newsom’s office plans to measure “how well local governments are working to get people off the streets and require local governments to report their progress to access state homelessness money.” As Newsom hailed the $750 million in new spending, the Bee cited a different way to tackle housing issues that drive the homeless problem.

The politicians, planners, regulators, and activists who obstruct new housing bagged the Independent Institute’s self-explanatory “Golden Fleece Award.” Independent’s Lawrence J. McQuillan flagged a “government-created crisis” that can only be solved by “market-based solutions and fewer entrepreneurial impediments from lawmakers and regulators.” As McQuillan notes, “The only solution to the housing problem is to build our way out of the problem. An increased housing stock will ease the upward price trend, improve access, reduce homelessness, and speed-up wildfire recovery for tens of thousands of Californians who desperately need relief.”

By all appearances, Gov. Newsom is going another way.

He wants to tinker with 2004’s Proposition 63, which hiked taxes and spent more than $13 billion on mental health. As we noted, the Little Hoover Commission found little evidence that the measure had improved the lives of any Californians. They might also recall the California Housing Finance Agency, established in 1975 as the state’s “affordable housing lender,” helping “low to moderate income Californians have a place to call home.” The allegedly self-supporting CalFHA has done nothing to avert the housing and homeless crises the state faces today. 

Those crises will abate only when California turns to market-based solutions and imposes few impediments to entrepreneurship.