The mortgage industry feels in many ways divorced from issues of homelessness — and for obvious reasons. Homelessness is a complicated challenge that goes beyond just a lack of housing. People who are living on the streets are unlikely to be in a position to buy a home of any kind for some time.
The number of homeless Americans has actually declined over time, according to the National Alliance to End Homelessness. In 2007, 647,000 individuals were considered homeless. Today, that number is about 575,000. But the homeless population has been growing over the past four years and is as visible as ever, especially in contrast with the recent surge in homebuying. California, New York and Florida have nearly half of the U.S. homeless population.
Since the start of the pandemic, we saw some really interesting relationships between people who have wealth and people who don’t. Mortgage rates hit record lows in 2021. Through 2020 and 2021, there was a huge uptick in demand for housing. A lot of people started buying houses, and not only that, they started to bid well over asking price. In a period of time where everyone seems to be buying a house, what about the people who not only cannot afford to buy a house but who cannot afford any type of shelter?
States with the most expensive housing tend to have proportionally higher homeless populations, right?
That’s very true. Certainly, that makes logical sense. If it’s more expensive to buy a house, it’s going to be more expensive to rent. More expensive housing often means that there’s less supply of housing on the market.
What about the people who not only cannot afford to buy a house but who cannot afford any type of shelter?
You look at California or Washington state, where you have some the highest-paying industries in America, and some of the wealthiest people — not just in America but in the world. But you also have issues of housing affordability for lower-income people, which is spurring on higher levels of homelessness.
In many cases, does homelessness involve mental illness, substance abuse or other factors apart from housing?
Certainly, there are instances where somebody, just through no fault of their own, doesn’t earn enough income to be able to live in their area and they’re forced out of their house. Oftentimes, people become homeless because they have mental health issues, they have substance abuse issues that prevent them from holding down a job, and that frankly prevent them from living in a housing unit where maybe they could be a danger to others as well as themselves.
Does the mortgage industry have a role to play in solving homelessness?
There may be instances where mortgage lenders should be encouraged a little bit to make loans for things that aren’t sort of traditional single-family houses. For example, sometimes there are alternate types of housing, like mobile homes, that can be good, safe housing. They can be really good options for people who don’t earn as much money, but oftentimes lenders shy away from them from a variety of reasons.
Do you believe that renters who are unable to purchase a house could be at risk for homelessness in the future?
If a homebuying market really heats up, a lot of times the people who are on the lower end of the buyer spectrum will end up being pushed into the rental market. That causes a ripple effect, wherein people who used to be able to buy no longer can. So, now they’re renting, which means there are fewer renter units available, which means that the people on the low end of the rental spectrum — who are just barely able to find a place — are now forced out altogether.
Did anything surprise you when you did the report?
Generally speaking, the number being as high as it was — 575,000. I’m from Wyoming, so the entire population of that state is only a little bit smaller than that. I’d sort of think about it from the perspective of, what if everyone I knew growing up was suddenly homeless? ●
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