Pt 2: Can NYC combat the problem if they can't even put a price tag on it?

The Answer to 95% of Rhetorical Questions in Headlines is "No"

In Part 1 we looked at the picture of homeless overseas, and the cost of combatting homelessness in California. In Part 2, we turn to the city with the most acute problem.

There seems to be no plausible estimate of how much a unit of housing in New York costs, but it’s high. Take this 2021 press release from the office of then-governor Andrew Cuomo touting a $20 billion housing plan, spread out over 15 years, meant to create 20,000 units.

That is easy math, each unit would cost $1 million per unit, a figure that is not implausible given how much California pays (see Part 1). But pay attention to the other words contained within the press release, which make clear that the state has not created 5,400 units but has provided the operating funds for these units. Likewise the $20 billion will create or preserve units. The difference between creating and preserving units is the difference between losing 10 pounds for your New Year’s resolution and not gaining 10 pounds before next year. Not surprisingly, it cost a lot more to create a home than to preserve one.

While he was mayor, Bill de Blasio also had an ambitious plan to create and preserve housing. Delve into the document describing this plan and you’ll find that preservation outweighed new construction, and still the price tag for these efforts were high.

The above math works out to a price per unit created or preserved of over $200,000 each, which seems low. But on closer inspection even that is misleading. The plan was a public/private partnership that required developers with set aside a certain number of units per building, earmarked for certain moderate, middle, or low income earners. A big part of the plan was dedicated to keeping rent regulations from expiring, which didn’t compound the immediate problem, but of course doesn’t create new homes. Rent regulation, by the way, distorts the overall market and is haphazardly applied .

Eventually that De Blasio planned expanded to 300,000 new or preserved units, which a public interest group calculated as costing just a smidge short of $100 billion.

The figure, of $333,000 per unit is based on the new and preserved figure, and acknowledges the mix of public and private funding typical of building in New York (in order to get approvals, developers pledge a certain percentage of their buildings are priced below the market and awarded via lottery). The record shows that of the 165,590 units, 50,656 were new, and 114,934 preserved, so that planned 60/40 new/preserved ratio was actually 70/30, making it hard to affix a definite price tag on a new unit. But in cases where the price of housing families in newly constructed apartments could be cleanly deduced, the figure was…

Mike Myers is loving the residuals

To be “fair” that million dollar expenditure did purchase nine years worth of rent for the families who were lucky enough to benefit.

In any event, homelessness rose during the de Blasio administration, his greatest failure.

Hochul Hopes to Have Houses

The cost-per-unit of housing during the governorship of Kathy Hochul is likewise hard to nail down, though press releases around the latest state budget seem to suggest a price tag of $250,000 per unit

But Why Pay LA or Manhattan Prices?

In many localities, where housing is cheaper, and regulations are fewer, combating homelessness is a much easier lift. The city of Houston is widely hailed, even in such outlets as the New York Times, as having achieving something of a housing miracle. The homeless population there shrunk by 63% since 2011. But housing is much, much cheaper in Houston. Even housing with supportive services, the costliest type of units in Houston had a price tag of a relatively low $300k per unit…

Overall, Houston housed a reported 7,700 individuals over a decade at a cost of $200 million. Not billion, but million. This works out to $26,000 per individual housed. Please note my figures for NYC and California were an attempt to generate a per unit cost, whereas the Houston figure is per person, but the point stands. Housing the homeless in Houston can be done for fractions of the amount of spending required in the largest metropolitan areas. After all, according to Zillow the average rent in Houston is $1800, half the median rent in NYC.

So how much to House all the Homeless in NYC?

The funding structures, complex regulations, political disincentives for firm figures and the market needs make a firm figure impossible to generate. But, if one conservatively calculates New York’s sheltered population to be 50,000, which it was before migrants were being bused into the city, and one uses a cost-per-unit of half a million dollars, which I think might be cheap, the price tag comes to $25 billion. This, remember is to give the currently homeless housing. But what about all the very poor New Yorkers, just getting by? One estimate put forth by Professor Alex Schwartz of the New School fixes the price tag at over $5 billion per year if the goal were to be delivering sufficient rent assistance to New Yorkers considered “Very Low Income”. Paying that price , like the national figure discussed in Part 1 is do-able but costly. $5 billion a year is almost 75% of what the City’s Department of Education pays to educate the city’s almost one million students. It’s a hair less than what the total budget of the NYPD is. It’s a bit more than next year’s $4.3 billion projected cost of accommodating asylum. When pondering the relative costs and current expenses, keep in mind that the city can’t currently fund all its programs and is currently projected to run a deficit of $14 billion by 2027,

So if “we”, or the citizens of city and the tax payers of the country were to conceivably prioritize this issue, and sacrifice some services, or incur higher tax bills more than we ever have or have ever been asked to, we might forcefully address homelessness. But without a structural change in the nature of rents, the cost of building, and the seemingly unlimited demand for limited land even this massive expenditure won’t be final. The problem will perpetuate, and we’ll be asked to address it anew time and time again. Which of course we have the moral obligation to do, or try to do, if the effort doesn’t crush our other agreed-upon pursuits and priorities. And when the time comes, as it inevitably will, that some tragedy arises involving a homeless individual interacting with an uncaring society, we’ll be able to pose the accusatory headlines once more. Unlike real solutions to homelessness, those come pretty cheap.