🖤 Donations of all sizes power our public service journalism Give Now

Why it’s gotten more expensive to house people experiencing homelessness

Matt Levin Apr 22, 2024
Heard on:
HTML EMBED:
COPY
The costs of constructing housing for the unhoused are being hammered by higher interest rates. Mario Tama/Getty Images

Why it’s gotten more expensive to house people experiencing homelessness

Matt Levin Apr 22, 2024
Heard on:
The costs of constructing housing for the unhoused are being hammered by higher interest rates. Mario Tama/Getty Images
HTML EMBED:
COPY

On Monday, the Supreme Court is set to hear oral arguments in Grants Pass v. Johnson, a case that could determine whether cities can fine or arrest people in homeless encampments.

The case comes at a time when higher interest rates and rising insurance costs are making it more expensive to build and operate low-income housing — especially in California, home of 28% of the country’s homeless population.

It’s already pretty expensive to build low-income housing in San Francisco. The nonprofit Mercy Housing has a 220-unit complex in development where construction costs are budgeted at $522,000 per apartment. 

And the Fed’s move to leave interest rates higher for longer isn’t helping, per Mercy’s Ramie Dare.

“We, like many other real estate projects, we borrow,” she said. “We have a construction loan from a bank, and we still are pretty close to what the prevailing market is.”

Rates have gone up from about 3% to 6% over the past few years, Dare said. And at the same time, nonprofits who own and manage affordable housing properties are also getting whacked by skyrocketing insurance rates.

“We saw a premium increase of 350% last year to this year,” reported Holly Benson, CEO of Los Angeles-based Abode Communities.

Benson added that surging insurance costs are particularly acute in California, where insurance companies are withdrawing from the market

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.