As California faces soaring numbers of unhoused residents, building affordable housing must remain atop the state’s homelessness-prevention plan.
More than 187,000 Californians experienced homelessness in 2024 — a stunning 24 percent of the entire nation’s homeless population. The state is at risk of adding even more families to this alarming figure. Among those at risk are working families, often holding one or two jobs, who are just one setback — such as a job loss, major illness, natural disaster, domestic violence incident or childcare crisis — away from housing instability.
Like New York, California’s economy offers more job opportunities and higher incomes, which lead to higher housing costs. A $100 increase in monthly rent is estimated to drive a 9 percent rise in the homeless population, underscoring the severe impact of rising housing costs in these areas. As a result, California and New York account for about 45 percent of the nation’s homeless population.
Housing also is a critical issue for working families, which might not be eligible for government subsidies but still struggle to make rent each month despite working several jobs, in some cases. The Urban Land Institute defines workforce housing as affordable to households earning between 60 and 120 percent of area median income. These are our teachers, nurses and emergency responders — the backbone of our communities — and there is a severe lack of attainable housing for them and their families.
Optimism Remains Steadfast Amid Funding Concerns
There are growing concerns that the new federal administration may reduce funding for Housing Choice (Section 8) vouchers, which provide rental subsidies for low-income individuals by paying landlords directly. This was a big topic at the recent Housing California conference held in March in Sacramento, where industry leaders gathered to strategize about potential solutions.
One of the takeaways I’m most inspired by is the affordable housing industry’s commitment to tackling the issue head-on. In addition to providing housing, many developers and operators are committed to improving services offered to residents in affordable housing communities. Financial education for adults, after-school care for children and senior services should all be part of a holistic approach to enriching lives and preventing homelessness for those who live on the brink.
It is a critical time to double our efforts in these endeavors as federal programs face cuts. What was once considered a cyclical issue tied to economic downturns has since become a persistent and entrenched challenge in urban areas. President Trump’s 2026 fiscal budget calls for a 44 percent cut to HUD’s affordable housing, homelessness and community-development programs, and it would impose changes to rental and homelessness assistance, according to the National Low Income Housing Coalition, which calls this cut “historic.” The reduction in funding will effectively pull the safety net out from under families relying on vouchers to stay off the streets.
If these vital programs are further diminished, the consequences will ripple far beyond the individuals and families who depend on this assistance. Housing developers, for instance, may question the financial viability of their projects, as reduced subsidies could undermine their ability to meet their expenses. This would compound the crisis, creating a domino effect that exacerbates housing insecurity for vulnerable populations while destabilizing the broader housing market.
Solutions Will Require Creativity
How does California carve out a path forward while facing a confluence of across-the-board financial and programmatic uncertainty when it comes to housing policy? How do housing developers complete accurate pro formas when so many factors are suddenly unknown?
For developers, the recent tariffs on imports will likely produce significant increases in the cost of building materials and, thereby, drive up the cost of construction. Additionally, increased costs from tariffs are likely to ensure that inflation will not improve, reinserting the fear of rising interest rates and exacerbating risks in the complicated world of debt financing.
For the state, which partners with the federal government on an array of programs, federal funding cuts will require California to find the money…somewhere.
That will be the big trick going forward. How does the state design and execute a refined homelessness-prevention program in this environment? Perhaps one solution is better coordination of funding across state, regional and local levels.
Traditionally, funding comes in the form of a capital stack that requires affordable housing developers to seek out multiple funding sources one after another until they have enough budget to move forward. This creates the potential for funds to be granted to a project that is unable to secure the other pieces and never move forward.
Perhaps this uncertain time is a chance to revisit this capital stack structure and replace it with a system that coordinates all known funding pieces that are within state and local control. This would allow developers to submit one application that goes to all sources and renders a singular offer of total funding from all sources available to them.
Joy Silver is chief strategy officer with Community Housing Opportunities Corp., a nonprofit affordable housing developer and services provider.