The Economics of Homelessness: Why Restoration Costs Less Than Crisis

The True Cost of Chronic Homelessness

When someone experiences chronic homelessness, they do not simply disappear from public systems. They cycle through emergency rooms, jails, psychiatric facilities, and crisis services, accumulating costs that are ultimately paid by taxpayers. According to research compiled by Community Solutions and various academic studies, these costs are staggering.

A University of Texas study found that each chronically homeless person cost taxpayers $14,480 per year in jail costs alone. The highest users of emergency departments visit weekly, accumulating $44,400 in ER costs annually. Nearly one third of all emergency room visits are made by people struggling with chronic homelessness.

These are not theoretical numbers. They represent real dollars flowing out of public budgets, dollars that could be spent on prevention and restoration instead of crisis management.

The Cost Comparison: Crisis vs. Solution

The data is clear: it costs more to leave someone homeless than to house them with supportive services. Multiple studies have confirmed this counterintuitive finding.

A Housing First pilot program in Seattle found participants significantly decreased their use of emergency services relative to a comparison group. This led to cost reductions of $36,579 per person, far surpassing the program's operating cost of $18,600 per person.

In Los Angeles, a study found that placing four chronically homeless people into permanent supportive housing saved the city more than $80,000 per year. In Portland, Oregon, Medicaid covered residents experienced an $8,724 reduction in annual expenditures within one year of housing placement.

Where the Money Currently Goes

The majority of costs associated with chronic homelessness flow into reactive crisis systems rather than proactive solutions:

• • Emergency Departments: People experiencing homelessness visit ERs at three times the rate of the general population. 80% of these visits are for conditions that could have been treated with preventive care.
• • Jails and Prisons: A typical state prison bed costs $20,000 per year. Many homeless individuals cycle through jails for minor offenses related to their housing status.
• • Psychiatric Facilities: Emergency psychiatric holds and crisis stabilization are expensive and do not address underlying issues.
• • Emergency Shelters: According to HUD, the cost of an emergency shelter bed is approximately $8,067 more than a federal housing subsidy annually.

This is not a failure of resources. It is a failure of strategy. We are spending the money. We are just spending it on managing symptoms rather than addressing root causes.

The Healthcare Cost Crisis

People experiencing homelessness have significantly higher rates of chronic health conditions than the general population: higher rates of high blood pressure, heart disease, diabetes, lung disease, and HIV. They spend an average of four days longer per hospital visit than comparable non homeless patients.

The vast majority lack health insurance or a primary care physician. Since hospital emergency departments must serve everyone regardless of ability to pay, these costs fall on taxpayers and the healthcare system as a whole.

Research shows that providing housing dramatically reduces these costs:

The Proof: Veteran Homelessness Success

The decline in veteran homelessness, down 55.6% since 2010, provides proof of concept. Targeted, sustained investment in housing with supportive services works. The HUD-VASH program and VA's Supportive Services for Veteran Families demonstrate that when we commit resources strategically, we see results.

In 2024, while overall homelessness hit record highs, veteran homelessness reached its lowest point since data collection began. Veterans were the only population to see continued decline. This was not an accident. It was the result of intentional policy and investment.

The Steady Ground Economic Model

Our model is built on this economic reality. Rather than operating as an emergency shelter that cycles people in and out, we are building a comprehensive restoration community that addresses root causes. The economics work because:

• • On site medical care prevents expensive emergency room visits
• • Mental health treatment addresses underlying conditions before crisis
• • Addiction recovery reduces healthcare and criminal justice costs
• • Job training and placement creates taxpayers rather than service recipients
• • Transitional housing prevents the revolving door back to the streets

A man who graduates from The Steady Ground with stable employment, housing, and ongoing support is not a drain on public resources. He is a contributing member of society, paying taxes, supporting his family, and potentially helping others who are where he once was.