What’s the No. 1 challenge facing cities in 2025? The lack of affordable housing, says Adam Ruege, director of strategy and evaluation at Community Solutions. The New York-based nonprofit works with local governments to design and implement strategies that solve homelessness in their areas. “Communities need to be able to build housing, [including] temporary housing, much quicker,” Ruege said.
The U.S. housing and homelessness problem continues to grow: In December, the U.S. Department of Housing and Urban Development released data showing that U.S. homelessness surged between January 2023 and January 2024. According to HUD’s 2024 point-in-time count report, homelessness rose 18% over the course of the year, with more than 770,000 people experiencing homelessness on the night in January 2024 when the count was conducted.
Other reports emphasize the severity of the U.S. affordable housing crisis: Just 34 affordable rentals are available for every 100 renters with extremely low income, according to the National Low Income Housing Coalition.
Cities are tackling the affordable housing and homelessness crisis in a variety of ways, from building more affordable housing to piloting guaranteed minimum income programs that ensure households can cover rent. Even amid funding challenges and the uncertainty of what policy changes may come from the second Trump administration, cities are developing and sharing evidence-based strategies to end homelessness.
“Communities with strong responses to homelessness [connect people] to permanent housing as quickly as possible — and have mechanisms to prevent people from entering in homelessness in the first place,” said Mari Castaldi, director of state housing policy at the Center on Budget and Policy Priorities.
Emerging trends
To address homelessness, “some of the key levers that cities are uniquely positioned to work with include [increasing] the supply of affordable housing,” said Castaldi. She highlighted city legislation to remove zoning restrictions on building multi-unit housing and to strengthen tenant protection laws that rein in rent increases, as well as laws that make it easier for residents with federally funded Housing Choice Vouchers (often called Section 8 vouchers) to find homes. About 150 cities have outlawed income discrimination in the housing market, preventing landlords from rejecting tenants because they receive vouchers. These “source of income” laws have proliferated in recent years, with Kansas City, Missouri, and Philadelphia both passing such ordinances in 2024.
Alongside plans for the construction of permanent housing, cities are also building interim housing: safe, temporary housing for people experiencing homelessness. “It’s a stepping stone to stability that is faster and more affordable than permanent housing,” said Elizabeth Funk, founder and CEO of DignityMoves, a nonprofit that works with communities to develop vacant land into short-term supportive housing.
DignityMoves focuses on solving unsheltered homelessness. It launched in California, which has a serious housing shortage and few congregate shelters. The nonprofit builds temporary, private, tiny-home-type cabins for people experiencing homelessness so they can first be sheltered before accessing other services, like health or job supports.
Building DignityMoves’ interim housing communities, which are in California communities including Santa Barbara, San Francisco and San Bernardino, can cost as little as $30,000 per home, Funk said, a fraction of the cost of building permanent housing. Reducing costs is important considering one of the biggest challenges facing cities is funding — or the lack thereof.
But cities are also developing strategies to increase their revenue to tackle homelessness. Federal housing programs are severely underfunded, Castaldi said, and as a result, there is “a lot of pressure on local governments to fill in the gap.” She has seen a trend of cities levying transfer taxes on high-value home purchases to raise revenue for affordable housing and homelessness prevention. At least 16 localities have passed or expanded so-called “mansion taxes” since 2018, with many of the measures — such as those passed in Los Angeles and Santa Fe, New Mexico — earmarking the funds for affordable housing projects.
New factors in play
The conditions that created the U.S. affordable housing and homelessness crisis have existed for decades, but other factors cities face in 2025 when addressing this problem are newer.
The 2024 Supreme Court decision Grants Pass v. Johnson ruled that cities can fine or arrest homeless people for camping or sleeping outside in public spaces, even when they have no other place to go. In the seven months since the Grants Pass decision was handed down, more than 100 cities have passed ordinances banning sleeping in public. The City Council in Aurora, Colorado, for example, passed an ordinance in 2024 to strengthen the city's camping ban by eliminating the requirement for law enforcement to give a 72-hour notice before clearing some encampments. Some experts say such practices will backfire, however.
Other communities are taking a “more client-focused, coordinated approach,” Community Solutions’ Ruege said. Denver, for example, has connected more than 2,000 people sleeping outdoors to city-operated housing since 2023.
Castaldi is concerned about how the Trump administration’s policy and funding approaches at the U.S. Department of Housing and Urban Development will treat homelessness — and how it may change housing programs. “One challenge that is facing cities in 2025 is the prospect of already inadequate resources being at risk of pretty severe cuts under the new federal administration and Republican-controlled Congress,” she said.
The House Republican Study Committee’s FY 2025 budget proposal calls for eliminating at least three HUD programs that fund affordable housing:
- The Community Development Block Grant program, which provides states and localities with funding for economic development projects such as housing development and rehabilitation.
- The HOME Investment Partnerships Program, a federal grant for states and localities to build, buy or renovate housing for low-income people or provide direct rental assistance.
- Choice Neighborhoods, a grant program that leverages public and private funds to address “struggling neighborhoods with distressed public or HUD-assisted housing through a comprehensive approach to neighborhood transformation.”
The first Trump administration proposed eliminating those same programs in its FY 2018 budget.
The need for better data
Even in the face of challenges, cities can strengthen their strategies to address homelessness, especially in regard to identifying the extent of the problem, these experts say.
HUD’s point-in-time count data “doesn't actually help us solve homelessness because the data's a year old” by the time it’s released, said Ruege.
If cities could gather better data, they could "have visibility into how many people are experiencing homelessness at any given time, the reasons why they're experiencing homelessness and the reasons why they're leaving homelessness,” Ruege said. Accurate data can help a city understand what’s working and what’s not working, he added.
For example, a city could identify what populations in their communities are disproportionately experiencing homelessness. In Chattanooga, Tennessee, for example, Mackenzie Kelly, the executive director of the Chattanooga Regional Homeless Coalition, last year touted the success of targeting support to specific sub-populations of people experiencing homelessness instead of using the same approach for everyone. That approach helped the city virtually end veteran homelessness in 2020. In 2024, more veterans exited homelessness than became homeless in Chattanooga, Kelly said in a local news report in December.
“We're never going to solve the problem until we have systems that can actually tell us on a more real-time basis what the challenges are,” Ruege said.
