The Cost Effectiveness of Supportive Housing for the Homeless

The federal government authorized supportive housing as a homeless prevention strategy in 1987. The authorization was in the form of the Stuart B. McKinney Homeless Assistance Act of 1987.

Supportive housing entails making affordable housing units available to individuals who have need for such housing and for “support services.” Support services are services that help individuals live independently. These services include treatment for medical conditions, employment and training, referral for Medicaid, or assistance in applying for Social Security disability or Supplemental Security Income.

Generally, supportive housing is designed to meet the needs of deinstitutionalized homeless persons, homeless individuals with a mental disability or other handicap, and homeless families and children.

Walsh et al. investigated whether providing affordable housing and support services to the homeless reduced the total cost of homeless-related social services. For example, helping a homeless individual manage his health care needs may decrease his total healthcare costs. This reduction in healthcare costs is achieved by encouraging the individual to rely on primary care providers rather than on hospital emergency rooms for primary care. Treatment from primary care providers generally costs less than similar treatment in hospital emergency rooms. As another example, supportive housing may lead to cost savings by decreasing the need for police to enforce laws against the homeless, which also decreases court and jail costs.

Walsh et al. gathered data on the 21 residents of the supportive housing complex Lennox Chase in Wake County, North Carolina. The data of interest were the costs of the social services—including shelter costs—used by 21 residents prior to entering Lennox Chase and the costs of the social services used by 21 residents after entering Lennox Hill. A before-after comparison of the costs indicated that overall service costs had fallen from $377,141.66 in the two years before entry to $265,785.20 in the two years after entry, a decline of $111,356.46, or 29.53%. If the cost of social worker who was stationed at Lennox Chase was excluded, the service costs decline to $210,950.00, a decline of 44%.[1]


[1] Adam Walsh, Dean Duncan, Laurie Selz-Campbell, and Jennifer Vaughn, The Cost Effectiveness of Supportive Housing, UNC-CH School of Social Work, December 2007 at 2 (http://www.endlongtermhomelessness.org/downloads/news/lennoxchase_costs.pdf).