When Karen Bass was elected mayor of Los Angeles in 2022, LA’s homeless count was about 42,000. While campaigning for re-election about two months ago, she stated, “I inherited a hot mess. . . . Homelessness was out of control.”

Homelessness is still a hot mess and is still out of control. 

The Los Angeles Homeless Services Authority (LAHSA) announced recently there were more than 45,000 homeless people within the city, is a 7.6% increase since Bass’ 2022 election. 

If the homeless within LA were their own city, it would be larger than nearly 60% of California cities. 

Los Angeles didn’t lose the war on homelessness because of funding. Nearly $4.4 billion was budgeted within the city to address homelessness between the 2022-23 and 2025-26 budgets, which works out to about $100,000 per homeless individual at the time Bass took office.

So, what went wrong?

A key reason why LA has failed to reduce homelessness: unrealistic assumptions about the mental and physical health of the homeless.  

In 2019, LAHSA stated that only 29% of Los Angeles County’s homeless population had either a serious mental illness or a substance-use disorder. LAHSA argued that “the majority of people experiencing homelessness do not report serious mental illness or substance abuse.”

However, the majority of the homeless do have drug and alcohol abuse and mental health disorders.  

A Journal of the American Medical Association study reports that 37% regularly use meth, nonprescription opioids, and/or cocaine, and that nearly 20% of the homeless had overdosed. 

Moreover, about 42% of homeless self-report they drank heavily before becoming homeless, and about 49% self-report they regularly used drugs before homelessness. And these self-reported statistics may significantly understate their true incidence.

Another JAMA article surveyed 85 studies and found that rates of mental health disorders among the homeless are roughly 10 to 28 times as high as among the general population.   

And then there’s the failure of “housing first.”

California, including Los Angeles, historically downplayed substance abuse and mental health disorders as causing homelessness or as being barriers to exiting homelessness. 

In 2016, California adopted the principle of “housing first,” which prioritizes placing the homeless in permanent supportive housing, with no requirement for sobriety or treatment.  

Building permanent housing for the homeless is expensive, and in some cases is out-of-the-ballpark expensive.

Among the most expensive include a Venice development estimated to cost $1.24 million per apartment unit, including the value of the land and parking, and a Santa Monica project that will cost $1 million or more per unit, not including the value of the land. 

My calculations show that only about 7% of US households could afford this housing if they were priced at the market rate. 

There is also the issue of what happens to the funding as it moves through different organizations, including LAHSA. 

LAHSA’s record shows administrative incompetence and financial controls so weak that waste and fraud can escape detection.

In June 2026, HUD suspended LAHSA from future federal transactions, citing suspected false certifications, inadequate financial controls and deficient conflict safeguards.

LAHSA disputes the allegations against it, and the matter remains under litigation. 

Evidence shows an agency repeatedly unable to demonstrate what it spent, what it received, or whether contractors delivered what taxpayers purchased.

Meanwhile, placing those struggling with mental illness and substance abuse into permanent housing has often been deadly.

A 2020 analysis of the outcomes of those exiting federally funded permanent supportive housing showed that 25% died while enrolled; 21% returned to homelessness, temporary housing or an institutional setting; 27% had no known destination; and 27% moved to other permanent housing. 

Harm reduction is another pillar of Los Angeles homeless policy.

This holds that those using drugs and alcohol should be accepted by others in society, rather than being stigmatized, and that policy should aim for the safety of all, including those using drugs. This includes needle exchange programs, distribution of naloxone, which can reverse the effects of an overdose, and strips for testing fentanyl. 

But harm reduction has negative, unintended effects that were either discounted or unrecognized by its proponents.

One peer-reviewed academic study found that clean needle exchange is associated with lower HIV infection, but more overdoses and overdose deaths. Similarly, a peer-reviewed study shows that making naloxone widely available is associated with more overdoses, more emergency room visits, and more theft.

And the major negative effects don’t stop there. 

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Skid Row has grown into an area in downtown LA of about 54 blocks where drugs are widely available and where both nonviolent and violent crime rates are high, including a murder rate 17 times as high as in the rest of Los Angeles.

Animal abuse, particularly of dogs, also is reported in Skid Row, where animals are bred within encampments, are traded for drugs, and die because of neglect and malnutrition. There are also allegations of dogs being used as guinea pigs to test if drugs are toxic.

The homeless also take up a significant amount of first responder resources in LA: About one-third of fires in Los Angeles are homeless-related, and about 15% of police calls are homeless-related.  

Broadly, LA’s policies incentivize drug use, make the city a desirable location for those abusing drugs and alcohol, and do not give people adequate incentives to become responsible for themselves.

Policies that might reduce homelessness would improve incentives and increase accountability from city staff and nonprofit operators; build treatment centers in affordable locations to help the homeless deal with mental health and substance abuse; and follow San Francisco’s new policy in creating sober-living environments. 

Perhaps the most important change in addressing homelessness is decoupling policy from housing first and harm reduction. 

Of course, some of these recommendations will not be universally popular because influential groups will stand to lose if they are implemented.

And I see very little interest in changing these policies within California’s Democratic leadership. This suggests homelessness is here to stay.

Lee Ohanian is a professor of economics at UCLA and a senior fellow at the Hoover Institution.