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Homelessness in the San Francisco Bay Area: The crisis and a path forward

Homelessness in and around the San Francisco Bay Area continues to rise. Coordinated efforts among governments, nonprofits, and the private sector could stem the crisis and spark progress.

Homelessness in the San Francisco Bay Area has reached crisis proportions. The region has the third-largest population of people experiencing homelessness in the United States, behind only New York City and Los Angeles. Two-thirds of the Bay Area’s homeless residents are living on the street, in their cars, or in encampments, while the remainder live with daily uncertainty over whether their bed at night will be a relative’s couch or a temporary shelter cot. Tent encampments are becoming a visible feature of the region’s streetscape, and the crisis is placing an undue burden on auxiliary support systems, such as healthcare, criminal justice, and behavioral health. Despite concerted effort by public officials and substantial investment in housing and related supports and services, the number of homeless is growing, as inflows continue to outpace outflows.

Addressing this issue will likely require a regional, multi-stakeholder approach that holistically supports homeless families across the full journey, from housing insecure to homeless to housed, and integrates resources across the government, nonprofit, and private sectors.

Exhibit 1

The journey from housing insecure to homeless to housed

While most of the public thinks about homelessness as “unsheltered” homelessness, or street homelessness, the reality is a broader journey as individuals enter, experience, and transition out of homelessness, with myriad possible interventions along the spectrum (Exhibit 1). Complicating the crisis further are the facts that an individual or family’s path into and out of homelessness is often not straightforward and that the support system itself is fragmented, with limited communication and data sharing between service providers and across regions. Efforts to improve the crisis response system will benefit from an end-to-end strategy to stem the instances of entry into homelessness, increase exit opportunities, and better coordinate care across the support spectrum to ensure people don’t get “stuck.”

The state of the crisis in the Bay Area

Based on a 2017 point-in-time (PIT) count, 28,200 people were estimated to be homeless in the Bay Area, with 70 percent of these living in Santa Clara, San Francisco, and Alameda Counties (Exhibit 2). 1 Preliminary PIT counts released in 2019 indicate an increase of 17 percent in San Francisco, 31 percent in Santa Clara, and 43 percent in Alameda Counties from 2017 to 2019. The total number experiencing homelessness in a given year is likely substantially higher: PIT counts may underestimate persons experiencing homelessness on an annual basis by at least two to three times. 2

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Contrary to popular myth, the majority of homeless persons in the Bay Area are not coming from other regions: 89 percent of people experiencing homelessness in 2017 reported living in their county for one or more years. 3 However, practitioners report high rates of interregional mobility, with persons experiencing homelessness crossing county lines regularly, many separated only by a short bus or metro trip. 4

A large portion of the Bay Area homeless population is unsheltered: 67 percent in 2017, second only to Los Angeles. Relative to other metropolitan areas, the Bay Area also has high rates of chronic and youth homelessness (Exhibit 3). 5

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How we got here

The combination of a long-standing housing-affordability crisis, insufficient inventory, and a lack of system-level and regional coordination means the Bay Area has failed to sufficiently stem inflows, increase exits, and effectively navigate those experiencing homelessness to lasting solutions.

Housing affordability

Long-standing housing-affordability challenges affect every stage of the Bay Area’s homelessness cycle. From 1999 to 2014, the Bay Area permitted construction of 61,000 fewer very-low-income affordable-housing units 6 than recommended by the state and lost a substantial portion of existing housing inventory to market pressures—in San Francisco, for every two affordable housing units created, the city lost more than one from its existing inventory because of units being permanently withdrawn from the protection of rent control. 7

The result is a severe housing shortage: according to the National Low Income Housing Coalition, as of 2017, in the San Francisco–Oakland–Hayward and San Jose–Sunnyvale–Santa Clara metropolitan areas alone, there was a supply gap of more than 157,500 affordable and available units for extremely low-income households. Two-thirds of extremely low-income households lived in rental accommodations they struggled to afford, leaving them one unexpected expense away from entering homelessness (Exhibit 4).

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Insufficient inventory

Insufficient inventory across the homelessness spectrum further limits exit opportunities and leaves many waiting on permanent solutions without a temporary home. In keeping with the national push for Housing First, 8 the Bay Area has doubled down on increasing permanent-supportive-housing 9 and rapid-rehousing 10 options. However, in light of the affordability challenges previously discussed, current inventory is not nearly enough to meet demand. Accounting for permanent-supportive-housing and rapid-rehousing supports, the current Bay Area crisis-response system currently shelters 30,000 homeless individuals. Assuming current bed-count utilization is at 100 percent, more than 28,000 additional individuals require permanent housing, with more than 18,000 of those in need of immediate shelter (Exhibit 5). Ultimately, an “all of the above” strategy is required: the right mix of affordable housing, permanent supportive housing, and temporary shelters to meet the full accommodation need.

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Lack of coordination

The Bay Area’s crisis-response system is highly fragmented, with limited communication and data sharing between service providers and across regions. Each county operates its own Continuum of Care: submitting its own strategic plan, collecting its own data on its homelessness population and system performance, and receiving its own funding from the US Department of Housing and Urban Development (HUD). Given the substantial interregional mobility of the Bay Area’s homeless population, this approach impedes understanding of current service needs and gaps; it also hampers much-needed collaboration to determine the most effective strategies to meet growing need.

Pillars of the solution

Practitioners across the system agree: there is no silver bullet. Progress on the issue will likely require regionally coordinated efforts by governments, philanthropists, and the private sector across three key spheres.

1. Meet the accommodation need

At its core, the solution to homelessness is a home. The Bay Area must expand the housing supply available to extremely low-income households to keep people in their homes and increase exit opportunities into permanent housing solutions. Efforts will need to target both families and individuals able to benefit from rapid rehousing services, as well as the Bay Area’s large chronically homeless population, who, in most cases, require housing with wraparound services in order to successfully transition out of homelessness and remain housed long term. 11 These solutions aren’t free, but neither is the status quo: a 2015 study in Santa Clara County estimated that indirect costs of homelessness on the healthcare, criminal justice, and social services systems amounted to more than $520 million annually.

Meeting the affordable-housing gap will likely not be possible under the status quo: convoluted permitting, high construction costs, and long timelines fraught with administrative bottlenecks impede meaningful progress. Renewed efforts by stakeholders in the public and private spheres could reduce the time and cost needed to build new units, incentivize housing production for lower-income brackets, and test and scale innovative models to meet accommodation needs and provide the necessary support services.

2. Drive greater state and regional collaboration

The fragmented solution landscape and intraregional mobility of the Bay Area’s homeless population point to the importance of a cohesive strategic approach to homelessness that integrates funding, data collection, and advocacy efforts between service providers and across regions. Creation of a regional Bay Area Homeless Management Information System could help to build a more accurate map of inflows, exits, available services, gaps, and cost to serve. Establishing a regional homelessness-management plan—like the regional emergency-management systems that have been set up in the wake of disasters—could enhance service delivery, reduce redundancies, increase accountability, and enhance the region’s power to advocate at the state and national levels.

3. Engage private and philanthropic capital to enhance services and pilot innovative solutions

Private and philanthropic dollars can be deployed in innovative ways to expand and improve services for current homelessness populations. Public–private partnerships and innovative models, such as pay for success, 12 could mobilize much-needed capital to rapidly test and scale highly effective interventions. Fast-growth employers expanding in the Bay Area can add housing as they expand or invest in efforts to preserve affordability, such as the recent Partnership for the Bay’s Future, supported by Facebook, Genentech, Kaiser Permanente, and several local foundations. Innovative technologies can enhance outreach efforts, reduce costs, and simplify complexities in the current service system.


Unprecedented growth in the Bay Area has brought unprecedented challenges. The region has long been an engine of growth and prosperity, but it has also increasingly become marked by unaffordability and inexcusable conditions for our most vulnerable. The problem is not intractable: the Bay Area has the intellect and resources to turn the tide, but doing so will likely require additional resources and a more cohesive, coordinated, and substantial approach than the status quo.

About the author(s)

Kate Anthony is a consultant in McKinsey’s San Francisco office, where Kunal Modi is an associate partner; Kausik Rajgopal is a senior partner in the Silicon Valley office, where Gordon Yu is a manager.

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