The Housing and Homelessness Issues We’re Watching in 2025

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2024 was another relentless year of the housing crisis. Homelessness spiked year over year, both because of rent hikes and because of an influx of asylum seekers, and anti-homeless politics took hold in most major cities. Rent growth slowed down in some areas while accelerating in others, and the federal government’s sharp interest rate hikes from the past few years continued to have unintended consequences. Tenants became more agitated and driven to organize, leading to key successes, and more cities upzoned to allow more dense housing.

I’ve covered urban policy, including housing, homelessness and policing, since 2016. Here are some of the biggest housing market trends and problems I will be watching out for in 2025.

The limits of zoning reform

For the past few years, zoning reform has been the main goal of the supply-side faction of housing activists, who have increasingly had the ear of politicians. In California, the state effectively eliminated single-family zoning by allowing duplexes and quadplexes in 2021. Austin, Texas more or less eliminated single-family zoning, allowing 2 or 3 homes on plots previously zoned for one. Miami-Dade legalized duplexes in 2018. Madison, Wisconsin allowed more dense zoning near transit. In New York City, Mayor Adams and the city council passed a city-wide plan that allows for denser housing construction, with the goal of creating 80,000 new units of housing within 10 years.

Read more: How Minneapolis and Austin Beat New York City in the Quest to Enable More Housing

Some of these zoning reforms have been a long time coming, particularly in single-family zoned areas close to public transit. But the role of upzoning in creating more housing or reducing rents may turn out to be overstated.

The biggest predictor of how much housing gets built is the flow of capital. New housing construction tends to dip dramatically during recessions, including a large dip during the 1973 recession, early 1980s recessions, the 2008 recession and the 2020 pandemic.

And the main reason cited by developers for reduced construction of single-family homes is not zoning but a lack of construction labor, according to research from Freddie Mac. Many construction workers are newly-arrived immigrants, so if mass deportation occurs during the second Trump administration as promised, it could cause further chaos in the market.

Zoning restrictions make available land rare and more costly, potentially leading to rent increases. Yet its impact on the aggregate amount of housing that gets built each year is at best mixed; mostly it just means housing is more concentrated in dense urban areas. When the federal government reduces interest rates, subsidizes construction or when the economy is booming, more housing is built.

Areas that allowed more dense zoning in single-family areas in recent years have seen smaller-than-hoped-for increases in housing construction, in part because of a lack of funding. In Miami-Dade, only 73 applications for duplexes were made in 2023. In California, a report a year after a statewide duplex law went into effect found it had led to little in the way of new housing.

Part of the reason is that homeowners don’t have the funds to build more units. The process of adding a duplex remains logistically challenging. New Jersey has had more success than other states, mainly because of a fair share housing requirement coupled with state and federal funding. And the construction of more market-rate housing doesn’t necessarily mean the lowest end of the market will find relief, which means subsidies are the only real way to bring down costs — particularly for people at risk of homelessness.

Next year, state and local governments that have run against the limits of rezoning will have to look for ways to fund new housing, absent any meaningful federal funding. This could mean sales taxes to fund workforce housing, development taxes or bond-funded housing.

More crackdowns on homeless Americans

There is no way to sugarcoat that 2024 was a bad year for the rights of unhoused people and 2025 is likely to get worse.

As of January 2024, homelessness increased 18% from the prior year, the highest number since HUD began counting in 2007. That’s a far cry from the Biden administration’s plan to decrease homelessness by 25% by 2025. Family homelessness rose by nearly 40%. Amid an influx of migrants seeking shelter, the main culprit is a housing system that fails provide homes for people at the margins: According to the National Low Income Housing Coalition, the shortage of affordable rental homes increased between 2019 and 2022 by 480,000 units. The coalition estimates there is a lack of 6.3 million affordable homes nationwide.

Housing is not being produced for the lowest-income brackets; multifamily housing production reached a 50-year peak in 2022, but low-income units were being lost faster than they could be replaced thanks to both the age of housing stock and federal LIHTC financing elapsing. After years of federal and local eviction bans and emergency rental payments from federal stimulus funds, evictions have returned to their pre-pandemic levels and in some cities exceeded them. When these protections were in place, homelessness increased only incrementally in the first two years of the pandemic, even as street homelessness spiked.

Read more: Why Are So Many Cities’ Homeless Policies Punitive?

The rise in homelessness comes as the Supreme Court has taken away some of unsheltered residents’ legal protections. For years, a 2018 federal court decision in the Ninth Circuit Court of Appeals kept cities on the West Coast from legally sweeping encampments when shelter space was unavailable. Because most cities outside New York City do not have a right to shelter, they never built up homeless shelter beds, and construction on permanent supportive housing has stalled. Cities frequently violated the Martin decision while it was in place, but the fear of endless litigation hampered their aggressiveness.

But 2024’s Supreme Court decision in Johnson vs. Grants Pass has eliminated Martin v. Boise’s legal decision that homeless sweeps without available shelter violate the constitution’s ban on cruel and unusual punishment.

After the Supreme Court decision, over a hundred jurisdictions imposed camping bans that don’t account for available shelter space, according to NPR. This is likely to continue into next year, with cities facing spikes in homelessness more quickly using police and sanitation workers to displace unhoused people.

While the federal government under Biden made some gestures toward discouraging the criminalization of homelessness — requiring plans to address homelessness without the police to qualify for some forms of homeless funding — it failed to penalize jurisdictions that were the most punitive against unhoused people.

The incoming Trump administration is likely to further encourage criminalization of homelessness, as the president-elect has encouraged the displacement of unsheltered people into tent cities. And informal power broker Elon Musk is allied with anti-homeless billionaire Joe Lonsdale, whose right-wing Cicero Institute has been promoting criminalization as a “solution” for homelessness in its home of Austin, Texas as well as across the country.

Read more: The Supreme Court’s Grants Pass Decision Has Lit a Fire Under Homeless Advocacy Groups

We could also see some of the most widespread and coordinated organizing against criminalization of homelessness and displacement next year. That includes protests already forming against L.A.’s 2028 Summer Olympics, pushing back on residential displacement and harassment of homeless people that accompany the Olympics every four years. We may also see organizing from the National Union of the Homeless and other similar organizations as criminalization increases. Democrats, who are just as likely to crack down on unhoused people as Republicans, will only begin to change their behavior if activists can make clear that they are making the problem worse by shuttling people around cities rather than providing housing.

Rental price-fixing and the DOJ

In recent years, the role that algorithmic price-fixing plays in increasing rents has become more apparent. RealPage was accused of pooling information on rents to push up prices in apartment rentals beyond what the market would normally bear through its “Yieldstar” tool. This year, the Department of Justice sued RealPage, claiming that their business model violates antitrust laws; just this week, the DOJ expanded its lawsuit to accuse six other major landlords of colluding to drive up rental prices. If the suit is successful, it could potentially mean a crackdown on landlords sharing data on their rental units with large companies. (The practice has existed in one form or another for decades, but was supercharged by RealPage’s algorithmic pricing.)

While the Department of Justice is ostensibly separate from the judiciary, it’s not clear how a new Trump administration would approach the price-fixing suits. The DOJ launched multiple large antitrust investigations during the first Trump administration, but a second administration could very well be operating without the same guardrails, leading the lawsuit to be nixed. Since the lawsuit was filed, more evidence has come out showing the enormous impact price-fixing algorithms have had on the economy, potentially playing a key role in exacerbating the housing crisis. A White House report from December said that algorithmic pricing had led to nearly $4 billion in price increases for renters.

Tenant unions fighting for repairs in federally-regulated housing

During the Biden administration, more tenants banded together to fight the federal government, which is responsible for regulating not just the public housing it owns but the housing it subsidizes through tax credits and the housing purchased through government-backed loans.

Tenants in Kansas City housing went on strike to demand rent caps and to call on HUD to force their landlords to sell their housing to a more responsible owner. Tenants of project-based Section 8 housing run by Millennia Housing organized for years and successfully got HUD (which both subsidizes the housing and is in charge of regulating it) to sell the housing stock to different owners.

And tenants of private housing, including affordable housing with mortgages financed by Signature Bank — which bankrolled the sales with the understanding that units would be deregulated — successfully got federal regulators to sell their housing when that bank failed.

These small successes may be harder to achieve during the next Trump administration, with increasing pressure for the federal government to get out of the business of subsidizing and regulating housing. Trump has nominated Scott Turner to run the Department of Housing and Urban Development. According to ProPublica, Turner has a history of opposing legal protections for low-income tenants as a Texas legislator, including opposing laws that would ban source of income discrimination.

Fannie Mae and Freddie Mac, the two government-created for-profit entities that back mortgages, have been overseen by the Federal Housing Finance Administration since 2008, but the Trump administration may make them private again. (The Biden administration introduced a rule change to make that harder to do.)

This doesn’t mean tenants don’t have leverage.

Without their rent, many affordable housing units that relied on leveraged debt will become insolvent, private companies could go under, and more banks could face turmoil similar to Signature Bank. As rents increase and conditions deteriorate, the next administration may have to concede to tenants’ wishes to prevent larger economic ripple effects.

Debt, interest rates, mortgages

Another big unknown for 2025 is whether the Fed will raise interest rates and how that will impact housing construction and mortgages.

The Federal Reserve’s interest rate hikes in 2022 and 2023 have been credited with tamping down inflation. But whatever benefits interest rate hikes bring to the cost of goods, they led to some painful outcomes for peoples’ wallets, including layoffs in certain industries and raising the cost of mortgages.

Developers found it more difficult to borrow money to build more housing. People who wanted to buy starter homes found it more challenging to exit the rental market. And anyone taking out loans to purchase property had to load up on higher-interest debt to do so, meaning they had to raise rents to recoup that debt.

If the Fed reduces rates in the next administration, some of these issues could be softened. Setting rates higher than they were after the Great Recession may not be a bad thing, but the jolt to the system of being raised suddenly may take a while to shake off.