The perfect storm

Homelessness on the rise amidst housing affordability

The intersection of social services, homelessness providers, and disaster recovery has never been more apparent – or more urgent. The COVID-19 pandemic, compounded by increasing natural disasters and economic instability, has created a perfect storm that is pushing more individuals and families into housing insecurity. Despite the interconnected nature of these challenges, missed opportunities to provide comprehensive, long-term solutions persist. Now, more than ever, enhanced communication and collaboration between homelessness providers, social services, and disaster recovery agencies are critical to tackling the growing crisis.

The rapid escalation of housing costs has been a significant driver of homelessness. Even before the pandemic, many individuals and families were on the brink, struggling to meet rising rents with stagnant wages. The National Low Income Housing Coalition reported in 2020 that no state in the U.S. had rent prices affordable to a full-time minimum wage worker to rent a two-bedroom apartment without exceeding 30% of their income.¹ This affordability crisis has only worsened in recent years, pushing more people into precarious housing situations or homelessness. In December 2024, the U.S. Department of Housing and Urban Development (HUD) released the 2024 Annual Homeless Assessment Report (AHAR), revealing an 18.1 percent increase in homelessness across the nation in the prior 12 months.²

The COVID-19 pandemic: an unprecedented crisis

When COVID-19 spread across the globe in early 2020, it brought additional hardships that disproportionately affected the low-income and homeless populations.

1. Economic Impact: Job losses and reduced income due to lockdowns and economic shutdowns left millions without the means to pay rent. The gig economy workers and low-wage employees were particularly vulnerable, experiencing financial instability that forced many into homelessness.
2. Health and Safety Concerns: Shelters faced the dual challenge of accommodating the increased demand while implementing necessary health measures to prevent the spread of the virus. Social distancing requirements reduced shelter capacity, leaving even fewer options for those in need.
3. Eviction Moratoriums: Although temporary eviction moratoriums provided some relief, they also built a “financial cliff” that many tenants fell off as protections expired. This policy lag left numerous individuals facing evictions once the moratoriums ended.

Exacerbation by natural disasters

Natural disasters, increasingly aggravated by climate change, compound these issues by causing sudden and severe displacement. According to a U.S. Census Bureau Household Pulse Survey in 2024, nearly 4.4 million people in the U.S. were displaced from their homes in the previous year due to natural disasters.³ Recent years have provided stark examples⁴:

1. 2021 - Winter Storm Uri: The unprecedented winter storm in Texas left millions without power or running water, leading to significant property damage and displacing many residents. Homelessness providers in the state faced acute challenges in addressing both immediate shelter needs in freezing temperatures and the subsequent longer-term housing crisis.
2. 2023 - Hurricane Ida: The Gulf Coast faced devastation from Hurricane Ida, which resulted in widespread flooding and damage across Louisiana. The region, still recovering from previous natural disasters, saw an increased burden on homelessness services and a spike in individuals requiring housing assistance.
3. 2024 - Midwest Tornado Outbreak: A series of violent tornadoes across the Midwest left a trail of destruction, displacing thousands. The rapid onset of these disasters left local homelessness providers scrambling to respond, highlighting ongoing vulnerabilities.
4. 2025 – California Wildfires: The wildfires that ravaged California in early 2025 burned more than 40,000 acres and razed more than 12,000 homes, schools and businesses. Due to the volume of destruction in tourist-heavy areas, short-term rental costs have skyrocketed, displacing many impacted and financially vulnerable groups.

Impact on local homelessness services and social service providers

The combination of these crises has dramatically impacted the ability of local homelessness services providers and social services to respond effectively.

1. Resource Constraints: These unprecedented events drained existing resources. Providers already struggling with everyday demands found themselves with insufficient funding, supplies, and staff to handle the surging needs.
2. Operational Strain: Organizations had to shift rapidly between disaster responses and ongoing services for their usual client base. This dual focus often led to disruptions and a dilution of efforts, impacting the quality and reach of services.
3. Mental Health Services: The trauma associated with these overlapping crises necessitated increased mental health support. However, the overwhelmed systems were often ill-prepared to handle the surge in mental health needs, leaving many without adequate care.
4. Coordination Challenges: Disjointed responses and lack of cohesive planning among various agencies and organizations complicated relief efforts. Effective coordination remains crucial for addressing the multifaceted needs of impacted populations.

Examples of local initiatives and responses

Despite these challenges, there have been some poignant examples of resilience and innovation:

1. Project Roomkey in California: Initiated during the pandemic, this project aimed to provide immediate shelter in hotel and motel rooms for those experiencing homelessness. While designed for COVID-19 relief, it became a model for addressing homelessness during natural disasters.⁵
2. Houston’s Coordinated Access System: Houston’s network of shelters and services worked together to streamline the process of locating and providing services. This system was tested and adapted during winter storms to ensure individuals received timely support.⁶
3. New York City’s Emergency Housing Vouchers: New York City responded to the combined impact of COVID-19 and natural disaster displacements by expanding its emergency housing voucher program, offering temporary shelter and direct housing placements to those in need.⁷

Moving forward: pathways to resilience

To navigate the ever-growing complexities of homelessness amid natural disasters and lingering pandemic effects, we need:

1. Leverage Federal Funding Flexibilities: Find ways to utilize existing federal funding opportunities to create sustainable housing solutions. In particular, consider how to quickly access funding to respond and adapt to emergency situations.
2. Improved Coordination: Increase and enhance interagency coordination between governmental stakeholders at all levels (local, state, and federal) and across domains (housing, health, nutrition, education, and more). Developing robust networks and collaborative partnerships among governmental and non-governmental agencies to provide a holistic and integrated response. Improve data sharing and access to support coordination and collaboration.
3. Resilient Infrastructure: Investing in resilient housing and infrastructure to withstand natural disasters and prevent displacement.

How we can help

Addressing the complex issue of homelessness requires a broad perspective and specialized expertise. By bringing in a third-party advisor like KPMG, organizations can benefit from leading services and insights that facilitate a holistic approach. Our involvement helps to break down siloes across the housing ecosystem, fostering a more integrated and unified response to the crisis.

• Business Process Reengineering: Our business process reengineering services can streamline operations and improve efficiency within homelessness services. By analyzing and redesigning workflows, KPMG helps organizations optimize their processes, reduce redundancies, and enhance service delivery. This leads to better resource utilization and increased capacity to respond to the growing demand for assistance.

• Enterprise Reference Architecture: Implementing an enterprise reference architecture allows organizations to standardize their IT infrastructure and align their technology strategy with operational goals. KPMG can help design and implement such an architecture, helping ensure that systems and processes across various departments and agencies are cohesive and interoperable. This facilitates better data sharing, improves coordination, and enables a more effective response to homelessness.

• System Implementation: Our experience in system implementation helps ensure that organizations adopt and integrate advanced technological solutions effectively. One crucial component of this is the implementation of a grants management solution. This system helps organizations manage funding more efficiently by:
  • Tracking and Reporting: Providing visibility into the grant lifecycle, from application to award and disbursement.
  • Compliance: Ensuring adherence to regulatory requirements and helping minimize risks of non-compliance.
  • Resource Allocation: Facilitating efficient allocation and utilization of grant funds to help maximize impact.
  • Performance Monitoring: Enabling continuous monitoring and evaluation of funded programs to help ensure they achieve their intended outcomes.