The Disappearance of Low-Cost Housing and the Persistence of Homelessness With a Minnesota Focus

 

The Disappearance of Low-Cost Housing and the Persistence of Homelessness

Introduction

Extremely low-cost urban housing—such as flophouses and single-room occupancy (SRO) units—once provided shelter of last resort for the poorest individuals. In the mid-20th century, many U.S. cities contained thousands of these tiny rooms, often just a bed in a residential hotel with shared bathrooms or kitchens. Such units were far from luxurious, but they were affordable on meager incomes. At the time, homelessness (in the modern sense of unsheltered people living on streets) was relatively rarepew.orgpew.org. Over the decades, however, deliberate policy and market changes led to the widespread demolition, conversion, or banning of SROs and flophouses, especially in urban centers. This report analyzes how that disappearance of extremely low-cost housing is intertwined with the rise and persistence of homelessness in the United States. We examine key historical developments that eliminated these housing forms, review national research on the correlation between the loss of SROs and homelessness trends, and provide a focused case study on Minnesota’s experience. International comparisons are included to highlight how different approaches to low-cost housing have produced different homelessness outcomes. The analysis draws on academic studies, historical accounts, and policy reports, and includes data visualizations of housing and homelessness trends.

20th-Century Decline of Flophouses and SRO Housing

By the early 20th century, most large American cities had entire districts of cheap lodging houses, often called skid rows. These areas – exemplified by New York’s Bowery, Chicago’s West Madison Street, San Francisco’s South of Market, or Minneapolis’s Gateway District – featured dense clusters of SRO hotels, boarding houses, and saloonspublications.gc.cawww3.mnhs.org. They catered to single men, seasonal laborers, new migrants, and others with extremely low incomes. In 1950, SRO units comprised roughly 10% of all urban rental housing in some major citiespew.org. A typical unit was a furnished 8×10 foot room, rented for only a few dollars per week (equivalent to under $300 per month today)pew.org. This abundance of cheap rooms meant that even the very poor could usually avoid literal street homelessness.

Mid-century Backlash and “Slum Clearance.” Starting in the mid-20th century, however, political and public opinion turned against SRO hotels and flophouses, stigmatizing them as blight. Urban reformers and officials labeled these districts as slums and targeted them for renewalpew.orgpew.org. Many SRO buildings were old and in disrepair, and critics associated them (and their residents) with vice, crime, and disease. A 1965 aide to New York’s mayor infamously declared: “The SRO should not be accepted as lawful housing for any segment of our population…No community should equate such housing with acceptable living standards of the 1960s.”pew.org This sentiment paved the way for aggressive action to eliminate SROs in the name of modernizing cities.

Local Zoning and Code Changes. Beginning in the 1950s and 1960s, cities revised their zoning and building codes specifically to drive out SRO housingpew.org. Many jurisdictions outright banned the construction of new residential hotels or rooming houses and forbade the subdivision of existing structures into SROspew.orgpew.org. New York City, for example, banned new SRO buildings in 1955, then over the next two decades added building code requirements (like large minimum unit sizes) that made operating SROs unprofitable unless they were converted to conventional apartmentspew.org. Other cities imposed strict fire safety, sanitation, or parking requirements on lodging houses – well-intentioned regulations that nevertheless made it economically untenable to maintain low-rent micro-units. For instance, after a 1970 fire, Seattle required costly retrofits (sprinklers or fire doors) for multi-story SRO hotels; many owners simply closed up instead, and Seattle demolished 5,000 SRO units under this single “Ozark” fire code rule in the 1970spew.org. Zoning codes also often prohibited SROs in residential districts, treating them as commercial lodging or “non-conforming” usesightline.org. These legal shifts were decisive: researchers note that market forces alone would not have wiped out SROs – they were profitable to run when allowed – but new laws intentionally precipitated their declinepew.org.

Urban Renewal and Demolition. On top of code changes, mid-century urban renewal projects literally bulldozed many skid rows. Under federally funded “slum clearance” programs of the 1950s–60s, cities tore down blighted downtown areas to make way for highways, offices, and upscale development. Unfortunately, the lodging houses of the poor were often the first to go. San Francisco’s South of Market area, for example, was targeted for redevelopment in the 1960s; an estimated 40,000 SRO hotel rooms were destroyed in San Francisco by urban renewal – including over 6,000 in just five years (1975–1980)pew.org. The director of SF’s redevelopment agency at the time bluntly said, “This land is too valuable to permit poor people to park on it.”pew.org Other cities followed suit. Seattle demolished 16,200 SRO units (over half its downtown stock) between 1960 and 1973 during a post-war building boompew.org. Boston similarly eliminated nearly 90% of its SRO units from the 1950s to 1985pew.org. And in Minneapolis, the entire Gateway District (the city’s skid row) was leveled from 1958 to 1963, with more than 200 buildings – including every flophouse and cheap hotel – demolishedweb.archive.orgweb.archive.org. Over 5,000 low-income residents (mostly single working-class men) were displaced virtually overnight by the Gateway demolition in Minneapolisweb.archive.org. This pattern repeated across urban America.

Mass Conversion of SROs. Even where outright demolition didn’t occur, many SRO hotels were “upgraded” or repurposed during the 1970s real estate boom. Some were converted into boutique hotels for tourists, artist lofts, or efficiency apartments. In New York, after the city offered tax breaks in the 1970s for converting SROs into self-contained apartments with kitchens, owners rapidly took advantage: roughly 40 hotels per year were converted, and a state study found two-thirds of NYC’s remaining SRO units were removed in just 5 years (1976–1981)pew.orgpew.org. Chicago lost a similarly huge share – 80% of its SRO rooms (32,000 units) were eliminated between 1973 and 1984pew.org. The net effect nationwide was a precipitous drop in the low-cost housing stock available to the poor. Historian Paul Groth estimates that “millions” of SRO rooms were closed or torn down in major U.S. cities by 1970, and another million SRO units were lost in the 1970s alonepew.org. By the 1980s, the traditional skid row hotel had virtually vanished in many cities.

Figure: Loss of SRO Housing in Major U.S. Cities (Mid-20th Century) – Major urban centers eliminated the bulk of their SRO and rooming house stock in the decades after 1950. For example, Boston lost nearly 90% of its SRO units by the 1980s, Chicago lost about 80%, and New York City and Seattle each saw roughly half or more of their low-cost units disappear.pew.orgpew.orgpew.org

Source: Historical housing reportspew.orgpew.org.

The drivers of SRO eradication were not only local policy but also federal housing priorities. The Housing Acts of the postwar era emphasized slum clearance and new public housing for families, with little provision for rehousing the displaced single poor. In practice, when a cheap hotel district was cleared, the former residents had no equivalent alternative. Public housing projects built in the 1950s–60s generally served low-income families or elderly tenants; single working-age men with unstable incomes (the typical flophouse residents) often did not qualify. Rent control laws and other regulations could also play a role – e.g. strict rent controls sometimes incentivized owners to demolish rather than maintain old low-rent buildings – but the dominant trend was that by the late 20th century, America’s lowest rung of the housing market had largely been eliminated by designpublications.gc.ca.

From SRO Decline to Homelessness: National Trends and Research

Homelessness in its modern, visible form began rising markedly in the late 1970s and exploded in the 1980s – precisely as the nationwide loss of SRO units reached its peak. A large body of research agrees that the shortage of affordable housing is the single greatest cause of homelessness, more significant than individual factors like mental illness or addictionpew.orgpew.org. In particular, the disappearance of cheap SRO housing is tightly linked to the surge in homelessness. Cities that had maintained abundant low-cost housing saw relatively little homelessness, whereas those that eliminated SROs experienced sharp increasespew.org. Even high-cost cities like New York and San Francisco had minimal homelessness as late as the 1970s when SROs were still widely availablepew.org, but once those units vanished, unsheltered populations grew rapidly.

Correlation Evidence. Contemporary accounts in the 1980s noted a direct one-to-one correlation: in New York City, as tens of thousands of SRO rooms were removed from the market, the number of people sleeping on streets or in emergency shelters climbed in near-lockstep. “As the nation’s least expensive source of housing disappeared, homelessness soared,” writes one housing policy briefpew.org. In NYC, the official homeless count went from virtually zero in the 1960s to around 30,000 people homeless by 1987pew.org. Tellingly, a study found that about half of the single men entering NYC homeless shelters in 1980 had last lived in SRO housingpew.org. Those men were not chronically “unreachable” – they had been housed in cheap hotels until those were shut down. As one advocate observed at the time, “The people you see sleeping under bridges used to be valued members of the housing market…they aren’t anymore.”pew.org. The pattern was similar in other cities: Los Angeles, Chicago, and others saw homeless encampments emerge after thousands of skid-row hotel rooms were lostpublications.gc.capublications.gc.ca.

Statistical analyses confirm the housing linkage. Economist studies have found that local median rent levels are strongly predictive of homelessness rates – far more than poverty or weather. For example, a $100 increase in median rent is associated with a ~9% increase in homelessnesspew.org. Likewise, low vacancy rates and lack of inexpensive units correlate with more homelessnesspew.orgpew.org. In essence, when rent is cheap and housing is available, even very poor people can obtain a room (or double up with friends/family) rather than be on the streetpew.org. But when the entire bottom tier of the housing market is removed, many individuals “fall out” of housing entirely.

Academic Perspectives. Scholars writing on homelessness in the 1980s often pointed to structural housing scarcity as a root cause. Peter Rossi, in his seminal 1989 study Without Shelter, concluded that “homelessness on the scale seen today is in large part an outcome of the shortage of inexpensive housing for the poor, a shortage that began in the 1970s and accelerated in the 1980s.”publications.gc.capublications.gc.ca. Rossi documented steep declines in low-rent housing: e.g. in 12 large cities, the supply of rentals affordable to poverty-level households fell by 30% on average from the late 1970s to early 1980spublications.gc.ca. The collapse of the SRO stock was even more dramatic – some cities lost over half of their single-room units in a 15-year span (Seattle, Los Angeles, etc.)publications.gc.capublications.gc.ca. Sociologist Christopher Jencks offered a nuanced view: he noted that skid row districts were already shrinking in the 1960s (as the economy improved for some poor), and he argued that rising poverty and stagnant incomes in the late 1970s made housing unaffordable for many, just as zoning laws prevented new SROs from being built to meet the increased demandpublications.gc.capublications.gc.ca. In Jencks’ analysis, homelessness grew from a “double whammy”: more people were unable to afford market housing, and the traditional safety-valve of cheap rooming houses had been sealed offpublications.gc.capublications.gc.ca. Thus, both the destruction of skid row housing and the lack of replacement housing (due to regulatory barriers and insufficient public housing support) contributed to the crisispublications.gc.capublications.gc.ca.

In summary, national trends in the late 20th century show a clear linkage: the period in which millions of flophouse/SRO units were eliminated is the same period in which modern homelessness emerged as a persistent social issue. Homelessness was “rare from at least the end of the Great Depression to the late 1970s” when SROs still housed the poorest, but it “exploded nationwide” once those units disappearedpew.org. While other factors (deinstitutionalization of psychiatric patients, recession, substance abuse epidemics, etc.) played a role, housing researchers note those factors occurred in many places, yet cities with ample low-cost housing had far less homelessness despite similar social issuespew.org. The critical differentiator was housing. One striking hypothetical comes from a recent analysis: had SRO units grown since 1960 at the same rate as the rest of U.S. housing stock, the nation would have roughly 2.5 million more such units today – enough to house every person experiencing homelessness three times overpew.org. Instead, those units were removed, and the U.S. today has roughly 580,000 people homeless on a given night (as of 2022) and a massive shortage of housing for the lowest-income bracketmelbournemicrofinance.com.

Case Study: Minnesota’s Low-Cost Housing and Homelessness

Early History – Skid Row in Minneapolis. Minnesota’s urban experience closely paralleled national trends. In the late 19th and early 20th century, Minneapolis’s downtown included a thriving skid row known as the Gateway District (around Lower Nicollet and Hennepin Avenues). By the 1910s–1920s, this 25-block area was filled with bars, cheap lodging houses, and weekly-rate hotels serving transient workers and the unemployedweb.archive.orgweb.archive.org. During the Great Depression, the Gateway became an informal “retirement community” for redundant lumbermen, railroad gandy dancers, and other down-and-out laborers – essentially, the city’s flophouse districtwww3.mnhs.org. While derided as blight by civic leaders, it provided hundreds of very low-cost rooms that kept destitute single men off the streets (albeit in often dire conditions).

By the 1950s, Minneapolis officials – echoing other cities – decided that skid row stood in the way of downtown progress. In 1958, armed with federal urban renewal funds, the city undertook the complete demolition of the Gateway Districtweb.archive.orgweb.archive.org. Over the next five years, every structure in the area was razed: 62 taverns, 48 warehouses, 24 pawn shops, 43 cafes – and every last flophouse and cheap hotel, more than 200 buildings in all, were leveled by 1963web.archive.orgweb.archive.org. This “renewal” created a barren plaza and new office towers, but nothing replaced the housing that had existed. According to historical accounts, the Gateway clearance displaced nearly 5,000 low-income residents who had lived in the area’s SRO hotelsweb.archive.org. Most were unmarried men on meager public benefits or day-labor incomeswww3.mnhs.org. Some of those evicted drifted to skid rows in other cities; a few found rooms in the remaining boarding houses on Minneapolis’s peripheryweb.archive.org. But many simply had no place to go. As one Minneapolis rooming house owner later recounted, “They’ve closed them all up…places like this provide living quarters for people who can’t afford an apartment. Here it’s $50 a week… I get 200 calls a month [from people seeking a room]”web.archive.orgweb.archive.org. The Gateway’s demolition was effectively the extinction of official low-cost housing in the central city. A local journalist termed it “the life and death of Minneapolis’s Skid Row” – after the 1960s, the culture of cheap communal living largely vanished from Minneapolis’s landscapeweb.archive.org.

Policy and Zoning in Later Decades. The purge of flophouses continued in subsequent decades via policy. By the 1970s, Minneapolis’s remaining scattered rooming houses were often cited for code violations or shut down for “blight.” In 1981, the city formally froze new permits for SRO housing, effectively banning any new rooming houses for the next ~40 yearsminnpost.com. Existing SRO properties were grandfathered but faced pressure; many closed due to mismanagement or were sold to be converted into upscale rentals. This reflects a broader attitude: for decades, city policy treated SROs as something to eliminate, not encourage. One long-time Minneapolis Planning Commission member admitted in 2021, “My time on the City Council, 50 years ago, we were dealing with getting rid of SROs” – a stance he now views as mistakenminnpost.com. The net result was that by the 1980s, Minneapolis and St. Paul had virtually no legal pathway to create extremely low-cost single-room housing, despite a growing population in need.

Public housing initiatives in Minnesota did little to fill this gap for single adults. Under the postwar Housing Acts, Minneapolis and St. Paul did build several public housing projects (e.g. the Olson Townhomes, Cedar-Riverside high-rises, etc.), but these were mostly targeted at low-income families and seniors, not the unattached “skid row” men. Indeed, St. Paul’s Housing Authority explicitly saw its goal in 1949 as removing slums and constructing low-income family housingstpha.orgstpha.org. For impoverished single individuals without children, very few subsidized units were available in the 1960s–70s. Some charitable and nonprofit organizations tried to operate transitional housing or missions, but capacity was limited.

Rise of Homelessness in Minnesota. Through the 1960s, outright homelessness in Minneapolis remained mostly hidden; local officials believed the problem had been “solved” by economic growth and welfare programs. However, by the late 1970s and early 1980s, the consequences of low-cost housing loss became starkly visible. A 1976 Minneapolis task force on rental housing warned that the city’s housing was “in a state of crisis” and that the system “could not continue in its present form.” By 1978, a HUD report estimated over 57,000 Twin Cities renter households needed financial aid to afford their housingwww3.mnhs.org – signaling a huge unmet need at the lower end. The patchwork “safety net” that had previously kept people housed was fraying: for years, Hennepin County social workers had quietly paid for indigent single adults to stay in cheap downtown hotels or at the YMCA, and charity missions provided emergency beds for men who lost housing. But as those residential hotels closed and the economy tightened, this ad hoc system broke down.

In the winter of 1981–1982, Minneapolis experienced a severe homelessness crisis that caught public attentionwww3.mnhs.org. With no formal shelter system yet in place, ten churches and community centers opened their doors as emergency shelters to get people out of the freezing weatherwww3.mnhs.org. It was the first time in modern memory that significant numbers of men, women, and even families were sleeping in church basements because they had nowhere else to go. Contemporary reports attributed this crisis to “economic instability, a tight housing market, and disinvestment from social welfare programs” in the early ’80s – a perfect stormwww3.mnhs.org. Notably, in mid-1981 the State of Minnesota had also tightened eligibility for General Assistance (income support), abruptly cutting off thousands of single poor adultswww3.mnhs.org. That policy change (which dropped 9,000 people from GA rolls) removed a critical subsidy that many used to pay for cheap lodgings. Thus by 1981, the waves of low-cost housing loss (through the 60s–70s) “became a tsunami,” and homelessness, which previously had been managed through emergency housing placements, now overflowed into unsheltered and shelter settingswww3.mnhs.org.

Since the 1980s, homelessness in Minnesota has persisted and in fact grown. The Minnesota Homeless Study (a comprehensive triennial survey by Wilder Research) counted about 3,000 homeless people statewide in 1991. By 2018, that one-night count had reached 11,371 – the highest on recordhouse.mn.govhouse.mn.gov. (The 2023 count was slightly lower, about 10,500, partly due to pandemic interventions)house.mn.govhouse.mn.gov. Minnesota’s homeless population includes families and youths, but single adults (often those who might once have lived in SROs) make up a large share. The chart below illustrates the trend: Minnesota’s homeless numbers climbed significantly from the 1990s to 2010s, mirroring national patterns. Meanwhile, the supply of extremely low-cost units did not recover. As of the 2020s, Minneapolis still had only a handful of nonprofit-run rooming houses (with long waiting lists)minnpost.comminnpost.com, and statewide a huge gap remains between the housing needs of the lowest-income residents and the available units.

Figure: Homelessness Trends in Minnesota vs. United States – Homelessness has risen in Minnesota over the past three decades (red line, right axis), from roughly 3,000 people in 1991 to over 10,000 in recent yearshouse.mn.gov. Nationally (blue line, left axis), the homeless count declined somewhat from 2007 to the mid-2010s but has since increased, reaching about 582,000 in 2022melbournemicrofinance.com.

Sources: Wilder Research (Minnesota one-night study)house.mn.gov; HUD Point-in-Time counts (USA).

The Minnesota experience underscores that homelessness took hold when deep poverty persisted but housing options for the poor did not. Even before the modern shelter system existed, Minneapolis had “emergency housing” options – like the cheap downtown hotels or private rooming houses – that prevented many people from becoming literally homeless. Once those were gone, the only recourse became shelters or the streets. In recent years, Minnesota policymakers have recognized this history. Minneapolis in 2021 moved to end its decades-long ban on SROs, passing an ordinance to allow new single-room occupancy developments (initially operated by nonprofits)minnpost.comminnpost.com. This reflects a full-circle realization that what was once considered an undesirable “last resort” housing model may actually be a necessary part of the housing continuum to prevent homelessness.

International Comparisons: Housing Policy and Homelessness Outcomes

The United States’ approach to low-cost housing has not been universal. Other countries either maintained analogous cheap housing or bolstered social housing in ways that mitigated homelessness, yielding very different outcomes.

Finland – Housing First and Social Housing: Finland provides a stark contrast. Rather than relying on flophouses, Finland invested heavily in social housing and in the 2000s adopted a “Housing First” policy to literally give apartments to homeless individuals. As a result, Finland today boasts Europe’s lowest homelessness rate – fewer than 20 homeless persons per 100,000 peopleourworldindata.org, compared to over 170 per 100,000 in the U.S. This difference is partly because Finland never eliminated housing for the poor; its welfare state ensured that even those with very low incomes had access to government-subsidized housing or shelter. By focusing on permanent housing solutions (and even converting shelters into apartments), Finland has nearly eradicated street homelessness. The Finnish case suggests that if adequate deeply affordable housing is supplied (through public or nonprofit means), the need for informal SRO-style housing diminishes – and so does homelessness.

Japan – Preserving Low-Cost Lodging (Doya): Japan offers another illuminating example. Through the mid-20th century, Japan had doya-gai – rough equivalents of skid rows – in cities like Osaka (Kamagasaki) and Tokyo (Sanya), where day laborers rented tiny cubicles in flophouses (called doya)melbournemicrofinance.commelbournemicrofinance.com. These areas persisted longer than U.S. skid rows. Into the 1990s, thousands of working-poor men still lived in cheap hostels in Kamagasakialjazeera.comaljazeera.com. Japan’s government did eventually attempt to reduce street homelessness in the 2000s, but notably they did not bulldoze all the doya. Instead, many have been refurbished as very low-budget hotels or temporary housing. A national survey in 2003 found ~25,300 homeless individuals in Japan (then one of the world’s largest economies)melbournemicrofinance.com. By 2023, the official count of homeless people had plummeted by 84% to only around 3,000 nationwidemelbournemicrofinance.commelbournemicrofinance.com. This dramatic decline is partly attributed to an expansive welfare system (rent assistance and job programs) and a narrow definition of “homeless” (Japan counts only people sleeping rough in public spaces)melbournemicrofinance.com. But crucially, Japan’s cities still offer alternative forms of shelter that don’t exist in the U.S. – for example, the phenomenon of “net café refugees”. Around 5,000 people in Japan live semi-permanently in 24-hour internet cafes (at $15/night) because they cannot afford formal apartmentsmelbournemicrofinance.com. While one might debate the desirability of such arrangements, these micro-shelters (doya or net cafes) absorb many people who might otherwise be on the streets. Consequently, Japan’s visible street homeless population is very low for its size (roughly 0.0024% of the population, versus 0.18% in the U.S.)melbournemicrofinance.com. In short, Japan adapted its low-cost housing – maintaining a form of it (though informal) – and combined it with safety-net programs to yield far fewer homeless individuals than a country like the U.S., which criminalized or eliminated comparable housing.

Western Europe – Temporary Accommodation vs. Rough Sleeping: Many Western European countries likewise show that the availability of low-cost or subsidized housing correlates with homelessness outcomes. The UK and France, for example, report higher homelessness rates than the U.S. (over 300 per 100,000 in France), but the majority of their “homeless” counts are people in temporary accommodation or emergency hostels, not unsheltered on the streetsourworldindata.orgourworldindata.org. These countries long ago phased out Victorian-era flophouses (the UK’s common lodging houses were largely gone by the 1980s), but they invested in alternatives like council housing, statutory homeless assistance, and an extensive shelter system. The result is a form of “hidden” homelessness: large numbers in shelters or transitional housing, but relatively fewer encamped on sidewalks. Germany and the Scandinavian countries similarly have robust social housing sectors and legal rights to shelter; street homelessness exists but is less widespread than in the U.S. Meanwhile, Canada (which shares some housing market traits with the U.S.) has struggled as well – e.g. Vancouver’s Downtown Eastside still has SRO hotels, yet many are now so dilapidated or costly that thousands remain homeless. Canadian analysts note the loss of low-cost rental stock in the 1980s paralleled rising homelessness, much like in U.S. citiespublications.gc.capublications.gc.ca.

The international comparisons reinforce a core point: when extremely low-cost housing is either preserved or replaced (through social programs), homelessness can be significantly reduced. Finland’s near-zero homelessness came not from SROs but from building deeply affordable homes and providing rent support. Japan’s low street homelessness came from tolerating unconventional micro-housing and ensuring those on the margins have at least some roof. By contrast, the U.S. eliminated the old flophouses without adequately replacing that housing function – and has among the highest rates of unsheltered homelessness in the developed worldourworldindata.org. It is a sobering “natural experiment” in how housing policy choices translate into human outcomes.

Housing Market Gaps at the Lowest Income Tier

A key concept tying these threads together is the mismatch between housing costs and incomes at the bottom of the market. In the U.S. today, there is an extreme shortage of housing that is affordable to people with extremely low incomes (for example, those earning under 30% of area median income). National data show that for every 100 extremely low-income renter households, only about 35 affordable rental units are availablenlihc.org. In Minnesota, the situation is only slightly better: approximately 39 affordable units per 100 extremely low-income renter householdsnlihc.org. This means a majority of the poorest households cannot find an apartment or room they can afford – a gap that directly contributes to homelessness or housing instability. By contrast, for moderate-income renters, the market has many more options (vacancies at higher rent levels), and housing assistance programs rarely need to serve them. It is the lowest tier of income where the market consistently fails. Minnesota faces a shortfall of around 100,000 units for extremely low-income rentersnlihc.orgnlihc.org, reflecting decades of underinvestment in that segment.

The disappearance of SROs exacerbated this gap. Those units essentially were the affordable units for the very poor – often renting at 20–30% of the cost of a regular apartment. When they vanished, the housing options for extremely low-income individuals dwindled to nearly nothing. Today, addressing homelessness in the U.S. and Minnesota is largely about recreating housing that serves people with minimal income (whether through new SRO-style micro units, “tiny homes,” supportive housing, or rent subsidies). As long as there are only 35–40 affordable slots per 100 poor households, tens of thousands will remain unhoused. Recent policy reports emphasize expanding supply “deeply affordable” to those with 0–30% AMI incomesnlihc.orgnlihc.org – essentially, re-filling the niche once occupied by the old flophouses, but ideally in safer, modern forms.

Conclusion

The demolition and loss of America’s extremely low-cost housing stock in the mid-late 20th century was a profound structural change that set the stage for the modern homelessness crisis. The historical record shows that homelessness was not an inevitable phenomenon in wealthy societies – it became rampant in the U.S. only after we eliminated the humble SRO hotels and did not replace them at scale. The case of Minnesota’s Gateway District and the ensuing rise in homelessness exemplifies how local decisions to remove “blighted” housing had long-term social costs. National research and international comparisons all point to the same conclusion: when the housing ladder has a bottom rung (no matter how basic), far fewer people fall to the ground. When that bottom rung is missing, those who can’t climb higher end up on the street.

Reversing the persistence of homelessness will require deliberately rebuilding housing for those with the least means. This could involve reviving SRO-style units – indeed, many cities and states are now reconsidering zoning to allow micro-apartments, single-room occupancies, and co-living arrangements once againpew.org. Converting underused commercial buildings into small affordable units is one promising strategy being tried in multiple statespew.org. Housing First programs, as shown in places like Finland, also demonstrate that providing secure housing (with supportive services) to chronically homeless individuals is not only humane but cost-effective. Public policy is slowly acknowledging that the “market” alone will not house the extremely poor, especially not in high-demand urban areasnlihc.orgnlihc.org. Significant public investments – whether via housing trust funds, subsidies like vouchers, or nonprofit housing development – are needed to create units with rents that someone living on a disability check or entry-level wage can pay.

In rebuilding this capacity, we need not recreate the exact flophouses of 1900 with their often squalid conditions. But we must recreate their fundamental role: to offer a door key for those who have only a few dollars to spare, but a great need for a home. The history of SROs and homelessness in America demonstrates that housing is the foundation of stability. Losing the lowest-cost housing led directly to the entrenchment of homelessness; restoring a spectrum of housing that includes extremely low-cost options is essential to reducing homelessness. As one analyst put it, homelessness will persist as long as we pretend that everyone can afford (or merit) a conventional apartment – “When housing is cheap, relatives and friends tend to have more space…enabling them to keep someone at risk of homelessness off the street. … When space is tight, the people forced out are those hardest to live with.”pew.org In the end, ensuring housing for all income levels – including the poorest – is the only proven way to greatly diminish homelessness. The lesson from the past century is that housing policy can create or solve homelessness, depending on whether we value housing the poorest as much as we value eliminating the unsightly poverty in our midst. The challenge now is to apply that lesson by rebuilding the lost housing ladder from the bottom up.

References:

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• Wilder Research (2019). Homelessness in Minnesota: 2018 Study – Key Findingshouse.mn.gov.

• HUD Annual Homeless Assessment Report (2022). Part 1: Point-in-Time Estimates of Homelessnessmelbournemicrofinance.com.

• Our World in Data (2024). “Homelessness rate, international comparison” (OECD data)ourworldindata.org.

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• City Pages (1998). “Room at the Bottom” (Wing Young Huie photos and interviews)web.archive.org.