Should California Double Down on Building Tiny Homes for People Experiencing Homelessness?

When 48-year-old Carlos Ruben Jacobo was living on the streets, he preferred to sleep in the park than take a bed at one of San José’s group shelters.

“There were just too many horror stories for me to go there — staff robbing you, people robbing you,” he said. “Bad people there.”

So, when a caseworker offered him a spot at one of the city’s newest tiny home villages, he was skeptical.

He changed his mind when he learned he’d get his own room with a bathroom and air conditioning, and when he saw photos of the colorful shipping container-like buildings arranged around a courtyard with shaded tables, gated dog runs and a communal kitchen that offered three free meals a day.

“Once I got in here, I [felt] safe,” he said. “It really feels like home.”

Jacobo is one of more than 1,600 people who’ve lived in a tiny home in San José — a city that has embraced this type of temporary housing more aggressively than nearly any other in the state. There’s no statewide data tallying the homes — the term has become shorthand for everything from rudimentary sheds to multi-story modular housing — but cities across California, from Los Angeles to Sacramento to Oakland, have each added scores of them in recent years.

Last year, Gov. Gavin Newsom signaled his support for the approach when he promised to distribute 1,200 more to select cities, including San José. Supporters have heralded the individual accommodations as a faster, cheaper, and more humane way to whisk people off the streets.

At a moment when unsheltered homelessness in California has reached epidemic proportions, and the devastating mental and physical consequences of living outdoors have never been more clear, tiny homes offer an alternative to group shelters.

Now lawmakers are considering a plan to expedite their construction. A proposed state law, SB 1395, would make it easier to build tiny home villages by clearing some of the red tape that slows new projects.

“We’ve seen this dramatic increase in people dying on our streets,” said state Sen. Josh Becker (D-Menlo Park), who introduced the bill. “We have to get people off the streets. This is an extremely cost effective way to do that.”

But there are longstanding concerns surrounding the model. Data around outcomes is mixed, with rates of success at getting people into permanent homes varying from city to city and site to site. And skeptics are wary that tiny homes risk normalizing substandard housing, arguing they do nothing to either prevent homelessness or solve it.

Meanwhile, a recent state audit blasted the Newsom administration, along with local governments, for failing to track whether the $24 billion spent on reducing homelessness in recent years is actually working — calling into question whether tiny homes like the one where Jacobo lives are worth their cost.

“If half of American renters can’t pay their rent, is a tiny home the answer?” said Jennifer Loving, CEO of Destination Home, a Silicon Valley organization, referring to a recent report from Harvard University’s Joint Center for Housing Studies. “It’s better than somebody being on the streets, but it’s not an answer to homelessness.”

The promise

The tiny home village where Jacobo lives in San José, called the Guadalupe Emergency Interim Housing site, employs many of the field’s best practices, gleaned from studies of existing sites and focus groups with people who’ve experienced homelessness.

The 96-room village was designed with input from formerly unhoused people who told developers it should be colorful, dog friendly and free of curfews or limits on how long people can live there. Case managers help clients track down documents, access benefits, and find jobs and housing. Many residents are enrolled in an employment training program run by Goodwill of Silicon Valley.

“That is the model that is going to be the most successful anywhere,” said Jocelyn Michelsen, associate vice president of LifeMoves, the nonprofit that operates the site and others across the city.

Jacobo has been in his tiny home for about a year, longer than what Michelsen said is the typical stay of around nine months. Here, he plans to take advantage of job training he hopes will prepare him to work as a security guard. In the meantime, Jacobo said his city-assigned case manager is helping him apply for housing.

“I’m nervous because it’s a new journey,” he said. “But I’m excited at the same time because I want financial independence.”

San José Mayor Matt Mahan credits the city’s tiny homes with reducing unsheltered homelessness by 10% from 2022 to 2023, even as it increased by roughly the same amount statewide and nationally over that period.

The city doesn’t keep tabs on how often people accept offers of shelter at tiny home sites, but a city spokesperson said there’s a waitlist. And other research has demonstrated that people are more likely to accept offers of shelter at tiny homes, motels, or similar accommodations when residents get an individual room and the privacy it affords.

One study noted that it enabled some to get health care treatment for the first time since becoming unhoused. Another found that motel or hotel rooms lowered the mortality rate among residents, including from overdoses, and reduced interpersonal conflicts, police responses and hospital stays.

But enhanced privacy comes with a higher price tag. Pallet, a leading producer of tiny homes that has sold over 1,900 units in California over the past four years, has seen increasing interest from cities in units with ensuite bathrooms, according to CEO Amy King. But, she noted, individual plumbing hikes prices significantly.

“[Cities] are not following through with purchases of those unit types, with us or other vendors, at scale,” she said.

In San José, each new tiny home costs between $75,000 and $175,000 to build, according to Mackenzie Mossing, Mahan’s chief policy officer. The price tags vary depending on unit size and whether bathrooms are private or shared, among other factors. That’s significantly more than new congregate shelters in the Bay Area, which average around $43,000 per bed.

But while they are often more costly to build, they can be less costly to operate than traditional shelters. San José’s tiny homes range from just over $10,000 to nearly $29,000 per bed annually. By comparison, most of the local congregate shelters cost the county between around $17,000 and $35,000 per bed each year.

Different sites, disparate outcomes

When it comes to how likely residents are to move out of these communities and into permanent homes, the data is inconclusive: Figures vary dramatically across cities and even across different tiny home sites within the same city.

As part of a state-commissioned study released last year, UC Berkeley Terner Center researcher Ryan Finnigan visited tiny home sites across the state, surveyed service providers and talked to people experiencing homelessness. He found some tiny house communities offer robust services, while others are understaffed; their reputations varied accordingly.

“There’s just such variation in the model,” Finnigan said. “Sometimes people have just heard bad things.”

In Oakland, John Janosko has few good things to say about the Wood Street Community Cabins, where he lived for almost a year. He said the shared bathroom facilities were frequently broken, and while he was grateful for free meals, he said the site provided paltry services.

A spokesperson for the city pointed out the site was designed with input from future residents and said officials are working with the nonprofit that manages the program to address concerns.

“I’ve seen everyone’s mental state, their emotional state, their spiritual state, their physical state deteriorate,” Janosko said of his fellow residents, who he lived with in an encampment before moving into the cabins. “There’s nothing here to keep them … afloat.”

Oakland got a $1 million grant last year for one of its cabin community sites to quickly transition its residents to permanent housing after an audit found that fewer than one in three residents left the sites for a permanent home. That’s an improvement over group shelters serving single adults in Oakland — though some years, only modestly. During the same time period, the proportion of people leaving group shelters for permanent housing ranged from a high of 24% in fiscal year 2018 to a low of 7% in fiscal year 2019.

Janosko said more support would make a difference. “These villages, they need people supporting them 24 hours a day, wraparound services,” he said.

Still, even at San José’s Guadalupe site, the outcomes are not much better. Since the site opened a year ago, only about 30% of residents who have left the facility moved into permanent housing. Over a quarter returned to homelessness.

And since 2020, across San José’s six city-funded tiny home communities, the percentage of people who ended up in permanent homes varies widely, from a low of 18% at the Felipe Avenue site, to a high of 77% at its tiny home village for families, called Evans Lane.

City staff point out that the site with the worst outcomes requires people to leave after four months, unlike the others, where people can stay longer.

If there isn’t an affordable home for residents to move to, service providers say many simply return to the streets. But it’s not just about the availability of housing, it’s also how to pay for it.

Three out of four people who leave temporary housing in Santa Clara County for permanent homes do so using federal vouchers for subsidized rent. But those vouchers are scarce: The waiting list in Santa Clara County has around 37,000 people on it. The county housing authority estimates it’s able to serve about one in six eligible residents.

“Even if the tiny home facility is amazing, it’s hard for [residents] to move into housing if there’s no housing to move into,” Finnigan said, adding that success “depends as much on the availability of permanent housing as it does on what the shelter does.”

Doubling down on tiny homes

Despite the varying outcomes across tiny home sites in San José, Mayor Mahan is on track to more than double the number of tiny home beds in the city. As he does, he’s coming under fire for pushing to use money earmarked for permanent affordable housing to pay for the temporary units. The city’s most recent budget proposal could divert the entirety of its Measure E fund away from new housing construction.

Consuelo Hernandez, director of the Santa Clara County Office of Supportive Housing, is bracing for the impact. Without a strong investment in new affordable housing, she said, “We are just putting people in these little boxes with no plan. … People need an exit strategy.”

Shifting funds toward temporary solutions has also meant less money for prevention efforts. The county saw a spike in the number of new people falling into homelessness last year, and some observers note that trend corresponded with a decision by city leaders to fund more temporary housing.

Still, Mahan wants other cities to follow his lead. He’s co-sponsoring SB 1395, the state bill that would help clear the way for more tiny home projects. The bill would ensure such projects are eligible for streamlined zoning under the Shelter Crisis Act, which allows for expedited development, and free up state money for this type of housing.

Mahan argues the change is needed to accelerate the time it takes to develop the projects, which has stretched from around four months to about a year, he said, ever since emergency provisions that expedited development during the pandemic were dropped.

To remedy this, the City Council last year backed him in declaring a shelter emergency that tweaked land-use rules and building codes, changes expected to shrink construction time significantly.

Under the loosened rules in San José, sites aren’t required to have running water, just mobile showers and portable toilets.

That raises concerns for some observers.

“These are meant to be really short-term emergency spaces where folks quickly move into permanent housing,” Finnigan, of the Terner Center, said. But given the reality that people may spend months or even years living in them, “There’s a real need to make the spaces where people are living for much longer than a couple of months dignified and healthy and stable and safe.”

Sen. Becker points out that any tiny house is subject to state building codes, and is an improvement over the status quo.

The bill passed out of the Senate earlier this month with broad support.

“We can’t wait for that to solve the problem,” Becker said. “Sometimes you get in this area where you have the perfect get in the way of the great.”

Correction (June 4): The original version of this story stated that since 2020, only about 30% of residents who have left the Guadalupe Emergency Interim Housing site have moved into permanent housing. That is incorrect, as the site only opened about a year ago. In that time 26% of residents exited to homelessness, not nearly 40%. 

Correction (June 13): The original version of this story misspelled Ryan Finnigan’s surname. It is Finnigan, not Finnegan.