There's a wide variety of reasons, but some recent shifts in thinking on this are instructive as to what exacerbates the problem
Arrest vs social services
San Francisco (deep blue city in a deep blue state) is something of a unique experiment to deal with homelessness. It's been such a contentious issue there, there's a whole Wikipedia page dedicated to it, as well as an official SF city department.
In the 90s, you had police action used to combat homelessness. This section highlights the microcosm of different approaches (from Wikipedia)
Jordan introduced the Matrix Program, which expanded the role police had in tackling homelessness by increasing the number of citations given to homeless people for city misdemeanors, with 6,000 citations issued in the first six months of the program's initiation. Matrix teams of city police usually accompanied with social service workers to systematically sweep the city block by block to engage members of the homeless community and dismantle homeless encampments. The initial reception from city residents was mostly positive with 75% of calls to the Mayor's office praising the crackdown as a needed step to clean the city up.
Critics of Matrix accused the program of using resources on punitive enforcement of quality of life laws that generally only affect the homeless community, like sleeping in public and loitering, instead of promoting services to aid homeless people. Mass citations to homeless people, critics argued, was counter-productive since those in extreme poverty lacked the funds to pay the fines. Judges would respond to unpaid fines by issuing arrest warrants, resulting in the incarceration of homeless people when the same resources used to jail the inmates could instead go towards expanding shelter services.
Willie Brown, Jordan's successor, promptly went the other direction. He took steps to dismantle the legal processes in play here, while keeping the policy of removing homeless encampments. Since Brown took office, San Francisco has been trending towards social services, rather than legal enforcement, although all mayors have still cleared homeless encampments from time to time.
There are also new legal problems now associated with clearing camps. Martin v. Boise (9th circuit ruling, governs CA and other western US states) prohibits clearing of camps without adequate shelters in place. And groups like the ACLU have fought vigorously against such policies.
SF is promising to do better, as usual (projecting zero unsheltered homeless by 2025). It does, at least, note there are other challenges at play, which will likely hamper said goal.
It is critically important to note that the ability to scale permanent housing and shelter opportunities and achieve the end of unsheltered homelessness is not only constrained by the present gap in financial resources. Other constraints include the difficulty of identifying and securing sites, the delays that consistently occur in leasing and development activities, and the need to build the nonprofit and City department capacity to scale up interventions, support an expanded system of housing, shelter, and prevention programs, and take the necessary steps to identify and respond to racial disparities or risk deepening those inequities
In other words, throwing money at this problem can't actually solve it. Let's talk about some of what they mention as other factors.
San Francisco (and other heavily populated blue states) are facing a serious problem with a major housing shortage creating "working poor" conditions due to exorbitant housing costs
Jed Kolko, chief economist of residential real estate site Trulia, says tech is an important part of housing demand in San Francisco both on the rental market and the for sale market. The key difference between a tech hub like San Francisco compared to Seattle, Austin, and Raleigh — the first of which has a greater share of its economy rooted in tech — is housing supply. Other tech hubs around the country build more, which alleviates demand. San Francisco is one of the most regulated cities in America when it comes to urban development, which heavily restricts how much can be built.
San Francisco also has lots of red tape, such as rent control
Landlords can only raise a tenant’s rent by a set amount each year (tied to inflation). Landlords can also petition for other increases. Notably, capital improvements can be passed through to the tenant for a maximum increase of 10% or increased operating and maintenance costs for a maximum increase of 7%, but these rent increases must be documented and approved by the Rent Board before they can be imposed. The tenant can request a hardship exemption for the capital improvement and operating and maintenance passthroughs.
And it has a powerful Board of Supervisors that reject housing projects for unclear reasons
On Tuesday, in an 8-3 vote, the board upheld an appeal of the apartment complex at 469 Stevenson St., essentially saying that the project’s 1,129-page environmental study was inadequate and directing city planning staff and the developer to redo it. The broader study could take a year or two, and the Board of Supervisors could still reject the project if they deem that inadequate.
This isn't a unique problem to SF. California has a law called the California Environmental Quality Act which allows anyone to sue to block a project on the grounds that a proper environmental review has not been done. The law is routinely used to block new housing projects
Yet when a local nonprofit developer proposed several years ago to build a 49-unit apartment building on the lot—with 24 homes set aside for disabled veterans experiencing homelessness—it was slammed with an environmental lawsuit. A single angry neighbor was able to delay the project, thanks to a piece of legislation known as the California Environmental Quality Act. Although a 189-page assessment found that all possible environmental effects could be mitigated, the suit demanded that planners spend years conducting additional environmental research. The site—covered in cracked concrete and lined with a barbed-wire-topped chain-link fence—remains empty to this day.
Poor mental health services
This site, for instance, gives the following statistics
According to a 2015 assessment by the U.S. Department of Housing and Urban Development, 564,708 people were homeless on a given night in the United States. At a minimum, 140,000 or 25 percent of these people were seriously mentally ill, and 250,000 or 45 percent had any mental illness. By comparison, a 2016 study found that 4.2 percent of U.S. adults have been diagnosed with a serious mental illness.
Virtually all states have strong systems to deal with people who are openly a danger to themselves or others, but not so much when they are no obvious danger, but are incapable of taking proper care of themselves. The cost of such a wide grey area can be unacceptably high when that first line cross is a deadly one
“I pushed a woman in front of a train,” the deranged suspect told police after surrendering without incident, according to a second source. The suspect has a documented history of mental health issues with the NYPD, the second police source added, and there was no indication that the killing was a hate crime.
The catch for some blue states is that bar seems to be higher than in other states. Eric Adams, Democratic mayor of New York City, raised eyebrows when he openly advocated for broader involuntary commitment after the aforementioned murder of a woman at the hands of a mentally ill homeless man.
New York City Mayor Eric Adams today announced a new pathway forward to address the ongoing crisis of individuals experiencing severe mental illnesses left untreated and unsheltered in New York City’s streets and subways. In a public address, Mayor Adams detailed a compassionate new vision to tackle this crisis, beginning with a directive being issued immediately to city agencies and contractors involved in evaluating and providing care to individuals in psychiatric crisis so that more people in need of help receive it. Mayor Adams also laid out an 11-point legislative agenda that will be among his top priorities in Albany during the upcoming legislative session. The agenda takes aim at gaps in New York State’s Mental Hygiene Law that intensify the city’s challenges in meeting the needs of its most vulnerable residents with severe mental illness. Finally, Mayor Adams announced new clinical co-response teams deployed in New York City’s subways to respond to those with serious mental health issues, as well as an enhanced training in partnership with New York State for all first responders to compassionately care for those in crisis.
Adams put out a brochure on some places where the system in NY is failing
There should be no question that people in these categories – even if not threatening violence or suicide or walking into traffic — are at risk of “serious harm” to themselves, in ways they would surely wish to avoid if their minds were functioning properly. But in New York, such individuals are routinely denied care by evaluators who interpret the law to require a demonstrated risk of violence, suicide or serious bodily injury.
Gavin Newsom (former SF mayor and current CA gov) has also embraced expanded mental health services, including a faster track for involuntary commital
Right now, homeless people with severe mental health disorders bounce from the streets to jails and hospitals. They can be held against their will at a psychiatric hospital for up to three days. But they must be released if they promise to take medication and follow up with other services.
The new law would let a court order a treatment plan for up to one year, which could be extended for a second year. The plan could include medication, housing and therapy. While it shares some elements of programs in other states, the system would be the first of its kind in the country, according to the office of Democratic state Sen. Tom Umberg, a co-author of the law.
This issue is less a red-blue one than the other issues I mentioned (advocacy groups that chart this have lists that do not line up neatly at all). Combined with other blue state problems listed, however, seems to exacerbate the problem.