Slum clearance and urban renewal reduce the supply of housing, and increase the supply of homeless people. From Ryan McMaken at mises.org:
Homelessness today is often blamed on both “gentrification” and “neoliberalism.” When these terms are used in the context of urban housing, it is usually implied that too much market freedom makes housing unaffordable to large swaths of the population. Thus, we are told capitalism is the primary culprit we now find in many large cities from Boston to Los Angeles.
But there is much more to the story.
Since the Progressive Era, government agencies — from the federal level on down — have been front and center in subsidizing, regulating, and planning city development in ways that have made housing in city centers more sparse and more expensive for households who aren’t part of the hipster-millionaire demographic that so many urban planners and politicians are working hard to attract.
While rising demand for housing in a fixed number of square miles will indeed increase the price of land and housing, various types of government intervention makes housing more expensive than it would otherwise be. And sometimes, through zoning ordinances and other regulations, cities largely outlaw just the sorts of housing that are most needed by low-income residents.
To gain a better understanding of why homelessness is a recurring problem with apparently growing numbers, it is helpful to examine the origins of what is now standard operating procedure for cities: centralized urban planning. While very-low-income households and persons have long been part of the urban landscape in both the United States and Europe, city officials in the past often recognized that low-income neighborhoods were simply something that had to be tolerated. Although reformers often complained of the unclean and allegedly immoral nature of these places, a lack of government power — and resistance from private owners — prevented city officials from abolishing the areas of cities that provided housing. This housing — however sub-optimal it may have been — was preferable to homelessness.