Housing as infrastructure, like roads and electricity.
We will exit an era where housing prices always rise, because both taxes and insurance will become unaffordable. I see a combination of publicly managed apartments (like Germany or Austria) with a much smaller private market for houses. The end-game is housing managed like infrastructure, with most of it publicly managed but a few privately managed/owned houses for unique or highly desirable spaces.
There is also a crisis in affordability of apartments, with a report [0] showing a collapse in lower-cost apartments that is partially driving homelessness. It is especially hard for fixed-income folks.
> arrest the homeless
Most homeless are working homeless. They crash with friends and family, or they live in their cars/trailers. Others are pushed to the periphery or out of their job market entirely; San Fransisco's struggle for service workers is a reflection of this trend, but it's hardly unique to the Bay Area. We need workers for just about everything, and those workers need a place to stay.
While this won't solve street-level homelessness, right now most homeless programs cannot move recovering people into permanent housing due to affordability and shortages. There are long waitlists right now for Housing and Urban Development subsidized housing because of the shortages. There are camp grounds or shelters, but those are only temporary. Having more stock available also means these homeless programs can provide much needed stability for recovering people and get them away from places/people that might cause them to relapse.
> Does the government eminent domain the houses
I see a collapse in house prices, and that might cause private equity to dump a bunch of housing stock into the market. To prevent a total collapse government would step in and be a buyer-of-last-resort, which will kickstart the publicly managed housing initiative. Another is insurance, where private insurers step away leaving governments to either rebuild after disaster or face a new homeless crisis. There's also banks holding a lot of mortgage paper that can go underwater forcing another intervention.
I see plenty of cases of market dysfunction that requires government to step in without explicitly eminent domain, which is why I see housing-as-infrastructure becoming the 21st century solution.
[0]: https://www.jchs.harvard.edu/press-releases/new-report-shows...