Hey, we should do that here!
Oh, wait, we already do that here. In fact, we helped to pioneer that strategy here. 1811 Eastlake is only one such program (though it is famous because the original research supporting this model is based in part on it). We have thousands of units of this kind of housing, and spend 10s of millions of dollars a year on it.
Despite what Matt Yglesias says about it, the money still does have to come from somewhere. And unless we are going to close jails and emergency services, we can't actually reallocate those funds.
Here's an overview of United Way's campaign to end chronic homelessness, just as one starting point:
Should we do more? Yes, clearly we need to. But permanent supportive housing for the chronically homeless is not a new idea here.