Residents of both "destroyed" housing units (256,000) and those suffering "major" damage (146,000) lost their homes to the hurricanes, making up the roughly one million persons that have been referred to as "displaced. "Many residents of units with "minor" damage (184,000) presumably left their homes temporarily, pending repairs.
Some persons who lost their homes naturally moved in with friends and relatives ("doubling up") in or close to the affected areas, while others presumably found market-rate apartments not far from the impacted areas. But very large numbers of displaced households wound up in shelters or makeshift housing across a wide geographic area and immediately became the subject of a potentially massive federal government response. FEMA came out of the box with controversial contracts for the provision of temporary housing units by a handful of very large corporations, and the word went out that the government also was prepared to purchase about 300,000 "mobile homes" —presumably some combination of HUD-code manufactured homes, travel trailers that are pulled by trucks, and self-propelled recreational vehicles. On September 15, the President also proposed an "Urban Homesteading" initiative that would provide evacuees access to government-owned property in the impacted region through a lottery system.
The Bush administration had planned to move Katrina victims out of shelters by mid-October. However, the temporary housing/mobile home concepts seem to have only limited potential and Urban Homesteading is not off the ground. Furthermore, movement toward a rental-assistance approach that would rely on the existing stock of apartments across a large geographic area (a great idea) is not yet in gear.
With little else working, many evacuees gravitated from shelters to hotel/motel rooms arranged for by the Red Cross and paid for by the federal government. This route was supposed to shut down on October 15, but the Red Cross and FEMA have just extended the program for an indefinite period. The Red Cross reports that 438,000 people were living in about 141,000 hotel/motel rooms on October 2 — a number that has been growing rapidly. With this kind of momentum, the pattern of eventual movement of evacuees to more permanent rental or owner housing (including mobile homes) is highly uncertain.