Examining census tracts within counties that are eligible for U.S. Department of Agriculture’s housing programs, Urban Institute researchers discovered that more than 150 counties ranked as having most-severe need for affordable housing units. The number represents 5 percent of eligible counties and roughly 7 percent of all eligible rural population in the country.
The figures look worrying: 38 percent of the researched counties are having moderately severe rental housing needs and 58 percent showed less-severe needs for affordable rental housing production. Compared to national averages, counties with most-severe need had high unemployment rates, were overcrowded and had lower shares of federally subsidized rental units. Roosevelt County in New Mexico turned out to have the most severe need for affordable rental housing production, meeting the high-need thresholds across six of the report’s indicators: Population growth, persistent poverty and unemployment, overcrowded households and severely cost-burdened households.
Demand for affordable rental housing in rural communities severely exceeds supply and the existing stock has aged significantly. Corianne Scally, senior research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute, told Multi-Housing News that it is very difficult to estimate the number of units needed nationwide to meet the current demand for rural housing due to frequent demographic and market changes. However, she confirmed that “(the) analysis of more general indicators still reveals many communities exhibiting characteristics of need, such as population growth, low rental vacancy rates and many renters paying more than half of their income for rent.”
Obstacles along the way
Building more affordable housing units in rural areas is challenging. Several legal and economic impediments determine developers to shy away from these type of projects in non-urban markets.
“In some larger rural communities there may be some traditional barriers to building multi-unit affordable rental housing, such as zoning and land use regulations restricting development. However, other impediments may be more frequent. These include the increasing costs of construction in the face of low market rents, a lack of local infrastructure capacity, community opposition to new construction, increased population or housing density, among others,” Scally added.
Despite the fact that land may seem abundant in many rural areas, another important obstacle is that it is mainly used for nonresidential purposes. A considerable amount is federal or state land and it is topographically impossible to build on it.
What can be done?
The report highlights that although many federal programs are authorized to provide loans, grants, guarantees and operating support for affordable rental housing in rural parts of the U.S., few are actively meeting the need.
“Programs that can construct new units in rural communities with deep rent subsidies—such as project-based Section 8, Section 202 housing for the elderly and USDA’s Section 515 rural rental housing that leverages Section 521 rental assistance—have not been adequately funded to produce new units. If funding was increased, developers would have new resources available for building units with deeper levels of affordability than today’s more common programs provide, such as the Low-Income Housing Tax Credit and the USDA Section 538 guaranteed loan programs for multifamily development,” Scally said.
Furthermore, the Urban Institute researcher told MHN that only about one out of every five households that are eligible for federal housing assistance programs actually receive assistance. Fully funding assistance would encourage more families that are struggling to pay their rent to ask for help. If funding is a significant part of the challenge, the development process and partners are the other half. Developers will only build if the project is financially feasible. Lots of communities have been served by older federal programs, but new solutions are needed.
“Given the growing housing affordability crisis across the country in urban and rural communities, the time seems right to reevaluate the various tools and resources available to government for encouraging more affordable rental housing construction. This could include examining tax policies and incentives, discretionary spending, public-private partnerships, land use regulations, infrastructure resources and more. Investing in rural rental housing development requires innovation and partnership,” Scally concluded.