The Future of Rural Housing

Research Report

The Future of Rural Housing

Abstract

Rural America covers nearly 75 percent of US land area and is home to 15 percent of the US population (roughly equivalent to Spain’s population). Metropolitan areas are home to the other 85 percent, and because these areas are frequently cited as hotbeds of development, innovation, artistic expression, and wealth creation, urban challenges and goals dominate most policy discussions.

As urban America has grown, rural America has lagged. Poverty rates for adults and children remain higher in rural areas, and many rural communities have struggled economically for decades. This report looks to the future of rural counties, extending recent demographic trends to portray demand for housing as rural America’s residents grow older and see only modest population increases. We project the following trends:

  1. Rural areas will see slow growth rates.

    Rural areas are growing slower than urban areas. Between 2000 and 2010, rural populations increased 3 percent, compared with 11 percent in urban areas. From 2010 to 2020, rural populations are projected to increase 2 percent, compared with 9 percent in urban areas. Between 2020 and 2030, rural populations are projected to increase by only 1 percent, compared with 8 percent in urban areas. The nation’s household growth will be driven by metropolitan areas.
  2. Rural Americans are aging faster than Americans in metropolitan areas.

    For decades, rural areas have had older residents than their urban counterparts. Between 2000 and 2010, the percentage of the population above age 65 was about 15 percent for nonmetro areas and 13 percent for metro areas. By 2040, 25 percent of rural households will be age 65 or older, compared with only 20 percent of urban households.
  3. Rural households will become as racially diverse by 2030 as the nation was in 1990.

    Increased racial diversity nationwide has been less pronounced in rural areas. Between 1990 and 2010, the white non-Hispanic share of American households declined by 10 percentage points. In rural households, it fell by only 4 percentage points. By 2010, rural areas were still less diverse (84 percent white) than the United States in 1990 (80 percent white). While rural households will continue to diversify through 2040, they will remain predominantly white.

Implications

The changing composition and size of rural populations has three important implications for rural housing needs over the next 25 years.

  1. Demand for housing in rural areas will increase.

    Slow population growth will not limit demand for housing. Instead, the US population is expected to live longer and more independently than previous generations, increasing the amount of housing required.
  2. The housing needs of rural seniors will require urgent attention.

    Rural areas are projected to be older than their urban counterparts. By 2030, the baby boom generation will have retired, and seniors are expected to head over 40 percent of rural households. After people pass age 60, salaries decline. Even families who own their homes will have housing, transportation, and health care costs. Housing affordability will be a challenge for these populations.

    Moreover, few American homes are well suited for people to comfortably age in place. Demand will grow for retrofitting existing structures and constructing homes that are more accessible to seniors.
  3. A growing share of working-age rural Americans may need housing assistance, even if they do not qualify for it.

    The growing senior population may also shift the income distribution downward in many rural counties. Subsequently, many working families who may have previously qualified for housing assistance will no longer qualify. Without increased resources for housing assistance, working-age families will not qualify for subsidies because resources will go to the lower end of the income distribution.
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