The housing affordability challenges in large, high-cost cities like San Francisco and New York often overshadow the enormous housing challenges in rural America. Though the situation is more extreme in metro areas, rural areas and small towns also face significant shortages of affordable and available rental housing.
In fact, as our newly updated housing affordability gap map illustrates, nearly every county in the United States lacks enough affordable housing to meet residents’ needs, a crisis that is particularly urgent for extremely low-income (ELI) households. Nationally, only 46 adequate and affordable rentals are available for every 100 ELI renter households—and without federal support, this problem would be significantly worse.
What’s driving rural America’s housing challenges?
Housing costs in rural areas are often lower than in metros, but so are incomes. And poverty rates have been higher in rural areas than in metros since the 1960s, when rates were first officially recorded. In 2010, the rural poverty rate was 18.1 percent, compared with a 15.1 percent urban poverty rate—the smallest rural-urban difference on record.
Just like big cities, small towns and rural communities have different market conditions driving the affordability challenges facing each community.
In some small towns, rising rents are making the affordability crisis worse. Small resort towns, like Breckenridge, Colorado, and Traverse City, Michigan, are feeling the squeeze of gentrification. Tourism fuels the economy, opening up jobs for locals and seasonal workers, but affordable rentals are hard to find. And many landlords can earn more from short-term rentals to tourists than long-term leases to residents.
In some communities, like Sunflower County in the Mississippi Delta, deep-seeded economic distress from manufacturing job loss and changes in the agriculture industry has made it harder for families to cover basic expenses. With the poverty rate and unemployment rate nearly double the national average, many Sunflower County households have too few resources to afford housing.
The federal government is a critical source of affordable housing in rural America
Without federal housing assistance, rural areas and small towns would lose 450,000 affordable rental units, or nearly 40 percent of their available housing stock for extremely low-income renters. In fact, federal rental assistance disproportionately goes to small and rural areas compared with the distribution of ELI renters, which are more concentrated in metro areas.
For every 100 ELI renters in rural or small towns, 69 affordable rental units are available. Without support from the federal government, the number of affordable and available units would fall to 42 per 100 ELI renter households.
In communities like Sunflower County, federal rental assistance programs make up almost all affordable, available, and adequate rental housing. Without federal rental assistance, the number of available units would drop from 68 to only 8 per 100 ELI renter households.
The US Department of Housing and Urban Development (HUD) has the biggest effect on the affordability gap in rural communities, helping nearly 300,000 rural ELI renter households afford modest housing through a variety of programs.
Less well known are the US Department of Agriculture’s (USDA) rental housing loans and rental assistance programs, which target rural areas and provide roughly 434,000 units to low-income households. USDA’s rental assistance program in particular provides affordable rental housing for nearly 280,000 ELI households, of which just over half live in rural and small towns.
Expanding prosperity in rural America through investments in housing
- Supporting and expanding HUD and USDA rental housing programs. Housing is both an essential safety net and a platform from which families can improve their health, educational, and economic outcomes, yet there is not enough federal rental assistance to meet the demand for affordable rental housing in any part of the country. Over the past decade, federal investments in rental assistance have essentially flatlined, and the effects of sequestration have squeezed limited resources. And because USDA’s rental assistance is relatively small, the consequences of broader USDA budget cuts on rural renters can be overlooked.
- Better aligning federal rental assistance programs. The geographic boundaries are blurring between these vital USDA and HUD housing programs. The USDA provides essential services and supports to rural America, but their core book of business is not housing. HUD and USDA should look for ways to leverage HUD’s long track record of administering rental assistance to better align programming and management and prioritize the preservation of project-based rental assistance. This could help reduce fragmentation and improve outcomes for people served by these programs.
- Ensuring capital is reaching rural communities and small multifamily buildings. Urban and rural communities face challenges securing capital to build and preserve affordable housing units, especially in small multifamily buildings. The low-income housing tax credit (LIHTC), HUD’s community development block grant and HOME investment partnerships program, the Federal Home Loan Bank Affordable Housing Program, and state housing trust funds are all important resources for affordable housing in both urban and rural communities.
- Creating new tax incentives to expand the supply of rental housing. Last month, the Center on Budget and Policy Priorities rolled out a proposal for a renter’s credit, which would reduce the cost of decent rental housing, including LIHTC properties, to a level ELI households could afford.