The voices of Urban Institute's researchers and staff
October 2, 2018

Rural communities need more affordable rental housing

September 17, 2018

*This post has been corrected to show that 54 million, rather than almost 48 million, rural residents live in USDA-eligible areas that have a most severe need or moderately severe need for the production of more affordable rental housing. The number of residents living in areas with a moderately severe need was corrected from 40 to 46 million. Corrected 10/2/18.

Roosevelt County, New Mexico, has a small but growing population of around 20,000 residents and is known for its more than 30 dairies that contribute $188 million to the state’s $1 billion dairy industry. But with growth comes pressure on the housing market. More than 40 percent of households in the county rent their homes, almost 10 percentage points higher than the state average. The number of rental units in the community is low, and most of them are already occupied.

In addition, renter incomes in Roosevelt were an estimated $8.68 an hour in 2017 (less than $1,400 a month working 40 hours a week), while the US Department of Housing and Urban Development (HUD) estimated monthly rent at around $667 for a two-bedroom home in the area. More than 50 percent of renters in the county pay more than half their total income for rent each month. So it’s no surprise that Roosevelt County scored high on our new index of need for the production of new affordable rental housing units.

Compared with all other counties with at least one census tract eligible for housing programs under the US Department of Agriculture (USDA), Roosevelt County scored highest on our index of need for new affordable rental housing construction, hitting six of our seven indicator thresholds, including population growth, persistent and high poverty rates, overcrowded housing units, low to no supply of federally subsidized units, many renters paying more than half their income for rent, and above-average unemployment. The only threshold Roosevelt County didn’t meet was having a rental vacancy rate lower than 5 percent (the rate was 6 percent).

The situation in Roosevelt speaks to a broader problem regarding how the lack of affordable housing supply can create a housing crisis for low-income rural renters and their communities.

 

Fifty-four million rural residents live in USDA-eligible areas that have a most severe need (8 million) or moderately severe need (46 million) for the production of more affordable rental housing.* As highlighted by our interactive map, the 152 counties with most severe need experience more unemployment and overcrowding than other counties, while the 1,136 counties with moderately severe need typically face greater population growth and lower rental vacancy rates.

Building more affordable units in rural communities will require stakeholders to address challenges and explore opportunities. These are among the most significant:

Funding is scarce.

Less than 2 percent of rental units in Roosevelt County were built with assistance from the USDA or HUD, and most federal production programs have been significantly curtailed or ended. The low-income housing tax credit has helped some rural communities, but it faces challenges. Rental assistance helps only if there is enough to go around and if homes are available to rent.

Capacity is low.

Where there are few rental units and where few property owners have worked with federal or state housing programs to build affordable units, there is often little local capacity to work toward a solution. Getting construction moving in these communities may take a combination of technical assistance and incentives.

Coordination is key.

Federal agencies have financed existing affordable rental units in rural communities and have some authority to do additional lending for new construction. Our work shows that it is time for the USDA and HUD to take coordinated action to meet the needs of rural renters who cannot find decent, high-quality, affordable homes. Supply shortages must be addressed by preserving existing subsidized units (as the Housing Assistance Council explores in its new report on preservation) and building more units.

Innovation is necessary.

We need more out-of-the-box solutions to meet the rural America’s rental housing needs. This means examining resident and community needs and reimagining what types of housing can be built, how it could be financed affordably, and where it would be best located in relation to key infrastructure, jobs, services, and amenities.

This research makes a clear case for more affordable rental housing construction in rural communities that need it. It’s time for policymakers, developers, and advocates to generate solutions necessary for a thriving rural America. 

Illustration by filo/Getty Images.

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