Asset Building and Rural Home Ownership
High rural home ownership rates disguise other problems like age, condition, and cost of the rural housing stock
According to U.S. Census Bureau data, home ownership in rural areas of the nation is higher than in non-rural areas, with 76 percent of occupied housing units in rural areas owned by the occupants. Overall, 68 percent of households in the United States are homeowners.
High Rural Home Ownership, But What Are the Homes Like?
The characteristics of rural homeownership are different from non-rural areas in many respects. While the age of all housing units in rural and non-rural areas are comparable, about 25 percent more housing units in non-metropolitan areas were built prior to 1930, and over one-third more rural housing units were built before 1919. In total, nearly one-in-six rural occupied housing units were built prior to 1930.
The types of homes owned by rural individuals and families also vary significantly. Nearly one-in-six owner occupied housing units in non-metropolitan America are mobile homes, nearly double the national total. The number of mobile homes in rural areas has increased by 38 percent since 1987.
While a legitimate housing option for many rural people and families, the prevalence of mobile homes in rural areas often acts as a deterrent to the construction of permanent housing, particularly for low-income families and individuals.
Mobile homes also do not provide many of the benefits of traditional, permanent housing – they decrease in value over time, not allowing them to hold their value as a sellable or inheritable asset.
Other characteristics include:
Rural areas have a disproportionate amount of the nation’s substandard housing. Nearly 2 million low-income rural households live in moderately to severely inadequate housing (i.e., units without hot or cold water, inadequate roofs and heating, rodent problems, lead-based paint). In total, 2.6 million rural residents live in inadequate homes of any kind, compared to 2.4 million central city residents and 1.3 suburban residents.
Housing “cost burdens” are greater in rural areas. The accepted housing “cost burden” – the percentage of income attributable to housing – is 30 percent. Twenty-one percent of rural homeowners – 5 million rural homeowners – pay more than 30 percent of their income for housing.
Rural Home Ownership Asset-Building Strategies Face Two Challenges
Home ownership rates, therefore, do not tell the entire story of rural housing as an asset-building strategy. The age, condition, type, and relative cost of rural housing make it “apparent many rural homeowners do not gain the benefits that typically accrue to home owners.” (National Rural Housing Coalition) As such, asset-building strategies based on home ownership for rural people and families face significant challenges.
Two primary challenges concern rural homeownership. First, is the condition and characteristics of rural housing. This is an issue of a lack of quality, affordable housing in rural areas for low to moderate-income rural residents and families.
The second, and related challenge, is one of resources and public policy. According to the National Rural Housing Coalition, rural areas are faced with a “low and declining level of federal housing assistance.”
Every federal housing program provides far less resources to rural areas than to urban areas. Over twice as many urban or metropolitan homeowners receive government-assisted mortgages. According to the 2001 American Housing Survey, 13.6 percent of metropolitan and 14.1 percent of urban homeowners receive federal assistance; only 6.7 percent of rural and 5 percent of non-metropolitan homeowners do.
Rural homeowners fare only slightly better with state and local mortgage assistance programs. In 2001, 5.6 percent of metropolitan homeowners received assistance from state and local programs, while 4.2 percent of rural homeowners received assistance. Overall, only 6 percent of Federal Housing Administration (FHA) assistance goes to non-metro areas. On a per-capita basis, metropolitan counties received nearly 10 times the FHA assistance than did rural counties ($264 for metropolitan counties vs. $25 for rural counties).
Recommendations for Asset-Building Legislation
As state and federal policymakers discuss asset-building legislation, any policy should address the unique housing needs of rural areas:
- Add home rehabilitation, renovation, and repair to the list of allowable uses in the homebuyer section. This would help address the issue of housing quality in rural areas.
- Allow home purchase cost assistance for rural people to include those who are not first-time homebuyers. Since homeownership rates in rural areas are already higher than other parts of the nation, issues relating to an aging and affordable housing stock are more relevant.
- Specifically allow home purchasing assistance in asset-building policy to be used for manufactured homes. Manufactured homes are an increasingly important part of rural housing yet are often treated differently than other types of housing.
The Senate Budget Resolution includes an amendment that would restore $2 billion in funding for CDBG and related programs that would be eliminated under the President’s proposal. The House and Senate will need to reconcile their budget resolutions. Then House and Senate Appropriations Committees will consider appropriation levels for programs, including SACI and the 18 programs it would replace.
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