The availability of affordable housing is essential for any community and has recently become a growing concern in rural areas. Over the past year, the demand for multi-family housing has grown in rural areas and small towns while it has shrunk in highly urbanized areas, suburbs, and exurbs of large cities.[1] However, the housing supply in many rural communities has not been able to keep up with this demand and affordability is quickly becoming a problem.[2]

The COVID-19 pandemic changed the ways many people work and live. One of these changes has been an increase in the number of people who are trading in life in a big city for small-town living, including higher-income earners who work from home. And, as seen in communities across the country, when population and demand grow, so do local housing prices.

As rural areas continue to draw new population growth, they must take steps to ensure they meet new demand while also protecting housing affordability for existing residents and maintaining their unique small-town character and appeal.

Long-Standing Problems Demand Attention

Increases in population and demand are also shining a light on existing challenges in the rural housing market that have been largely ignored until now. Rural communities typically tend to fall short of affordable housing supply targets for low- and middle-income households. And, due to the nature of the housing market in rural areas, more housing units are usually available for sale than for rent.

As rural populations begin to grow, many communities are investing in renovating empty industrial or commercial buildings into upscale multifamily living. Such investments will expand the housing market, providing additional housing options, and taking the stress off the market, but these redevelopment projects don’t typically include affordable units for low-income households.

Along with a growing population, having a large number of vacant units creates additional pressure on the local housing market. Housing units can be classified as vacant if they are abandoned, unused, or used only as short-term vacation rentals. In many rural communities, these vacant units also need significant and potentially costly repairs or renovations and do not appeal to buyers or renters, which further limits the available local housing supply.

Older properties also often have quality problems, such as lack of adequate plumbing or electrical systems, poor insulation, lead paint, etc. that can negatively impact residents’ health and comfort. Older housing stock also often lacks updated amenities that are essential for residents and help keep utility costs manageable.[3]

Potential Solutions for Rural Communities

How can rural communities continue to grow while keeping their small-town character? While many urban communities focus on increased density to support their housing needs—specifically affordable housing—and offer density bonuses, tax incentives, and zoning regulations that require affordable units, such solutions are often not applicable in rural communities because they do not share the same density and market dynamics as urban areas.

One strategy that addresses existing housing challenges and helps preserve community character is to focus on repairing and renovating existing housing stock. According to the United States Department of Agriculture (USDA), which is also responsible for rural economic development in the U.S., the current rural rental home market will need an investment of nearly $5.6 billion over the next 20 years to preserve more than 470,000 rental homes currently in disrepair.[4]

Single-family homes also often fall into disrepair and obsolescence. By investing in the restoration of its current housing stock and by turning single-family homes into multi-family units where needed, rural communities can address pre-existing housing repair needs while also providing additional affordable housing units to meet new demands.

Programs such as Rebuild Together, Habitat for Humanity, and local and federal programs offer loans, grants, and direct services to assist with repairing homes for low-income households, seniors, and residents with disabilities. [5]

American Rescue Plan Act (ARPA) funding can also be used to address housing needs. The goal of ARPA is to reverse the negative impacts of the pandemic, address economic fallout, and lay the foundation for an equitable future. [6] Providing additional affordable housing by investing in repairs contributes to the ARPA goal of laying the foundation for an equitable future. Many communities have used ARPA funds to create new housing programs or fund existing programs.

Other funding opportunities include, but are not limited to:

• U.S. Department of Housing and Urban Development (HUD)
  • Capacity Building for Community Development and Affordable Housing
  • Fair Housing Initiatives Programs – Private Enforcement Initiative APRA
  • Low-Income Housing Tax Credit 
  • The HOME Program: Home Investment Partnerships
    • Community Development Block Grant (CDBG) Program
• U.S. Department of the Treasury Emergency Rental Assistance
• U.S. Department of Agriculture (USDA) Multifamily Housing Rental Assistance Program
• National Council of State Housing Agencies Housing Bonds
• National Low Income Housing Coalition National Housing Trust Fund
• Federal Housing Finance Agency Affordable Housing Program
• Grants.gov allows you to cross-search agencies for appropriate funding

Community land trusts have also been used effectively to acquire and reserve existing developable land and even existing vacant housing to ensure it remains affordable for future use. Units that are included in the land trust can be price-controlled, even when sold, and the owners or renters are often provided with homebuyer education classes, and finance and maintenance counseling. Land trust properties often result in lower rates of mortgage delinquency and foreclosure. [7]

Where possible, it can be beneficial to work with other nearby communities. Housing challenges and needs are not limited by geography and often spill over into surrounding communities. Regions can better address their housing needs by working with others to fully understand and address the challenges.

Other strategies to support a fair housing market include, but are not limited to:

• Employing inclusionary zoning practices
• Incentivizing affordable housing through density bonuses
• Waiving fees and creating tax exemptions or incentives for affordable developers
• Allowing for flexibility in development by minimizing development restrictions
• Prioritizing work with affordable developers
• Using overlay zoning to create additional housing development opportunities
• Creating a diverse housing stock that includes mobile homes, tiny homes, cottage clusters, multi-plexes, townhomes, single-family homes, and more

The methods described above are not exhaustive of all available housing strategies. It is essential for a community to identify the housing approach that works best for their region.

In Conclusion

As the housing market continues to change and housing demand continues to rise in rural communities, it is important to ensure residents’ needs are being addressed. Various solutions and practices can help take the stress off the housing market and provide a diverse housing stock for any given area. Rural communities will especially need to continue to assess and forecast their housing needs to meet residents’ (both existing and new) demand and ensure housing equity and opportunity for all.

Camoin Associates offers a variety of services and expertise that may help if your community is struggling to meet new housing demands, including housing needs assessments, development feasibility, funding strategies, visioning and project development, and more. 

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[1] “Demand Surges for Rental Housing Far From Cities,” CoStar

[2] “COVID-19: The Impact on Housing and Rural America,” Freddie Mac

[3] “Housing the Workforce in the Rural Fifth District,” District Digest

[4] “Housing Needs in Rural America,” National Low Income Housing Coalition

[5] “Housing the Workforce in the Rural Fifth District,” District Digest

[6] “American Rescue Plan Spending: Recommended Guiding Principles”

[7] “Housing the Workforce in the Rural Fifth District,” District Digest