Affordable Housing Crisis in Rural America

As USDA Program Reaches Maturity Its Time to Rethink Rural Housing Policy 

A long standing, and successful, affordable housing program offered through the USDA is close to running its course.  The USDA Section 515 and 514/516 programs have provided low-interest loan opportunities for building affordable rental housing in rural America and make it possible for rent prices to remain low.  As the programs reach full maturity it is expected that a majority of owners will take steps to raise rent prices.  Their decisions could compound already complex labor issues in the agricultural sector as well as change rural community living.

Collectively, Section 515 and 514/516 programs support farm laborers, disabled and elderly residents to secure housing that costs no more than 30% of their annual income. To date, more than 533,000 apartments and townhomes have been built utilizing low interest loan options offered through the programs. Occupants pay as much as $800 dollars less a month in rental expenses than local market rates. Overall, goals of providing adequate, safe and affordable housing for the lowest income individuals in rural America have been achieved. 

Can We Affordably and Safely House Farm Laborers?

The 514/516 program was designed specifically to target migrant and seasonal housing deficiencies.  By 2045 90% of program loans will reach maturity. A majority of homes built through the program will require updates to be deemed adequate. Without low interest loan options available to support this work the out of pocket costs owners assume is likely to be passed on to renting occupants. With market rental rates significantly higher there is a growing concern that all available housing will be too expensive for seasonal laborers or their employers to afford. 

It’s a unique funding mechanism in that it provides a solution to high rent prices but it is hidden in the fiscal policy structures of our food system. Though we can’t have food without the workforce to produce it, weaving affordable housing into food system policy has built into a complex system. Some say the system is too complex and that other labor structures are better equipped to build funding strategies and meet current agricultural needs.  

The H-2A program, for example, prompted farm owners to make use of the 514/516 program to meet housing requirements for laborers. However, the design of H-2A is intended to place the burden of adequate housing costs on the employer rather than the taxpayer or the renter.  Would it be better if affordable housing was achieved through a means other than federal subsidies? As it stands, employers must provide free housing to employees. Even with low interest loans available, farmers have still felt the added costs that they cannot pass on to renters or fully offset through subsidies and tax incentives. 

Private investment could represent another means of affordable housing support systems.  As opposed to direct loans issued by the government, tax incentives for builders and housing developers could also have the potential to spur on efficient and innovative housing. If houses are built affordably it follows that they would be rented at affordable price points. Over time, there would be a decreased need for government funding and the expense burden would be distributed across builders, owners, renters and taxpayers.

Housing needs today have shifted. When Section 515 and 514/516 programs were developed the greatest need was to build. Today the greater need might be to update existing infrastructure. The old financial structure may not accommodate the new needs.

Is Rural Living Too Expensive?

Interest in farming models that foster close connections between individuals and their food systems is growing. Regenerative and sustainable agendas are rooted in concepts of healthy relationship between humans and the environment, but also community prosperity.  And yet, it could become increasingly difficult for Americans to actually move closer to where their food is grown or for rural residents to continue to afford the cost of small town living.

If the owners who built affordable housing by utilizing the USDA’s low interest loans raise rent prices once their loans mature then the rural housing market will see a shift.  Not only will the elderly and disabled be at risk but young families buying starter homes will find that baseline prices for affordable housing have increased.  And if the baseline is higher than it is likely that all of the rural housing available in the area will see an uptick in pricing.

It could be a real blow to initiatives that hope to decentralize food systems and rebuild communities around local food systems. Without the infrastructure like affordable housing, good schools and community programs who will want to, or even be able to, relocate to rural America?  Though the Section 515 and 514/516 programs have been successful in their endeavors to provide adequate homes, it may be time to reassess the housing needs of rural American in light of current agricultural initiatives.