Wednesday, March 17, 2021

Home ownership more widespread in rural America

A recent report by the Housing Assistance Council reveals home ownership rates are higher in rural America, with 71.4% of rural Americans owning homes as compared to 65.1% nationally. More specifically, 48% of rural and small-town Americans own homes mortgage-free, in comparison to only 37% of the rest of the country. Utilizing U.S. Census Bureau data between 2014 and 2018, the report further elucidates home ownership divides across geographic location, race, and age.

The report emphasizes the generally low cost of housing in rural areas. Almost 38% of rural houses are valued under $100,000, with less than 15% valued at over $300,000. For comparison, the median price for a house in the Bay Area is $1.06 million. More rural home ownership without mortgages and debts is attributed to both the prominence of mobile homes, which can be financed with shorter term property loans, and the generally higher age of rural residents: “With a median age for the adult population of 51 in rural areas compared to 45 in urban areas, the adult population in rural areas tend to be older and naturally in stages of life in which owning a house is more likely.” When homeowner’s age, mortgage debt declines, evidenced by more than 75% of rural homeowners over the age of 65 owning their homes mortgage-free.

Geographically, rural home ownership is lowest in the West, which may be unsurprising to many Californians. In the Golden State, housing affordability and availability is a continual problem in urban and rural areas alike, and “wildfires are aggravating the situation by destroying housing stock.” The lack of housing in rural Northern California is discussed in a blog post here. However, at 68.7%, rural home ownership in the West is only marginally lower than 73.4% in the Midwest and 73.2% in the Northeast.

But high rates of rural home ownership are not equal across the board. There is a large gap between rates of white homeownership and that among people of color:
Approximately 75 percent of rural and small town white non-Hispanics own their homes while only 55 percent of minority households own their homes. Rural and small town African-American households (51 percent) and Native Hawaiian/Pacific Islanders (49 percent) are the least likely groups to own their homes. But rural and small town minorities are nearly 8 percent more likely to own their homes than minorities in the nation as a whole.
Many Americans today view home ownership as a quintessential part of achieving the “American Dream” and a “cornerstone of middle class life.” The benefits of owning a home are numerous: tax deductions, investment building, and individual control over one’s home. But the benefits do not stem only from obvious advantages. Researchers Alexandra Killewald and Brielle Bryan found, “In 2012, each year of homeownership between 1986 and 2008 is associated with about $4,400 more in midlife wealth.” To a modest degree, homeownership is thus a vehicle for wealth accumulation.

Yet barriers to home ownership are high and are felt most acutely by people of color. Housing availability, lack of affordability, credit requirements, and the high cost of down-payments, closing costs, and loans all serve to make home ownership out of reach for many. Black Americans in particular are still impacted by discriminatory housing policies in place before the 1968 Fair Housing Act and are also frequently subject to higher tax assessments.

The Urban Institute suggests a five-point framework for reducing the racial homeownership gap: advance policy solutions at the local level, tackle housing supply constraints and affordability, promote an equitable and accessible housing finance system, accelerate outreach and counseling for renters and mortgage ready millennials, and focus on sustainable homeownership and preservation. Although an implied urban slant may come from the organization’s name, such solutions may be just as effective in rural areas.

The Biden Administration has already taken action to “end policies that enable discrimination in housing and lending, and acknowledging the federal government’s role in erecting systemic barriers to fair housing.” As the country works to decrease the racial homeownership gap, hopefully rural Americans are not left out of the discussion.

5 comments:

Kennedy Knight said...

Great read! I think it is definitely worth emphasizing the racial gap in rural home ownership. I think most often when I picture housing crises, I imagine expensive housing on the West Coast. But more importantly, the housing crisis disproportionately impacts people of color, and rural communities are no different. What does surprise me, however, is that home ownership is most pervasive in rural America when I have begun to understand rural communities as much less wealthy and more sparse than I originally understood.

Thomas Levendosky said...

This was incredibly informative piece, Melissa. The explanation that mobile homes and older populations are partially responsible for higher home ownership in rural areas was really illuminating. Without that information, the data creates misconceptions. I think the traditional idea of home ownership in America involves your sort of prototypical young nuclear family who owns a house and the land beneath it. The reality seems way more precarious than that ideal. This reminded me of our country's employment numbers. Since the Recession, both political parties have pointed to the declining unemployment rate as an indicator of accomplishment. Even at its lowest, the rate does not reflect that many workers are actually "gig" workers and have multiple jobs. Like the reasons behind the high rural home ownership rates, this obscures the sense of security and stability that employment statistics are supposed to signify.

Jaspreet Lochab said...

This is a very informative piece, Melissa! Part of me did not find it surprising that home ownership rates are higher in rural America. The first thought I had when thinking through reasons was inter-generational land being passed down. However, at the same time, I was surprised to the extent that we’ve learned so much about poverty in rural America that it almost doesn’t make sense that the area would have higher home ownership rates. You mention in your piece how many Americans today view home ownership as a quintessential part of achieving the “American Dream” and a “cornerstone of middle class life,” however I wonder if that is beginning to change, at least in urban centers, where home ownership is sometimes too costly, and so most people tend to rent. Regarding the five-point framework advanced by the Urban Institute, I love the idea of accelerating outreach and counseling for renters and mortgage ready millennials. I think most millennials aren’t taught enough about home ownership/mortgages/etc. and are neither equipped with the right tools to achieve home ownership. I wonder if colleges can start offering those classes, or maybe make a more widespread program to cover these topics in high school.

Ana Dominguez said...

Thank you for writing about this, Melissa! I truly would have never guessed that home ownership is more pervasive in rural areas than in urban ones. I always assumed that bigger cities with more houses and higher incomes meant more home ownership but I was wrong. I also read somewhere that rural homes are increasing in value given the fact that many people are buying rural homes now that they can work from home as a result of the pandemic. I wonder whether this will help shorten the gap between the median value of a rural home and a Bay Area home.

brandonreta1 said...

I never knew that home ownership was better in rural America than elsewhere, but it makes sense that it is. Urban Americans probably have greater rental housing options, whereas rural Americans probably live around less apartment complexes and such.

I was wondering if the increased homeownership rates in rural America contribute to rural American’s increased reverence for their locales. It would make sense to identify more with your county or city if you own land there. An American that takes on a lease in Chicago one year, and then a lease in San Francisco the next year, likely doesn’t have the affection for either of those two places that a rural American may have for the small town his family home is located in.