Decline in Reasonable Housing Prices in Remote American Regions
In a recent report, the Council of Economic Advisers (CEA) has highlighted the deteriorating housing affordability in rural America. The report, titled "Rural Housing Affordability: Challenges and Opportunities," reveals a marked decline in housing affordability over the past two decades.
The report's key findings show that rural homeownership rates have decreased for working-age Americans. Specifically, the decline in homeownership rates between 2000 and 2023 is 3.8 percentage points for households aged 36-40, and 3.2 percentage points for households aged 31-35. This trend is particularly concerning as it suggests a shrinking number of homeowners in rural America.
The report also provides evidence that rural incomes have not kept pace with the increase in housing costs. Over the same period, rural rents increased by 31.2%, while rural renter incomes only rose by 5.5%. Similarly, the median real income of rural homeowner households also only rose by a small amount.
The report attributes the housing affordability crisis to several factors. A shrinking supply of low-cost rental homes, aging and deteriorating housing stock, and rising costs that outpace incomes of modest- and low-income households are identified as primary contributors. The loss of affordable units is driven by demolitions, conversions to market-rate housing, and inadequate funding for repairs and preservation of existing affordable housing.
Other factors include limited new housing supply and financing challenges, poor housing conditions prevalent in low-income rural areas, transportation and geographic isolation, and economic shifts and stagnant wages. These factors compound the housing affordability crisis, making it difficult for many rural residents to afford housing.
The report's Figure compares the current values of housing costs and incomes to their 2000 values, indexed to 100. The Figure indicates a marked deterioration in housing affordability in rural America, with both real rents and real house prices rising at a pace significantly faster than rural incomes.
Recent legislative efforts like the ROAD to Housing Act of 2025 aim to address these issues over time by increasing housing supply, enhancing financing options, and reforming programs specifically with rural housing needs in mind. However, immediate relief is limited.
In summary, the deterioration of housing affordability in rural America reflects a complex interplay of declining affordable rental stock, poor housing quality, economic disadvantage, and systemic challenges in rural housing development and preservation. The report serves as a call to action for policymakers and stakeholders to address these challenges and work towards creating more affordable housing options in rural America.
- Struggling personal finances for many rural residents continue to be a significant concern, with the report revealing that rural incomes have not matched the increase in housing costs over the past two decades, leading to a housing affordability crisis.
- The ongoing issue of housing affordability in rural America necessitates immediate attention, particularly in the areas of finance and investment within the real-estate sector. Policies aimed at increasing housing supply, enhancing financing options, and preserving affordable housing are critical in alleviating this crisis.
