mollyfamwat
Orange County, Ind. 2018.
Photo:
Jenny Waters/MS Centre for Rural Engagement
With the Covid 19 pandemic looming on the horizon, this is a distant time for rural America. RedFin and Zillow’s research shows an interest in the countryside, as more and more Americans are fleeing the cities in search of greener pastures.
But finding housing in rural America is easier said than done. Let’s take the case of Orange County, IN, which has a population of 19,840 in 2010 and is in many ways a model for rural America. There is a thriving community of artists, a local food cooperative and farmers’ market, interesting environmental and natural attractions such as the Rise Natural Spring in Orangeville and the Hoosier National Forest, as well as a rich history dating back to the Dutch Protestant House of Orange.
And there are large open spaces. There simply isn’t enough housing for those who want to live there. This intuitive housing shortage is having a devastating impact on the economy of rural America.
At first glance, the housing shortage in Orange County makes no sense. You’d think building in rural America would be easy. There is a lot of cheap land, zoning plans are less restrictive and employers have difficulty filling vacancies. Still, the housing shortage is a big problem. In 2017, only 79,000 single-family homes were built in very non-metropolises in America, compared to 223,800 in 2005.
One of the reasons for this is the reluctance of banks to grant loans to builders or developers who want to build houses for which there are no comparable houses nearby. And given the relatively small and sometimes stagnant real estate markets in rural areas, such comparisons are often few and far between. Without that, there can be no credit. Without credit, there can be no construction.
The second problem is the lack of investors who see sufficient return potential in rural areas. The average cost of a house in Orange County is just over $100,000. In Bloomington, 50 miles away, the average price is more than double. Contractors have no difficulty in finding where they can make large profits.
Finally, there is a shortage of skilled labour. During the 2007-2009 financial crisis that affected the construction sector, 2.2 million out of an estimated 5.3 million construction workers left the sector and never returned. This is a national problem, but given the higher potential return on construction investment in urban areas, rural areas are at the bottom of the list of countries where contractors should be sent.
The housing shortage is exacerbating many other crises in rural America. One of these is an ageing and shrinking population, a trend that can be reversed as people find more flexibility in working remotely and as the pandemic makes coastal cities less attractive. Who wouldn’t want to live in an affordable neighborhood where you know your neighbors and maybe have a national forest as your backyard? But talented young professionals – those who start a business by hiring people and have the opportunity to make money – won’t settle in the country if they can’t find shelter.
To solve the housing crisis in rural America, state and federal governments should drive the pump by offering banks and lenders a temporary extension of rural loan guarantees. This would be an incentive to borrow builders in rural areas, which would help to create compensation.
By mapping out each step and breaking it down into a manageable and meaningful plan for local leaders and residents – as universities in rural America are beginning to address this problem – the risk of building houses in rural communities will be reduced. These ready-to-use toolkits can provide resources for data on the housing market, information on community spatial planning and a tax model to help communities determine the costs and benefits of new housing, among other things.
New prototypes can also provide answers. In the south of Indiana, a pilot project is underway to develop a prototype of modest, low-cost housing that will appeal to both young professionals and older residents. With their moderate size and modern design, open floor plans and energy-efficient features, the homes appeal to both young and old.
Contrary to common sense, housing is one of the most pressing problems in rural America, and the lack of housing is a driving force behind many of the problems. The crisis can be solved, but rural communities need innovative solutions and political will.
Mrs. Thomson is the Executive Director of the Center for Rural Engagement at Indiana University in Bloomington.
Newspaper editors: Kim Strassel, Kyle Peterson and Dan Henninger on the best and worst week. Photo: Erin Scott/Reuters.
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Published in the printed edition of 26. December 2020.
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