Demographic changes in rural communities since the 1970s have contributed to persistent poverty, institutions and infrastructures being stretched to their limits, and escalating housing costs (Johnson, 2006), all of which contribute to homelessness in rural areas. From the 1920s through the 1960s, rural counties grew slowly through natural increase (i.e., more births than deaths), even though millions of people moved from rural areas to cities. Subsequently, rural areas have experienced growth as a result of a reverse in earlier migration trends, with people, including immigrants, moving from cities into rural counties (except in the heartland of the Midwest), with about 17 percent (50 million) of the total U.S. population currently residing in rural areas (Johnson, 2006).
Homelessness has been characterized as the extreme end of poverty (Hopper & Hamburg, 1986). Poverty rates in the United States are highest in remote rural counties and central cities (Center for Family and Community Life, 2005; Mosley & Miller, 2004; National Coalition for the Homeless, 2006b). In 2005, 15.1 percent of rural populations were living in poverty compared to 12.5 percent of non-rural populations (Jensen, 2006). Among the 500 poorest counties, non-metropolitan (i.e., rural) counties outnumbered metropolitan counties by 11 to 1, and 48 of the 50 poorest counties were in rural areas (Aron, 2004). Recent research indicates that the odds of being poor are between 1.2 and 2.3 times higher for non-metropolitan residents than for metropolitan residents (National Coalition for the Homeless, 2006b). While the majority of rural low-income people are non-Hispanic whites, ethnic minorities in rural areas are particularly disadvantaged relative to both rural non-Hispanic whites and urban non-whites (Jensen, 2006; Mosley & Miller, 2004). For example, in non-metropolitan areas in 2001, almost one-third of African Americans and one-quarter of Hispanics lived in poverty compared to 11 percent of non-Hispanic whites (Jensen, 2006). American Indians in rural areas are also disadvantaged. In Montana, 38.4 percent of American Indians were living at or below poverty levels compared to 12.7 percent of all white persons in the state (Montana Council on Homelessness, 2007). OHare and Johnson (2004) point out that the highest poverty rates for children are also found in rural areas. Meanwhile, anti-poverty programs are often implemented less successfully in rural communities than in urban communities due to factors such as lack of transportation, physical and social isolation, stigma attached to seeking government assistance, and a dearth of health care providers and facilities (OHare & Johnson, 2004).
While rural communities have higher homeownership rates than most urban communities, 24 percent of rural households are renters. Because the rural housing stock is generally of lower quality, rural renters are twice as likely to live in substandard housing as their urban counterparts (12 percent of rural versus 6 percent of urban renters) (Housing Assistance Council, 2003b). Moreover, the cost burden is higher for rural renters than urban renters due to lower incomes (averaging $20,500 in rural versus $36,800 in urban areas in 2003). Lower incomes result in 36 percent of rural renter households paying more than 30 percent of their adjusted income toward housing (Housing Assistance Council, 2003b). Meanwhile, federal funding for rural rental housing programs, including the U.S. Department of Agriculture (USDA) Rural Development Section 515 Program, has been drastically reduced, making it even more difficult to address this disparity. Under the Section 515 program, direct loans are made for terms of up to 50 years to for-profit developers, nonprofit corporations, and public bodies to construct, purchase, or rehabilitate rental housing in rural areas for low- and moderate-income families, elderly persons, and persons with disabilities; loans and grants also fund the development of housing for domestic farm laborers (Housing Assistance Council, 2007; National Rural Housing Coalition, 2004).
Additionally, unrealistically low fair market rents in rural communities do not create an incentive for housing development in rural areas. While there is a lack of affordable rental housing throughout the country (measured by the percentage of people paying over 30 percent of their income for housing) (Saulny, 2006), fair market rents continue to remain low in most rural communities. Fair market rents (FMRs) serve as the payment standard used to calculate gross rent estimates (i.e., rent plus utilities) under the Rental Voucher program for 354 metropolitan areas and 2,350 non-metropolitan county FMR areas (HUD Office of Policy Development and Research, 1995). As HUD is quick to point out, setting these standards means balancing between creating rent payments high enough to stimulate housing availability but low enough to serve as many persons as possible (U.S. Department of Housing & Urban Development, Office of Policy Development & Research, 1995).
In calculating FMRs, HUD works closely with the U.S. Bureau of the Census and takes into account both decennial census rent data and the Bureaus American Housing Surveys. This information is then supplemented with random telephone surveys. This process proves to be successful for most metropolitan communities in determining a base rent from what is being paid in the community. However, the process is less successful in rural communities because of the small populations and small stock of rental units in these communities. The American Housing Surveys are conducted only in the 44 largest U.S. metropolitan communities, and most rural communities do not have enough rental units available to make a reliable random telephone survey feasible. In order to address the issue of unreliable FMRs in rural communities, HUD has implemented minimum FMRs using the statewide average FMR of non-metropolitan counties. However, since these non-metropolitan county estimates are all considered to be low, the minimum FMRs actually affect very few communities and do not create high enough minimum rents to spur rental housing development in the countrys poorest rural communities.
Meanwhile, minimum operational costs required to manage rental housing do not vary by community size or wealth. While rural developers are remarkably creative in developing housing, the average one-bedroom operating cost in rental housing development in communities less than 20,000 was between $3,749 and $4,064, similar to the average urban annual operating expense of $3,800 figured by the Federal Home Loan Bank. Therefore, the minimum break-even monthly FMR for most low-income rental housing in rural areas was about $333 per unit, not much different from the corresponding break-even monthly FMR for urban areas. Yet, the monthly one-bedroom FMR for high growth, urban communities, including Washington D.C. at $1,134, New York City at $1,069, Los Angeles at $1,016, and San Francisco at $1,239, was much higher than the FMR in rural areas. The minimum FMR for the poorest rural communities was as low as $335 per month (U.S. Department of Housing & Urban Development, Office of Policy Development & Research, 1995).