Affordable Housing Needs In Small Cities and Rural Areas

Creating and preserving affordable housing continues to be at the forefront of national conversation. The challenges are well reported: A higher interest rate environment, persisting inflation and increased insurance costs are impacting both construction and long-term sustainability of properties’ operations.

Rural communities and small towns, home to about one-in-five Americans according to the Department of Housing and Urban Development (HUD), are impacted by many of the same affordable housing challenges as urban and suburban communities. HUD outlines additional housing challenges that rural communities face, including labor costs and the cost of transporting construction materials to where they’re needed. This dynamic can put additional pressure on communities aiming to build more affordable housing in rural areas.

More than 400,000 households in rural communities nationwide reside in affordable housing properties financed by the US Department of Agriculture (USDA). But properties in the USDA’s affordable rental housing portfolio are aging and losing their affordability, which threatens residents who may not have other available affordable housing options nearby. 

To underscore the need for affordable housing in these communities, a recent analysis from Brookings states that 50% of households receiving HUD housing assistance live in suburbs or rural areas, while the other 50% live in urban areas. 

“In rural communities, there is limited housing stock and less density, which makes affordability a critical issue for residents and families,” said Tom Ayd, Principal of Green Street Housing, an affordable development company based in Salisbury, Maryland. “By rehabilitating properties and preserving the long-term affordability of rural housing, we’re ensuring residents have access to quality, stable housing that allows them to continue living, working and engaging in the community of their choice.”

Village at Iron Branch
In the town of Millsboro, Delaware, the population was about 3,900 in 2010. That number nearly doubled to 7,400 in 2022. With the increase in population came a need for more housing options, in particular affordable housing.

In 2017, Green Street Housing acquired Village at Iron Branch in Millsboro and invested in the substantial rehabilitation of the property, which was originally built in 1973. Capital One provided a construction loan and made a low income housing tax credit (LIHTC) equity investment to finance the rehabilitation. Village at Iron Branch, which completed its renovation in 2019, restricts rents at 30%, 40%, 50% and 60% of area median income (AMI).

Renovations to the property included:

• Reconfiguring the layout to offer 38 one-, two-, and three-bedroom apartments

• Adding three-bedroom units, which made the property more suitable for families

• Setting aside six units to create permanent housing for populations including individuals formerly unhoused, individuals with HIV/AIDS, veterans, survivors of domestic violence, people exiting foster care, and individuals with different physical and mental capabilities.

The property manager for Village at Iron Branch engaged local service providers to enhance the resident experience through programs related to financial literacy, childcare, nutrition and education.

Greenwood Village
Across the state line – but only 50 miles away – in Cambridge, Maryland, Green Street Housing undertook a substantial rehabilitation of Greenwood Village to provide 20 units of affordable housing to this community of 13,000 residents. 

Capital One provided a construction loan and LIHTC equity investment to support the renovation. The property was also funded through the Maryland Department of Housing and Community Development and a USDA housing loan.

The development features three-bedroom apartments for families and households making 30%, 40%, 50% and 60% of AMI. Greenwood Village completed its renovation in 2017. As part of the renovation, three units were set aside as units for individuals with different physical capabilities, and two units were renovated to be ADA compliant. 

The property manager coordinated with a network of community service providers to support a range of programs that focused on employment, education, housing, healthcare and nutrition.

“Affordable housing is a local issue, and we’re committed to solving it community by community,” said Ayd. “That means navigating the complex challenges that are unique to rural areas and smaller towns with the goal of ultimately benefiting and serving these residents and families.”