Housing Innovation in Rural America

Dec 31, 2023

Rural America is far more diverse than how it is portrayed in media and popular culture. This article concludes the series: Eradicating Rural Poverty: The Power of Cooperation. Coproduced by Partners for Rural Transformation, a coalition of six regional community development financial institutions, and NPQ, authors highlight efforts to address multi-generational poverty in Appalachia, the rural West, Indian Country, South Texas, and the Mississippi Delta.

The focus on high prices in red-hot urban real estate markets, a centerpiece of most national housing crisis analyses, overshadows the affordability challenges faced in rural America. Centuries of racist policy and decades of disinvestment have created low incomes, a lack of resources, and numerous roadblocks to capital. Overcoming these realities requires a different strategy.

Fortunately, a new approach to rural housing that pairs a flexible form of modular housing with community-based finance shows considerable promise.

At a recent convening focused on increasing homeownership opportunities for Black and Indigenous people and people of color, our coalition of rural community development organizations sat surrounded by affordable housing and community development rockstars from the largest housing markets in the United States, from New York City to San Diego.

That is where the problem arises: in facile analysis that compares urban and rural housing markets, barriers, and solutions as if the two are comparable.

As conversations drifted to the rising cost of homeownership and the lack of resources to assist with up-front purchasing costs, a natural comparison emerged between our two worlds. A familiar unease rose as we discussed average housing prices and closing costs; our urban colleagues chuckled and made disbelieving comments about what they saw as unbeatable real estate "opportunities" in our rural areas—joking that they needed to "get a jump on them."

The comments were not intentionally spiteful or dismissive. It is easy to disregard the lack of affordable housing options in rural areas when comparing the median housing value in Pine Bluff, AK (under $100,000) with that in New York City (over $750,000). The median housing listing in Manhattan as of December 2022 was nearly $1.3 million, an amount unimaginable in most rural communities.

That is where the problem arises: in facile analysis that compares urban and rural housing markets, barriers, and solutions as if the two are comparable. It may seem like a housing market is a housing market, right?

But that is completely wrong.

For decades, the United States has focused on what are called "place-based" strategies and policies to address poverty, housing access, and affordability. Yet the programs developed rely overwhelmingly on data drawn from the largest cities and communities. Despite the "place-based" moniker, there is often little consideration or understanding of how rural and remote areas face distinct challenges requiring unique strategies based precisely on differences in place. In that room, with representatives from Atlanta, Philadelphia, and Chicago, it would have been easy to overlook rural housing needs, viewing rural markets as affordable based on price alone, and move on. But this was a space for difficult conversations.

Our three-person team spoke about an Appalachian community where homeowners were unable to drill wells and lacked indoor plumbing and sewer access; the political limbo of Indigenous homeowners who lack direct access to clean water or safe housing; and the colonias (largely Latinx neighborhoods) along the US-Mexico border with infrastructure more akin to a developing country than the urban areas surrounding them. The communities’ systems of informal land tenure mean that land cannot be used for collateral with banks, keeping homeowners from converting homes to capital that can be traded, sold, or leveraged for needed improvements.

A county is a persistent poverty county if 20 percent or more of the population has been below federal poverty guidelines for the last three decades. Over 80 percent of these counties are in rural areas, most of which are in the South.

Persistent poverty communities regularly lack access to healthcare, healthy and affordable housing, banking and financial services, broadband, emergency and protective services, and public transportation, resulting in a scarcity of resources and access.

Studies show that secure housing is critical to reducing generational poverty. So, how can people address housing affordability and access in persistent poverty communities without compelling residents to move elsewhere?

The team at come dream. come build in Brownsville, TX, has an idea, and it is catching. cdcb is a nonprofit community housing development organization and the state's largest affordable housing developer. Founded in 1974, cdcb provides safe, affordable housing options for low-income residents of the Rio Grande Valley.

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As the need for more space arises, families can expand their homes by purchasing new modular box additions.

Communities in the Rio Grande Valley are some of the poorest in the nation, particularly in the colonias, where poverty rates average over 40 percent. Because people in these communities typically lack resources and access to credit, they forge their homesteads with whatever they have available. This often leads to homes that are not up to code and unsafe. Realizing that South Texas faced a perpetual systemic shortfall in quality housing, cdcb utilized its experience in natural disaster home replacement to find solutions. The result was the creation of a new rapid home production system: MiCASiTA.

MiCASiTA is a volumetric modular housing and flexible lending program. Volumetric means that the modular units are constructed off-site with flooring and ceiling included. This system allows families to design their own homes with the potential to add sections over time as their financial capacity increases. MiCASiTA's incremental and volumetric modules can be financed with cdcb's flexible lending options that significantly impact low- and moderate-income households’ access to capital and purchasing potential. This design has the potential not only to address the housing crisis in the colonias of South Texas but also persistent poverty and rural communities across the nation.

The MiCASiTA business model has several unique features. First, starting with production, MiCASiTA homes are "manufactured" locally. A single modular unit or "box" is 288 square feet. A home can be any range in size from two boxes (576 square feet) to five boxes (1,440 square feet). Two key advantages of volumetric modular construction are that it can be done at low cost and high speed. The entire construction process takes about 60 days, and homes can typically be bought for between $60,000 and $90,000, depending on the buyers’ preferences.

One particularly valuable aspect of MiCASiTA is the flexibility that its "grow home" model provides. As families grow, needs evolve; as the need for more space arises, families can expand their homes by purchasing new modular box additions.

Taken together, all these features represent a rare merging of flexibility and affordability in the affordable housing space: families can build the homes they want at the price point they can afford. As a family's circumstances change, they can adapt as necessary, all the while building wealth in the equity of their growing homes.

Families that live in communities that meet their basic needs and which provide opportunities to grow will reinvest in their community

Franchising MiCASiTA can help extend the reach of this approach. One early franchise partner is Communities Unlimited, a community development finance institution serving seven states in the South—a region that's home to 45 percent of all persistent poverty counties in the United States. Communities Unlimited works to help ensure that communities have clean, safe water; affordable housing stock; healthy, fresh food; and access to the capital necessary to thrive. Animating this comprehensive approach is the idea that families that live in communities that meet their basic needs and which provide opportunities to grow will reinvest in their community.

Communities Unlimited has partnered with cdcb and WE CENTER—a nonprofit in Pine Bluff, Arkansas—to expand the MiCASiTA model into the Mississippi Delta region. Pine Bluff is a city with immense opportunity and clear goals for economic development, improved infrastructure, enhanced quality of life, and strengthened education and housing. Affordable housing is a key pillar in revitalizing this historic community, but an aging housing stock and declining population has left the city with a total home vacancy rate almost double that of national rates.

With a low area median income, many low-income and asset-limited, income-constrained, employed families (also known as ALICE) are currently priced out of homeownership or unable to access traditional mortgage options. With over 600 homes identified as uninhabitable and scheduled for demolition in the small city of 40,000 people, the affordable housing stock in the area is expected to continue to decline in the coming years. It is here that Communities Unlimited is pairing the MiCASiTA model with WE CENTER's workforce training program to create a unique approach to both advance affordable housing and generate jobs.

A report published by the Federal Reserve Bank of Dallas in 2015 estimates that there are 2,294 colonias in Texas, with over 500,000 residents. Even if you get people in homes, there are still other challenges, including a lack of potable water, sewer systems, electricity, and paved roads—to say nothing of modern necessities such as high-speed broadband. And this is just in the colonias: one can find many more pockets of concentrated poverty in the rural South and Indian Country as well. The challenges, in short, are immense.

The MiCASiTA volumetric modular housing development model and flexible lending strategies have significant potential to change the affordable housing landscape in the colonias, Pine Bluff, and other persistent poverty communities across the country. Alone, it will not solve the rural housing crisis. But combined with flexible lending options and policies that foster investment in rural communities, it can be an important part of the solution.

Housing choice is often portrayed as a matter of consumer preference. But housing is much more than that. A family's home influences where parents go to work, what school district their children attend, and, of course, where they live. Structured well, home ownership can help provide a path toward racial justice and equity. In short, creating affordable housing with choice offers families the human dignity that comes from being able to develop their own answers to the essential question: What would you like?