Housing Bubble

Builders urge major push to address unmet rural housing needs

June 20, 2003

To help meet the housing needs of low-income rural households, the nation’s home builders today called for active participation of a broad partnership of federal government agencies, government-sponsored enterprises, state and local governments, private, for-profit entities and non-profit groups to provide affordable homeownership and rental housing opportunities in rural America.

"There is a significant need for new production of affordable housing units. The existing rental stock is aging and requires extensive rehabilitation, and access to competitively priced credit for potential home buyers, as well as builders, remains a problem in many rural areas," Bobby Rayburn, first vice president of the National Association of Home Builders (NAHB) and a home builder from Jackson, Miss., told the Housing and Community Opportunity Subcommittee of the House Financial Services Committee.

Rayburn said that some success in providing affordable homeownership and rental housing opportunities has been achieved through the HOME Investment Partnerships and the Community Development Block Grant programs in states where such efforts have been given a sufficient priority.

"NAHB strongly supports both of these programs, which distribute HUD funds to states and local jurisdictions through block grants, and we believe additional appropriations would be valuable and effective in addressing unmet housing needs in rural areas," he said.

NAHB also called for the Department of Agriculture (USDA) to rededicate itself to work in partnership with a wide range of organizations to address gaping rural housing needs and for the Congress to commit more resources for USDA’s Rural Housing Service (RHS) programs.

Noting that the Administration’s FY 2004 budget proposal includes no money for Section 515 new multifamily production projects, Rayburn called on Congress to reverse its funding cuts for RHS programs.

"Currently, there are no alternatives to Section 515 for producing housing affordable to very-low income households in rural areas, so the absence of new production money is a major setback," said Rayburn, who urged lawmakers to support a funding level of $300 million for the program.

Rayburn also called on Congress to double the Administration’s $100 million funding request for the Section 538 guaranteed loan program, which is intended to finance the construction, acquisition or rehabilitation of rural multifamily housing for lower-income residents. "An adequate level of funding would enable the RHS to have a broad range of tools by which to meet the affordable housing needs of these rural residents," he said.

Even with more funding, Rayburn noted that RHS cannot do the job alone. He called on Fannie Mae, Freddie Mac, the Federal Home Loan Banks, state housing agencies, the Farm Credit System, HUD and local lenders to play a greater role in improving the availability of housing credit in rural areas.

"These types of partnerships are essential given RHS’s limited resources and the large and often remote geographical areas that must be covered," said Rayburn. "More extensive efforts in this direction are necessary to improve rural credit availability and to adequately address rural housing needs"

Source:National Association of Home Builders