Building Assets for the Rural Future

Maximize the Asset-Building Potential of Low-Income Homeownership

Maximize the Asset-Building Potential of Low-Income Homeownership

As an asset-building strategy for those on the economic margin, low-income homeownership has been shown to build household wealth, improve the health of household members, result in greater workforce participation, and lead to higher educational attainment by children.[1]  Renting is a necessary stepping stone to eventual homeownership, but compared to renting, homeownership is linked to greater life satisfaction, expanded social networks, greater neighborhood satisfaction, and greater participation in voluntary organizations.[2]

Nationwide and in North Carolina, homeownership rates are higher in rural areas than in urban areas.[3]  Although homeownership rates are higher, rural homeowners are more likely to live in substandard housing and are more likely than their urban counterparts to be “cost burdened”[4] (that is, paying a high percentage of income for housing).[5]  In interviews conducted for this publication, housing advocates and professionals in North Carolina indicated that rural housing stock in some areas of the state was insufficient to meet the demand from local workers in low-wage jobs, particularly in popular vacation and retirement destinations and in communities that have experienced significant population growth.[6]  In these areas, financing is not the problem; rather, it is the lack of available housing at lower price ranges that makes homeownership elusive for local workers.[7]

A variety of programs seek to increase affordable homeownership opportunities for low- and moderate-income residents. These efforts range from lease-to-own programs to inclusionary zoning to sweat equity contribution programs. For purposes of this publication, two tactics were identified for further exploration due to their applicability to rural North Carolina and their unique emphasis on community and individual asset-building.  The first tactic places affordable housing into land trusts and shares home equity between the community and the individual homeowner (Take a Shared Equity Approach to Affordable Housing). The second recognizes the importance of manufactured housing as an affordable housing solution and seeks to improve that form of ownership for those on the economic margin (Increase the Asset-Building Potential of Manufactured Housing).


[1] Michal Grinstein-Weiss, et al., Fostering Low-Income Homeownership Through Individual Development Accounts: A Longitudinal, Randomized Experiment, 19 Housing Policy Debate 711, 712 (2006) (reviewing benefits of homeownership).

[2] William M. Rohe, Roberto Quercia, & Shannon Van Zandt, The Social-Psychological Effects of Affordable Homeownership, in Chasing the American Dream: New Perspectives on Affordable Homeownership 284-318 (William M. Rohe & Harry L. Watson eds. 2007).

[3] Housing Assistance Council, Homeownership as an Asset in Rural America 1 (2005), available at http://www.ruralhome.org/storage/documents/homeownership.pdf (estimating the rural homeownership rate as 76% versus 66% in urban areas); N.C. Rural Economic Development Center, Rural Data Bank: Housing in North Carolina, available at http://www.ncruralcenter.org/index.php?option=com_content&view=article&id=151:atc-boardg (last visited Apr. 24, 2010) (estimating NC rural homeownership rate as 73.5% versus urban rate of 65%).

[4] Housing is generally considered affordable when a household pays no more than 30% of its annual income on housing. A household is considered cost burdened when it pays more than that amount for housing. See U.S. Dept of Housing and Urban Development, Affordable Housing, http://www.hud.gov/offices/cpd/affordablehousing/ (last visited May 3, 2010).

[5] Housing Assistance Council, above note 279, at 1 (60% of substandard housing units in rural areas are occupied by owners versus 38% in urban areas and 62% of rural owners are cost-burdened versus 58% for urban homeowners). Rural homeowners are also more likely to have mortgages with higher interest rates and shorter loan term lengths.

[6] Interview with Barbara Blackston, Executive Director, Wilson Community Improvement Association (Feb. 10, 2010); Interview with Pat Malinak, Special Projects Director, Western Carolina Community Action (Apr. 19, 2010).

[7] Ibid.