Rural America is being hit hard by the affordability crisis, harder than suburban and urban markets.
New research from Redfin shows that the median sales price in rural areas is up 61% from before the pandemic. That compares to a 48% increase in the median price in suburbia, and a 46% gain in urban areas.
Worse, rural buyers must earn nearly $75,000 in order to afford the typical home in their markets, more than double the $36,000 needed prior to COVID, Redfin found. But the median household income in rural areas has climbed just 33% in that time, less than the 37% increase logged in suburban markets and the 39% jump in urban markers.
“Rural America has been hit by a one-two punch of rising home prices and lagging incomes, and as a result has seen housing affordability erode faster than big cities and suburbs,” the real estate brokerage company said in its report.
The median sale price in rural counties is $280,900, up 60.5% from $175,000 before the pandemic. Suburban counties, on the other hand, have seen a 48.9% increase, from $258,500 to $385,000, and urban counties have experienced a 46.2% gain, from $305,000 to $446,000.
At the same time, incomes have failed to keep pace, as the median household income in rural counties stands at $69,307, up 33.3% from $52,002 before the pandemic. By comparison, suburban counties have seen a 36.8% gain, from $64,782 to $88,627, and urban counties have seen a 39.3% increase, from $64,468 to $89,784.
Redfin claims that the pandemic is almost entirely to blame for the imbalance. Back then, scores of people moved to rural and suburban areas in search of space, privacy, and access to nature. Some were seeking a lower cost of living, while others were buying up pricey vacation homes, all to escape COVID.
Record-low mortgage rates and remote work were the forces that empowered millions to relocate, and the home buying frenzy that swept through rural and suburban areas sent prices soaring.
Despite the fast uptick in prices, rural markets still remain affordable when compared to many suburban and urban areas.
A household on the median income in rural counties would need to spend 32.3% of their earnings on housing to buy the median-priced home, Redfin reported. While that’s up from 20.9% from before the pandemic, it remains lower than the share in suburban and urban areas. In suburban counties, a household on the median income would need to spend 34.6% of its income to buy the typical home, and in urban counties, it would need to spend 39.5%.
“Rural America isn’t as affordable as it once was, but the silver lining is that unlike many urban areas, there’s still room to build homes,” said Redfin Senior Economist Asad Khan. “Adding more housing can ease the affordability crunch and also make room for more people, which can boost local economies.”
Governments in some states are working to combat the rural housing shortage by building more houses. New York, for example, just invested $50 million in a program that will build manufactured housing, which is typically quicker to construct and less expensive to purchase.
