Hulya Arik, PhD Economist Tennessee Housing Development Agency Rural Housing Challenges in Tennessee: Socio-economic Drivers, Problems and Opportunities Presented at: 19th Annual Rural Development Conference April 28, 2014 Hulya Arik, PhD Economist Tennessee Housing Development Agency

Rural Housing Challenges in Tennessee Socio-economic Drivers Demographics Economic Conditions Problems Availability Quality Affordability Opportunities

Drivers—Tennessee Rural Population Nearly Flat Rural Share In both rural and non-rural areas of Tennessee population grew from 1980 to 2012, but urban population grew much faster. The rural population is failing to keep up with urban population growth. From 1980 to 2012, the share of rural population in Tennessee declined from 25 percent to 23 percent. It is similar to the nation where 21 percent of population was living in rural areas of the country in 2010. USDA Economic Research Service Updated April 4, 2014

Drivers—Age Cohorts in Rural Tennessee Rural areas have much lower percentages of young, working-age adults than urban areas. While the population by age cohorts is similar for urban and rural areas of Tennessee, there is a lack of young people because of migration to the cities and urban center for finding jobs. Rural areas are having trouble in keeping the youth in the region that leads to decline in the production. There is not enough working age population to feed the very young and elderly in the region. The Housing Assistance Council, Updated 2010.

How do population growth dynamics affect housing problems in rural Tennessee? Population loss significantly impacts rural areas’ housing stock. As populations decline, homes become vacant and even simple repairs are not completed on time. Absentee homeownership increases. Older residents are usually unable to maintain their homes. As house values decline with delayed repairs, obtaining mortgages and home rehabilitation loans become more difficult to obtain.

Drivers—Educational Attainment in Tennessee People living in rural areas of Tennessee are relatively less educated. This in turn affects their ability to find better paying jobs and for the region’s overall ability to attract higher paying manufacturing firms with their more jobs. USDA Economic Research Service Updated April 4, 2014

Economic Drivers—Rural Industry One in every five jobs available in the rural Tennessee is in the manufacturing sector. Many of these jobs are often low-paying traditional manufacturing jobs. For a while, some companies that were looking for un-unionized lower page workers located to the rural parts of the country. Later, following the general trend, those companies relocated to the countries outside the US even with lower wages and less regulations. Rural counties of Tennessee are struggling to attract jobs that require more skills such as IT. The Housing Assistance Council, Updated 2010.

Economic Drivers—Income Per Capita Income per capita is significantly lower in rural Tennessee. Compared to the U.S. income per capita of $42,693, in rural Tennessee, income per capita is 72 percent of the U.S. income per capita. Compared to 2011, rural income per capita is flat. USDA Economic Research Service Updated Feb 20, 2014

Economic Drivers—Poverty in Rural Tennessee More than one-fifth of rural residents in Tennessee is in poverty. There is a dramatic increase in the poverty rate since 1999. Here are some details about poverty in rural Tennessee, which may have important implications for rural housing: (1) there are more than 40 seniors living below poverty threshold, and (2) more than 76,000 rural families live below poverty threshold. USDA Economic Research Service Updated Feb 20, 2014

Economic Drivers—Income Distribution Household income distribution is skewed to the left tail in rural Tennessee. Given the median household income of $43,314 in Tennessee, there is a significant gap between rural and urban areas in household income distribution.

Rural Housing Problems-Availability Housing Stock in Rural Tennessee Total housing structure in rural Tennessee is 909,020 units, of which 163,711 are mobile homes. Compared to urban Tennessee where multifamily and townhomes are 21.9 percent of all housing stock, multifamily and townhomes are relatively few in rural Tennessee with 10.20 percent (93,569). Rural households mostly live in single family homes or in small multifamily structures rather than large buildings or apartment complexes. Manufactured housing is much more prevalent in rural areas than in urban areas. HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Availability Housing Occupancy and Vacancy in Rural Tennessee Relatively more vacancy in rural Tennessee. Rural Tennessee has relatively more vacant homes than the urban component. Vacant housing units are estimated around 135,841. An additional group of vacant homes, which is labeled as seasonal, recreational, or occasional use, makes up 4.6 percent (41,439 units) of the available housing stock. Although these housing units may look available, in many cases they are not: some of them are either old homes that need major rehab or abandoned homes because of the massive flight of manufacturing jobs from the rural regions in Tennessee. HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Availability Owner or Renter Occupied? Nearly 27 percent of occupied units in rural Tennessee is renter-occupied. Compared to urban Tennessee, the relative gap is about 6 percentage points. Total number of renter-occupied units are 204,245 units. HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Quality Housing Stock in Rural Tennessee by Age Relatively older housing units in rural Tennessee Rural Tennessee has relatively more housing units, which are 60 years old or older. A total of nearly 123,000 units falling under this category may need severe rehab. The second category of housing units that may need medium level of rehab includes the homes built between 1950 and 1979. These housing units are between 60 and 30 years old. The total units that may need a medium level of rehab are 337,343 housing units. Conservatively speaking a little over 50 percent of all housing units in rural Tennessee may need medium to severe level of rehabilitation. HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Quality Substandard Housing? In rural Tennessee, there are 5,226 occupied units lacking complete plumbing; 5,852 units lacking complete kitchen, and 37,167 without a phone service. It is important to note these figures include only occupied units. Those units that are vacant may be in need of additional care. HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Quality Overcrowding? HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Affordability Cost-Burdened Units-Owner-Occupied Units? Relatively speaking, few owner-occupied units with mortgages. Almost 50 percent of owner-occupied units are mortgage free. In terms of cost-burdened owner-occupied units, nearly one-fourth of owner-occupied units are cost-burdened. 129,089 units fit in this category. HAC tabulations from ACS 2006-2010 data.

Rural Housing Problems-Affordability Cost-Burdened Units-Renter-Occupied Units and Overall Cost-Burden Units? Nearly half of renters is cost-burdened in rural Tennessee. Little over 80,000 renters are affected by this. Considering overall cost-burdened units (all occupied units), almost one-third of units is cost-burdened (209,396 units in rural Tennessee), and little over 10 percent is extreme cost-burdened representing 89,654 rural residents. HAC tabulations from ACS 2006-2010 data.

Other Rural Housing Problems: Rural Homelessness Different Responses than Urban Homelessness Living in unsafe housing conditions Staying with relatives Moving between Difficult to Address Fewer shelters Little community awareness Less government aid due to technical definitions

Opportunities and Impacts: Rehab and Affordable Housing Preservation Programs for Rural Housing Stock Repair and Rehabilitation Loan and Grant Remove health and safety hazards Accommodate home for household members with disabilities Available for homeowners 62 years of age or older. THDA’s Housing Trust Fund can be used in conjunction. Housing Preservation Grants Used to repair rented housing, rental properties, or co-ops Housing must be provided to low-income families Available to landlords, rental property owners, state agencies, and local governments

Opportunities and Impacts: USDA Programs for Homeowners Guaranteed Loans Help low-income households currently without adequate housing. Used to purchase, build, or repair a home. THDA has low interest rate mortgage loan programs. Housing Site Loans Provide Financing for low- and moderate-income families Used to purchase and develop housing sites

Opportunities and Impacts: USDA Programs for Rental Housing Rental Housing Loans Helps negotiate lower building costs for construction companies Used to purchase, build, or repair multi-family facilities Rental Assistance Program Provides additional rent support for multiple tenants Contracted for 5 years Available to tenants with low- and very low-income

Opportunities and Impacts: Efforts to help low-income households in rural areas of Tennessee ensure that they live in safe, sound affordable homes. In addition to the impact on individuals and families, the activities to further the affordable housing in rural areas improve the economic conditions by creating New jobs Wages and salaries Business revenues Improved tax base

Economic Impact of Rehabilitating 100 Multifamily Housing Units on Tennessee Economy Model used: IMPLAN

Employment / Job Creation Business Revenue The total contribution of rehabilitating 100 multifamily housing units to Tennessee’s economy is estimated at $6.3 million in 2014. Of this total, $3.5 million is directly injected into the economy. Every $100 of rehab activities generates an additional $79 in business revenues. Wages and Salaries Rehabilitating 100 multifamily units generates $2.2 million in wages and salaries in 2014. Every $100 of personal income produces an additional $77 of wages and salaries in the local economy. Employment / Job Creation Rehabilitating 100 multifamily units creates 52 jobs in 2014. Every 100 jobs created by rehabilitation of 100 multifamily units, primarily in the construction sector, generates 76 additional jobs throughout the local economy.

Thank you! Questions?

Works Cited Economic Research Service. "State Fact Sheets: Tennessee." United States Department of Agriculture, 4 Apr. 2014. Web. 06 Apr. 2014. http://www.ers.usda.gov/data-products/state-fact-sheets/state-data.aspx?StateFIPS= 47&StateName=Tennessee#.Uzt0BPldWSo Housing Assistance Council. Rural Homelessness. 2008. Web. 8 Apr. 2014. http://homeless.samhsa.gov/ResourceFiles/neqkwasx.pdf Rural Development. "Multi-Family Housing Loans and Grants." United States Department of Agriculture, 20 Mar. 2014. Web. 10 Apr. 2014. http://www.rurdev.usda.gov/HMF_MFH.html. Rural Development. "Single Family Housing Loans and Grants." United States Department of Agriculture, 20 Mar. 2014. Web. 10 Apr. 2014. http://www.rurdev.usda.gov/HSF_SFH.html. "The Rural Data Portal." Taking Stock: Rural People, Poverty, and Housing in the 21st Century. The Housing Assistance Council, Dec. 2012. Web. 10 Apr. 2014. http://www.ruraldataportal.org.