Hearing Entitled: Housing in the Heartland: Addressing Our Rural Housing Needs

House Subcommittee on Housing and Insurance

2025-06-12

Loading video...

Source: Congress.gov

Summary

This hearing focused on the critical challenges facing rural housing in America, exploring the unique difficulties encountered in these areas compared to urban settings, and discussing potential federal and local solutions [ 00:18:43 ] . Witnesses and members alike emphasized the urgency of the rural housing crisis, highlighting the need for collaborative, bipartisan approaches to increase supply and affordability while streamlining existing programs [ 00:32:47 ]

Citation requires full transcript

Sign in to continue

Sign in
.

Themes

Challenges in Rural Housing Development

Rural areas face unique and exacerbated housing challenges, including significantly higher construction costs due to factors like material transportation and labor shortages [ 00:20:26-00:21:27 ]

Citation requires full transcript

Sign in to continue

Sign in
. The housing stock in rural America is often aging, with over one-third of rental units being at least 55 years old, necessitating substantial preservation and new construction efforts . An affordability crisis is rampant, with 44% of rural renters being cost-burdened and a 30% increase in rural homelessness over the last three years . Additionally, restrictive federal regulations and administrative burdens, such as environmental reviews, "Build America, Buy America" mandates, Davis-Bacon requirements, and Section 3 rules, significantly drive up project costs and slow development, particularly for smaller communities with limited administrative capacity . Rural areas also struggle with inadequate infrastructure, limited access to private financing, and a scarcity of buildable lots and developers willing to take on the risks of small-scale projects .

Federal Programs and Policy Recommendations

The hearing highlighted the importance of existing federal programs like USDA's Rural Housing Service (RHS) under Title V of the U.S. Housing Act of 1949, which includes Sections 515, 538, and 502, as well as HUD's Home Investment Partnerships Program . Several legislative proposals were discussed as solutions, such as the Rural Housing Service Reform Act, which aims to improve USDA programs and includes provisions to decouple rental assistance from expiring mortgages to preserve affordable housing . Other recommendations included a 30% basis boost for rural housing projects in the Affordable Credit Improvement Act, incentives for homeownership through rehabilitation via the Neighborhood Homes Investment Act, and the elimination of the HUD permanent steel chassis rule for manufactured housing to reduce costs . Witnesses also emphasized the need to streamline permitting processes, invest in USDA's IT and staffing, and clarify the tax status of Fannie Mae and Freddie Mac for Low-Income Housing Tax Credit investments in rural areas . The Nebraska Rural Workforce Housing Investment Fund was cited as a successful, cost-effective state model that avoids the administrative burdens of many federal programs .

Impact of Disinvestment and Proposed Cuts

Disinvestment, including historical redlining practices, has made both urban and rural communities more vulnerable to economic hardship and the impacts of climate disasters . Concerns were raised about proposed budget cuts to USDA rural development and HUD programs, which were described as "devastating" for rural communities . Such cuts would undermine efforts to preserve and produce affordable housing, hinder private market growth, and leave families without critical support .

Unique Needs of Tribal Communities

Tribal communities face distinct barriers to homeownership, characterized by significantly lower rates compared to the general population . High poverty rates and limited access to credit and financing sources exacerbate these challenges [ 01:37:08-01:37:27 ]

Citation requires full transcript

Sign in to continue

Sign in
. Solutions proposed include supporting native Community Development Financial Institutions (CDFIs) to de-risk lending and allowing tribes to administer Section 502 Direct loans, which would enable trusted lenders on reservations to provide crucial financing for individual households .

Tone of the Meeting

The tone of the meeting was largely concerned and urgent, with speakers repeatedly emphasizing the "crisis" in rural housing and the severe consequences for residents [ 00:32:47 ]

Citation requires full transcript

Sign in to continue

Sign in
. Despite the gravity of the issues, there was a strong undercurrent of collaboration and bipartisanship, as evidenced by frequent mentions of working across the aisle and common ground on solutions . A significant portion of the discussion was critical of bureaucracy, specifically federal regulatory burdens and red tape, which were identified as adding excessive costs and delays to housing projects [ 00:21:39 ]

Citation requires full transcript

Sign in to continue

Sign in
. Despite these challenges, the overall sentiment was hopeful for solutions, with an emphasis on potential reforms, innovative approaches, and the effectiveness of targeted programs to address the identified problems .

Participants

Transcript

?
Unknown
Let's call the witnesses to take their seats.  We'll be gaveling in shortly.
The Subcommittee on Housing and Insurance will come to order.  Without objection, the chair is authorized to declare a recess of the committee at any time.  This hearing is entitled Housing in the Heartland, Addressing Our Rural Housing Needs.  Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record.  I now recognize myself for five minutes for an opening statement.   First of all, I'd like to thank our witnesses for being with us today and I very much look forward to hearing your testimony on the topic of housing in rural America.  Thank you for coming.   30 minutes early, given the House's schedule today.  So far this year, we have focused this subcommittee's work on the rising cost of housing in America.  We've spent our hearing in March focusing on the underlying driving force behind the problem, and that is a lack of housing supply.  In May, we had an opportunity to examine some of the alternate building methods that can bring supply online for less cost, like manufactured housing, modular housing, and even early stage experiments with 3D printing homes.   Today we are going to dig into the challenges with building housing in rural America.  The problems in the rural parts of our country are a little different than those that we see in the urban areas.  While a rural area may have lower land costs, the logistics associated with getting homes built in rural areas can introduce some unique challenges that drive up costs, such as   It's more expensive to transport building materials to a remote part of the country.  Longer supply chain means more cost, and those costs are often passed down to the home buyer or the renter.  Rural areas may have less contractors and subcontractors nearby to do the work needed to build the home.   Labor shortages can lead to expensive delays on a project or even stop projects altogether when an area simply doesn't have the experts needed to do the work at all.  Alternatively, it can mean bringing labor in from further away from the project site, which contributes higher labor costs overall.  Again, these costs are passed down to the home buyer or the renter.   However, as we examine what drives costs in rural housing markets, we'll also see some common themes that we've already discussed in this subcommittee that will reemerge, namely regulatory burdens from the federal government that often hit smaller communities with less resources the hardest.
Through my work so far in Congress, I have identified four key cost drivers in federal housing projects.  I call them the four horsemen of the housing apocalypse.  Number one, environmental review requirements that delay a project's start and drive up cost.  Number two, Build America, Buy America requirements that drive up the cost of critical construction materials and appliances, sometimes 20, even 40% more than otherwise necessary.   Davis-Bacon requirements, that, from what I've heard, are much more costly due to the associated reporting requirements than they are for the actual cost of paying prevailing wages.  And number four, Section 3 requirements that make it more difficult to find contractors to do the job, particularly in rural areas with some of the workforce challenges that I mentioned.   While many of these requirements are well-intentioned, their combined impact significantly drives up costs of projects using federal dollars.  I look forward to hearing from our witnesses about both the challenges that are unique to rural housing markets and how some of those common federal regulatory challenges affect projects in rural areas.  Finally, this hearing will also serve as an opportunity to explore the impact of federal rural housing programs like the USDA's Rural Housing Service.   The RHS operates programs under Title V of the U.S.  Housing Act of 1949.  The Section 515 program provides affordable housing, rental housing for low income families, the elderly, and people with disabilities.  The Section 538 program provides financing to increase the supply of rural housing for low and moderate income people.   and the Section 502 program that makes direct loans to low-income borrowers to rehabilitate or purchase a primary residence.  Ranking Member Cleaver has a draft bill notice to this hearing that would make some changes to these programs, which I'm sure will be a subject of discussion today with our witnesses and our members.  I'm excited to dig deeper into each of these issues today, and I look forward to our witnesses' testimony.  With that, I yield back.
The chair now recognizes the ranking member of the subcommittee, Mr. Cleaver, for five minutes for an opening statement.
Thank you, Mr. Chairman, and I also want to thank you for giving a great deal of your time to this and other issues related to contemporary housing problems.  I represent the 5th District of Missouri, and my congressional district includes Kansas City, Missouri, and the surrounding metropolitan area.   For redistricting, I spent nearly two decades representing a district that stretched from Kansas City, Missouri, in the far west to a city called Slater, Missouri, near the center of the state.  Slater is a very small town of 2,000 that unless you are a die-hard fan of Steve McQueen, the King of Cool, and know about the trivia at his birthplace, you probably never heard of Slater.   I spent a lot of time in rural America, having been born there in Texas, but rural America is home to 20% of the United States population and growing and covers more than 90% of the U.S.  land mass.  A lack of new construction, limited investment in existing housing stock, and economic constraints are driving a shortage of safe and decent housing in rural America.   Over one-third of rental units in rural America are at least 55 years old.  Preserving an increasing housing supply in rural areas is a formidable challenge, but possible.

Sign up for free to see the full transcript

Accounts help us prevent bots from abusing our site. Accounts are free and will allow you to access the full transcript.

Sign up