Rural Home Buying Outpacing Urban Sales Since Pandemic

Rural Home Buying Outpacing Urban Sales Since Pandemic

Written By: Joel Palmer, Op-Ed Writer

The housing and mortgage industries have seen a surge in demand for rural homes since the COVID pandemic, according to Fannie Mae research.

The main factor helping increase rural housing demand was the opportunity many were given to work remotely. Demand for space and low mortgage rates also contributed, though those trends bolstered home buying in all areas in the immediate aftermath of the pandemic.

“Although only a small share of urban residents relocated to rural areas during the pandemic, their influx represented a disproportionate increase in demand for housing in those regions,” wrote Fannie Mae economist Kevin Park.

“In fact, application activity for housing in rural and non-metropolitan areas rose 80 percent since the start of the pandemic,” and remained above their pre-pandemic averages into 2024.

Park said that homebuyers from outside rural areas are driving the increased demand. Second-home purchasers and investors made up a large share early in the pandemic, followed by buyers planning to move from outside the region.

Demand has increased across all types of rural communities, with resort communities seeing early spikes that have since tapered, and institution-rich hubs seeing sustained demand.

Park added that the demand created greater home price appreciation in rural areas and small metropolitan communities, affecting areas where affordability was already an issue because of lower household income.

“There is an unprecedented affordable housing crisis in rural America. Often thought of as a metropolitan and suburban concern, acute shortages of affordable housing are increasingly affecting families in rural areas, some of which are among the nation’s poorest.”

This was part of an essay published earlier this year by the Affordable Housing Tax Credit Coalition (AHTCC), a trade association of housing professionals who advocate for affordable rental housing.

AHTCC noted that low median household incomes and the deteriorating condition of existing housing stocks has “exacerbated the struggle to ensure an adequate supply of affordable housing in rural settings.” The organization noted that there are only 44 physically adequate affordable rental homes available and accessible for every 100 renter households with extremely low-incomes in rural areas.

The rural housing problem isn’t just failing to meet the needs of low-income residents. It’s also become a detriment to rural employers struggling to attract employees. This is especially true of school districts and rural health care organizations that can’t just locate to more populous areas.

Some rural areas are working to solve the problem on their own.

The state of Nebraska created a rural workforce housing grant fund in 2017. More recently, the Northeast Missouri Regional Planning Commission recently created a fund to build homes in the $180,000 to $240,000 range. The goal is to attract workers for necessary jobs like hospital workers and school teachers to these areas, where decent housing is often hard to find.

Derek Weber, the executive director of the planning commission there, said that 65 percent of the homes in the area were built before 1960. Those homes have a median price of $90,000. Another 20 percent of the homes in the area were built after 2008 and have a median price of $400,000. 

Therefore, only 15 percent of the local housing stock is affordable and desirable for potential employees of schools, hospitals and small manufacturers. And the residents who own those homes are putting them on the market.

The planning commission in Missouri is a non-profit and won’t have to sell the homes they build for a profit. They can use the proceeds of one home to build another.


About the Author

As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.


Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.