Preservation of Affordable Rural Rental Properties by Understanding Owners, Managers, Subsidies, and the Local Market

Abstract

Rural affordable housing preservation is a pressing policy issue due to subsidy expiration, aging properties, encroaching exurban growth, increasing property management challenges, and ownership succession uncertainties. Little research has been done on how ownership characteristics influence preservation outcomes. This study extends the literature on ownership type and scale impacts to the rural affordable housing field, by exploring multifamily properties financed through the USDA Rural Development’s Section 515 program. These properties are a critical source of affordable rental housing in many rural communities. This paper estimates the impact of five key factors on program exit: property characteristics, owner and manager typology and scale, history of additional subsidies, market concentration, and local market conditions. Results suggest that profit-motivated owners are the most likely to exit the program, especially those using non-scaled up property management companies, and holding properties without any other current or previous subsidies. Properties in counties with higher unemployment and military employment share were also more likely to exit. This work sheds light on rural rental markets and what drives ongoing affordability program participation.