New Definition of Rural by USDA

The House of Representatives are considering a bill that will “renew” the Farm Bill.  Unlike the Senate bill to fund the USDA – the House version does NOT tackle the question of USDA Home Loans and the new “definition” of Rural.  That’s unfortunate.  The Real Estate “Housing” recovery is not in high gear – and this program change could cause further HARM to home sales in NC.

The USDA RD Program is at a critical point – with mixed signals about it’s future.  There are over 500 communities that grew between the 2000 and 2010 census that could be determined as ineligible for the program.  That’s about 9.1 million people or approximately 8% of the population that currently lives in an eligibile area – these folks would no longer have access to the program.

One study notes that:

Approximately 90 percent of these potentially ineligible places are located in metropolitan areas, where towns must have populations below 10,000 to be eligible. Not surprisingly, while they are scattered around the country, clusters of these growing exurbs are particularly noticeable in metros in California, Florida, and Arizona. Rural housing producers have invested time and money in planning developments in some of these places, and we can safely assume that many of them need more affordable housing.

View The Proposed USDA Eligibility Map Changes for NC

At the base of the issue we find that no one in Congress seems willing to tackle legislation that would raise the population thresholds for all rural housing eligibility determinations – this close to an election.  Because of that, and the fact that population limits for USDA’s rural housing programs are not the same as they are for its business or utilities programs, it’s not surprising that the General Accounting office in Washington suggests that there needs to be a more “consistent” definition of Rural.  Again, we question the TIMING of the change to the program, given the Economic “recovery” that the Fed says is so fragile.

USDA Loan FAQ’s

Whatever rural is, we can agree on a sliding scale where the smaller the population the more rural a place is. A town of 5,000 feels different from a small city of 30,000. On that sliding scale, the farther a place is from a population center, the fewer resources are available to it and the more difficult housing development is.

It’s also understandable that larger towns and small cities would like to have access to a new pot of funds. USDA funds are already stretched thin, however, and getting thinner. Increased competition for a shrinking pie is likely to draw USDA housing funds to the places with larger populations, where housing development is generally easier than in remote rural areas.

So in determining the future of the USDA Rural Development program – Congress must decide if they want to DERAIL the program that is currently funding at least 1/3 of all homes sold in NC right now ??  If the USDA Home Loan program is determined to be INeligible to areas “close” to a MSA – then anyone living in the Raleigh, Johnston County area will not have access to the program.  Ditto for Greensboro, Winston, Charlotte… it’s a pretty long list!

If you have questions about OTHER no money down programs available in NC, please call Steve and Eleanor Thorne 919 649 5058 – we do many no money down loans, and offer today’s best rate!  Connect with us on Facebook or G+ for updates!