The gap between what low-income workers can afford and housing costs is a problem throughout the state. But rural areas such as the Delta are the hardest hit.
The more rural an area is, the more difficult it is to develop housing of any kind. Higher volume keeps prices down. Lack of access to amenities such as community water and sewer also makes building an affordable home more difficult.
“There is a lack of resources in the Delta because the area is rural,” said Clanton Beamon, executive director, Delta Housing Development Corp., Indianola. “Another problem in rural areas is the lack of employment opportunities. Unemployment and underemployment are problems.”
Many low-income people work at Delta catfish processing plants, for example. But that work is seasonable. Beamon said currently many people who work at the catfish processing plants are not getting enough hours to make a full-time wage. That leaves those workers paying more than 35% to 40% of their income for shelter.
“The only housing that will really fit is rental housing with a subsidy, and there isn’t enough of that to go around,” Beamon said.
While the American dream of owning a home is still alive, it is out of reach of many Delta residents. That leaves them in rental housing instead of building equity by purchasing a home. Beamon said it is going to take a concerted effort by both the state and federal government to assist with rural home ownership programs to solve the problem.
Options he recommends that would increase Delta home ownership could include using community development block grant funds to help people with down payment assistance. Also, Beamon said the federal Section 8 program, which has been used primarily for rental assistance by providing subsidies to owners of rental properties, can now to used to assist with mortgage payments.
“I’d much rather see the assistance go to home ownership rather than rentals,” Beamon said.
Currently a major resource in rural areas like the Delta is assistance through the U.S. Department of Agriculture targeted towards low and very low income households. This program includes an employer assistance plan where employers are given incentives to help assist employees with home ownership options.
This is very promising program, Beamon said, and benefits both employees and employers. The benefit to the employer is stabilization of the labor force, and happier workers.
Besides government assistance, in order to keep housing affordable it is important that building codes and regulatory issues don’t push the costs of homes out of sight, says Marty Milstead, executive vice president of the Home Builders Association of Mississippi. Milstead said issues such as codes requiring a fire sprinkler in every house or impact fees on new homes can be particularly burdensome for builders trying to meet the needs of lower-income buyers.
With increasing costs to meet regulations and higher costs for land, building materials and insurance premiums, “you have a lot of things that don’t add up to affordability,” Milstead said.
Codes that require minimum square footages, for example, can be an obstacle to developing affordable housing. Some cities require a minimum square footage that is a barrier to building smaller homes that cost less.
“Truthfully in Mississippi with our income levels, not everyone can afford to be in an 1,800-square-foot and above house,” Milstead said. “If you want to provide a product that people can buy, you need smaller square footages.”
One helpful factor is the current low interest rates for financing. Home buyers are responding, still, to the low interest rates. Low rates are important because they keep total payments more affordable.
Maura Phillips, deputy director of the Mississippi Partnership Office for Fannie Mae, said an important program that encourages developers in the Delta and elsewhere to develop affordable housing is the low-income housing tax credit.
“These are a great incentive for builders to develop low-income housing,” Phillips said. “They are being used a lot in the state. Mississippi Home Corporation is the entity that allocates tax credits in the state. They have one of the best tax credit programs in the country.”
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Another program to promote affordable housing is a $12-million state revolving loan fund for affordable housing being targeted to small developers and non profits. Funds should be available at the end of August.
Yet another program is called Self Help, and is typically administered by a non-profit organization. A new homeowner is required to put in “sweat equity,” providing as much as 50% of the labor for the construction.
Delta Housing Development Corp. is one of two non-profit organizations in the state doing a lot with the Self Help program.
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org or (228) 872-3457.