People Can’t Afford to Live in Rural America Either
While the affordable housing crisis is thought to be a big city problem, it is actually a problem just about everywhere. Today’s guest, Stacey Epperson, has been working to provide affordable housing to rural America for decades, and we were lucky enough to have her as a guest on our podcast.
Stacey Epperson has 30 years of experience in affordable housing development. She is the founder of Next Step Network, a nonprofit dedicated to bringing affordable housing to those who need it. Next Step’s mission is to help people achieve home ownership through factory-built housing.
Over these last three decades, she has built national networks and mission-driven nonprofits working with leaders in the manufactured housing industry, lending institutions, working to provide energy efficient homes and better loans to support home buyers.
The below transcript has been lightly edited for clarity purposes.
Mauricio Chacra: Welcome back to another episode of the Doublewide Dudes. Today we’re going to continue the affordable housing conversation and how it applies to rural America. Today our guest is Stacey Epperson. Thanks for joining us, Stacey.
Stacey Epperson: It’s a pleasure to be here. Thank you.
Alberto Pina: Yeah, I’m really excited to have this conversation. I think a lot of times affordable housing gets talked about in the context of our larger cities, but as we’ll get to here in a minute, it affects Americans all across the country, including rural America.
Our guest today is Stacey Epperson. She’s actually the founder of Next Step Network. She has 30 years of experience in affordable housing development. And Next Step is a national network that’s mission driven to help people achieve home ownership through factory-built housing. We’ll talk about that here in a minute.
She’s built national networks and mission-driven nonprofits working with leaders in the manufactured housing industry, lending institutions, working to provide energy efficient homes and better loans to support the home buyer. So again, thanks for joining us, Stacey.
Stacey Epperson: It’s a pleasure to be here. And I really look forward to this conversation today. You know, I grew up in rural America, so it’s a special place in my heart when I get to talk about the needs of rural Americans and how we can solve some of the housing problems.
Alberto Pina: Absolutely. And to kick that off, Next Step was actually started in Appalachia. What was going on in that part of the country that drove you to start next step and start focusing on solving those problems?
Stacey Epperson: Sure. I’m happy to talk about that. So, I have lived in Appalachia most of my adult life and even most of my childhood.
And so, I’ve always worked in affordable housing and I was living over in Eastern Kentucky, which is in the mountains of Appalachia. And I was running a local nonprofit called Frontier Housing, and we were the largest home builder in our area. Even though we were nonprofit, we were larger than the for-profits in that area. We built a lot of homes, and they were all energy star homes.
What was going on? Well first, let me just tell you that my vision, then and now, I imagine a world where every child wakes up in their own bed in their own home, ready to seize the day. I know and believe having a stable home affords a better life.
But, as I was facing some of the housing conditions in Appalachia, I was looking around and a lot of families were coming to me and they were living in older mobile homes, like the old stuff, pre 1976, and they were falling apart. But as I would spend time with them, they would tell me that they still owed some money on the home.
So, I started begging the question, what would it take to make this right? And it was on my mind. I kind of got lucky in that I was selected to participate in a two-year leadership program at Harvard. So, I got to go up to Cambridge. And I took on a challenge for my organization.
Even though we were the largest home builder, I knew that we had this problem we were facing in our community. And so, I decided to kind of dig in deeper and study that problem. which led me to manufactured housing today. So, I’m happy to share more about that, but I wanted you to know that background story.
Mauricio Chacra: Throughout the podcast and just being in the industry, we’ve talked about how important it is for kids to have a stable home and how that’s going to be crucial to a part of their upbringing, right? Site built or manufactured home, anywhere in the area, anywhere in the country. That’s just an important topic to always have on top of the mind to be able to provide. Doing our best to be able to help in that area.
Me personally, along with other folks think about affordable housing being important in dense areas, being mainly populated in cities and bigger cities, you would think affordable housing is you know, a big city problem. But how widespread is affordable housing in rural America?
Stacey Epperson: You know, rural America is very diverse.
And so, I’m going to spend part of my time talking about some of the areas that have the greatest need. And they tend to be areas that people in the policy world would call persistent poverty regions. But let’s just call these regions where there’s a lot of families with limited means trying to access housing.
And so generally these areas are the “Colonias.” So, we’ll talk a little bit more about that and how that persists in Texas. Appalachia, my home, the Mississippi Delta, Native American lands, and also sometimes our farm worker communities. And so, in these areas, what we find is that people have lower incomes than the rest of America.
And in fact, the poverty rates are higher. So just to get a feel for this, when we talk about rural America, it makes up less than 20% of the overall population. But it represents 85% of the persistent poverty counties in America. So, this really kind of gets down to when you have a lower income in rural America, that sometimes puts the cost of housing out of reach.
And, I would say that part of what’s going on in rural America, it’s just a lack of supply. We have in the U S overall, a lack of three and a half million units. Another thing we’ve got going on is that there’s about 37 million mortgage ready millennials coming into the marketplace, wanting to buy a home.
And when you have a lack of supply and high demand, it puts pressure on pricing. And you have a lot of site builders that are no longer building homes under $200,000 all across America, rural America, too. And so, that’s really kind of drilling down on what’s going on in the housing problem with housing problems all across this country.
And I think we have another phenomenon going on right now. We’re beginning to see in the data that because of COVID, people are beginning to leave urban markets, and they’re beginning to move out to suburban and rural. I was on a policy call with national home builders and one of the economists said, that’s one of the biggest trends they’re seeing are the number of building permits pulled in rural America.
So, we’re going to have further pressure on housing prices and demand and supply in these areas.
Alberto Pina: Yeah, I believe it. Mauri knows this, but my wife and I have actually been talking about selling our home here in San Antonio and moving out into the country. Nothing too crazy, 30 minutes outside of town, but I think part of the attraction for us is just land values are so much cheaper compared to what they are in the city.
If the cost of land is so much cheaper than in the city, what is driving the affordable housing crisis if it’s cheaper to live in a rural place? I think that’s something that listeners might have a hard time getting their head wrapped around.
Stacey Epperson: I think there’s a couple of things.
First there’s more land available in rural America. It may also be that we have fewer restrictions on land development in some areas of rural America compared to a city, right. To do infill in a city. And so that’s going to help keep the costs down right now. We get challenges with, of course we have to run water, we gotta have sewer, we have to have septic.
And so really this comes down to pricing that the land’s available. And it’s going to be less than urban, markets, right? Because it doesn’t have quite the same pressure on it for development and that makes it more affordable, which gives us a great opportunity, right?
If we can get an affordable home put on affordable land, then we can get families that are working into housing.
Alberto Pina: And one thing we definitely run into in our line of work, you know, you mentioned the utilities, water, sewer, electric, all of that costs more in the country, especially the farther you get from the main utility sources.
But with costs being what they are for builders and developers, why aren’t we seeing more new homes and new rental properties being built in rural America to kind of tackle the supply issue?
Stacey Epperson: You know, a lot of affordable housing developers do multifamily housing. So, let me just talk about that a little bit, and what goes on in rural America for that.
So multifamily apartments that are affordable, how it’s typically being built today in the affordable world is with a housing tax credit, a federal tax credit. And when these projects come together, and you put it into an area where people have really low incomes, you gotta have a really affordable rent that they can afford. Because there’s no subsidy for the rent. So, if I’m building for a family that can only afford a rent of, say, $300. That gives me very little rent money to pay all my bills. What’s happening is that in many rural markets the economics of the deal just don’t work.
They can’t afford the debt. They just can’t make the numbers work. They can’t make it cashflow enough to pay the long-term operating costs. So, what happens? It doesn’t get built in rural America. It gets built in markets with higher median income. So, you’re going to find it more in suburban and urban markets. And that’s where these developers will go to, is the path of least resistance.
The second thing I want to say about rural America is on the multifamily side. You know, the United States Department of Agriculture, the USDA, they had been very active in putting affordable housing units on the multifamily side, the apartments in rural America for a long time.
And they are putting less investment out. There’s fewer dollars today. Those were great projects. I think those are still some of our most affordable housing units out there that are worth preserving. Okay. A lot of them are coming up and these developers and owners have the opportunity to either keep them affordable or make them market rate. So, there are strategies across the country to preserve those.
Now, let me talk about single family just a little bit. Okay. One of the most important programs I believe in rural America is the USDA rural development home loan. I hate to start throwing numbers. But there’s a program they call the 502 program. Really there’s two programs out there.
There’s one for really lower income families that really make the home affordable. I highly recommend it for manufactured housing because you can get into it with a hundred percent financing and they can subsidize those interest rates down to as low as 1%, and 2%. And then there’s a program that goes through banks, that you can get a USDA loan and it’s a market rate loan, but it’s a hundred percent loan. It’s another excellent opportunity for manufactured housing.
These programs are really key to what gets built in rural America for lower income families. We just need more of that type of funding out there.
Alberto Pina: And it sounds like a lot of that funding’s disappearing. If these programs that have provided the bulk of the affordable housing in these markets go away, what happens in these areas over the next decade if nothing new comes up or if nothing changes?
Stacey Epperson: We’ll have to have a way to fill the gap. We’ll have to do that. And, I think that’s one of the reasons I got into manufactured housing. If you want to kind of get down to this, we’ll go back to my story in Appalachia for a minute. So, when I begged that question of, “what would it take to make it right?” You know, for those families that were kind of upside down, that they owed more for their home than what the home was worth. I thought, okay, how do we make it right? Well, we get a home that’s going to perform for the long-term for them, meaning that it was going to be high quality. It was going to be energy star.
We were going to prepare and support the family so they could go out and get the best financing. And I had in mind these really good mortgage type loans to really set them up for success. But I also thought at the time that I was looking around and the nonprofits were using these programs, like the USDA affordable home loan programs and that five fifteen multifamily.
And I could see the trend that these dollars were shrinking. And I’ve thought about, how do I spend the rest of my life? Do I want to work on trying to get 25 or 30 homes built in a year and family just move into them and get them financed? Or do I want to think about this manufactured housing?
Because at the time that industry, or our industry, was building about 120,000 homes a year, And I thought, well, it seems like if we could, help bring some solutions into this industry, like more education and more better loans and really being an advocate, and if I could get more affordable housing developers focused on this, I think I’d rather work on that opportunity of 120,000 families going into manufactured housing than 30. Right?
And what really attracted me to it and where I’m going with this is manufactured housing is the largest source of un-subsidized housing. It is a private market solution to affordable housing. It’s the only one I’ve seen work this way.
I’ve spent a career in affordable housing and that really attracted me to it. Here’s the solution. Now we’ve got some of our own challenges, right? We should be building 350,000 homes a year, right. To begin to get at the affordable housing needs we have in the country.
Alberto Pina: And the products have come quite a ways as well. So, going back to your days as a site builder, these are indeed built energy star and they can with the right foundations qualify for those traditional mortgages at market rates and whatnot.
Stacey Epperson: Yeah, absolutely. So that’s part of our formula for helping people get into a great appreciating home and their long-term success.
Alberto Pina: That’s awesome.
Mauricio Chacra: Yeah, that reminds me of what we were talking about with Chris Nicely in the next step program. Have you seen over your career, affordable housing being really the only solution for the private sector to be able to provide and help?
How would you say sustainable affordable housing would tie into something like this as far as cost wise and being able to drive that manufactured housing is the answer here?
Stacey Epperson: Well, at next step we really focus on three challenges. We work on three challenges to make it sustainable. First, we want to lower the upfront cost of the home. So, let’s compare that to site building. We want to get the best value for the best price.
Second challenge we work on is we want to lower the long-term operating and finance costs of the home. Okay. So that’s why you’re going to see Next Step, a product that we always do, Energy Star, mostly Energy Star Plus. And we’re looking for those best loan opportunities for our customers.
And then the third thing is we really focus on the challenge of increasing the long-term appreciation and value of the home for like what we say, wealth creation.
We want to see equity, planned equity in that home. Okay. How can we do that? So, first of all, we think about how you finish out that home to give it the best value. Like it may be curb appeal, for example. Okay. We think about how it looks on the street. We think about how it’s landscaped.
You want to get the best value in the marketplace so they can get the highest appraisal, set them up to earn equity. And then, it’s a really a wealth creation tool. So that’s how we go about that. That’s what sustainable means to us. We want to do everything we can to improve the odds for the home buyer.
We’re invested in their success and we always want them to stay in their home. That’s key to sustainability for us, setting someone up for success, not failure. And then we measure our success by their success,
Alberto Pina: We’ve seen that happen in this industry around San Antonio, just outside of town in Poteet, right by the Toyota factory. The Savannah Heights subdivision is pretty much all HUD code double wides that I sold a few back 10 years ago when I was just starting in the industry. But all of those homes that have sold since then with the land and all that, because of how they were set up to look at the beginning, have appreciated just like the rest of the market in that area.
So, I 100% agree that our industry can be the solution. It should be the solution. What do we need to do to get more sustainable, affordable housing in rural America? What are some steps we all need to be taking to get there?
Stacey Epperson: This is my feeling. There is a persistent mindset about this type of housing. We have to change people’s hearts and minds about what a manufactured home is today. So, generally when I’m talking to people, their vision or their mind goes back to that mobile home, where they’ve maybe seen that in rural America. And so sometimes we have to help people realize what that home can be today.
So, I think it’s showing what the industry can do. Show our homes in the best light. Put ’em on the best foundation, make them indistinguishable from a site-built home, make it look just like a site-built home. So, it’s the highest quality, right?
This mindset, if you will, is really key to solving our affordable housing crisis. Not only do we have to change the mindset of consumers, I have to change the mindset of a whole affordable housing industry, right? Like I think about manufactured housing as a niche industry, within a niche. There’s a huge affordable housing world out there, and it kind of looks at manufactured housing and how I see Next Step kind of builds bridges between those silos within the affordable housing industry.
And then we also have to change the mindsets, the hearts and minds of our mayors, our city and county officials, our state governments, our zoning officials. We’ve got a lot of education to do. And we have to shift this mindset, because I think it’s awesome that we have an opportunity where there’s this whole new generation that’s open to homes being built in factories for sustainability and affordability. You know, millennials. Millennials care about causes, particularly that their homes are greener. That they’re going to be right-priced, right-size. They’re going to leave a little bit wider footprint in the world and that they can afford them.
I don’t think they want to get oversold on too much house. They watched what happened in the great recession. They’re watching what’s happening right now. I think they’ll make wiser choices than maybe, generations before them.
Alberto Pina: Well, as millennials, Mauri and I both tend to agree.
Mauricio Chacra: Those are all good points. And it ties into the sustainability of things. So many times, I’ve had conversations with families about the stigma of what a mobile home is: it devalues, et cetera. And it’s so much of me trying to tell them like, “Hey, once these are placed on property, they’re just gonna create value just like anything else.”
If you sell them with the land, you sell it with the house, you’re gonna have that equity built in there. And people were going to be looking at that. And then now with the whole coronavirus, the mindset of people trying to move up out of the big city and going to suburbs or rural America, that’s even more attractable there. So, we can create that attraction.
And this sustainability, which you were mentioning, they’re all good points. Because now the factories are just, you know, included with tech all over the place and they’re doing really good things to create houses that are going to last a long time prior to how it was built back in the day.
So, I’m right there with them on this, even being a viable factor. I’m in a one-bedroom apartment myself. I’m stuck with my fiancé here for four or five months, and we’ve had that conversation of what should we do? Like, should we just buy some land, get a double wide, get out of the city?
There’s just a lot of change happening. And I think with the goal of a Next Step, being able to provide solutions to, create awareness of something like this is amazing. Because it is a small percentage, mobile homes and manufactured homes is still a small percentage of new construction as a whole.
You touched on things on how mayors and just, the city people in charge of policy how we can change their mind, but what else is kind of holding people back and what else can we do to let them know that manufactured housing is a great option?
Stacey Epperson: You know, I think just education, right? There’s a lot to do. So, if we just talk about considering members or potential home buyers, like what are some of the things that might be holding them back specifically in buying a home. Maybe they’re not confident in how much money they might need to save for a down payment, for example.
Maybe they need to talk to a trusted advisor or someone who specializes in coaching a new homeowner who wants to buy a home, so they can talk about, “what do I need to save?” These are the ways we can kind of help people make these decisions. For example, Next Step has launched a new tool on our website. It’s called the down payment seeker.
So, people can go down onto our website, look at our down payment seeker tool that can enter some basic information about them, and then it’s going to tell them whether they can be eligible for some programs across the United States that will help them with their down payment.
Maybe they’re already there. They’ve saved some but they didn’t know they could go out and access some funds from some affordable housing providers who really want to get them into home ownership. Did you know the average down payment assistance program offers $13,000 to prospective home buyers?
And sometimes it even goes up if you’re a veteran or a firefighter or a teacher, so people should check these tools out. And then we all also want to make sure that they’re connected to a good homebuyer education program so they can get out there and make these decisions and feel confident in their choice that a manufactured home today is a modern choice.
You can get a modern high-quality home. You can specify the standards you want in your home. You have some flexibility. You can require your home to be Energy Star, right? So, it gives you savings long-term. You know, that Energy Star program pays for itself pretty quickly; it pays you back. So, these are the things I think that helped people get over the hump in making a decision on what they need to do. If they need land, if they need to look at homes, you know, they probably want to talk to you.
But we can definitely help them out on the education side and help them access some of these tools and loans to make sure that they’re successful.
Alberto Pina: It’s been awesome getting to know you and Chris and your team over the last couple years, there’s just so many synergies on the mission behind what you and your team are looking to achieve and why we started Braustin back when it was just Mauri, Ernest and Jason and I three and a half years ago. So, I’m really excited to be partnering with your team and seeing what we can do down here in South Texas to play our part in solving that crisis. For all the folks that are listening, Stacey, that want to get in touch with your team to discuss how they can be part of the solution or how they can get information about becoming a homeowner themselves, how do they contact you guys and what resources do you all have available?
Stacey Epperson: Well, first, they should go to our webpage: nextstepus.org
There, they will see our programs. They can fill out requests to get information. They can contact us directly through our website. They can use our tools, and, when they give us their information, we won’t lose track of them. We’ll make sure that we get them pointed in the right direction, where they need wherever they are on their home ownership journey.
Alberto Pina: That’s awesome. Well, thank you so much, Stacey, for coming on and helping us continue the conversation on affordable housing. I think so much of this is just about educating people on not just what the problem is. I think at this point, most Americans know there’s a problem, but it’s really educating them on the solutions and what they can do in their communities.
And then, like the down payment seeker tool, what tools are available to help those looking to become homeowners do so. So, thank you so much for joining us. I really, really appreciate the work you and your team are doing.
Stacey Epperson: Alberto, it was a pleasure to be here today and I appreciate the opportunity to talk about rural America. It’s near and dear to my heart. It’s a special place to live, so I encourage your listeners to think through what they want to do, make those decisions, but it’s a great place to call home.
Mauricio Chacra: I agree. Thanks for your time, Stacey. It was awesome. I love doing these. There’s always something new that I learn. That does it for this episode, guys. Thanks for tuning in and we’ll catch you guys in the next one.