The 2010 Federal Census & Rural Development...

I was recently asked to write an article for "The Arkansas Realtor", which is a monthly periodical distributed by the Arkansas Realtors Association to its members state-wide.  That being said, with permission of the Arkansas Realtors Association, here is that article.  I hope you find it informative.

THE FEDERAL CENSUS AND RURAL DEVELOPMENT:

By Dwayne Hatt, ABR, SFR

Published in the February, 2011 Edition of "The Arkansas Realtor"

As many of you may know, the USDA Section 502 Single Family Housing Loan Guarantee Program (otherwise known as Rural Development or RD) plays an integral part in making the dream of home ownership become a reality for many low-income households and first-time home buyers not only in Arkansas, but across the nation.

The USDA Section 502 program has come under much scrutiny over the past several months, specifically regarding the depletion of program funds and Washington’s delay in making these funds available to the public.  Many would-be homeowners who were pre-approved by their lenders for Section 502 funds found themselves in situations where a closing was either postponed by several weeks or they lost the home to another buyer who was able to procure more stable funding options.  Fortunately, conditional commitments were finally issued which pulled many homebuyers out of limbo and placed them into their new homes.  But there is yet another challenge facing the rural real estate market:  the 2010 Federal Census.

The results of the 2010 Census could be the next challenge impacting the availability of Rural Development funding for Arkansas real estate.  According to data obtained from the Cooperative Arkansas Realtors Multiple Listings Services (CARMLS), which is the largest MLS system in the state, approximately 7.4 percent of all 2010 home purchases in the CARMLS user area were funded by Rural Development loans.  While this number may appear small, when one considers that these transactions are generated in rural areas such as Greene County, Batesville, Baxter County, Carroll County, and similar areas, the number is quite significant.  USDA guidelines state that in order to qualify for the Section 502 Program, the population of a rural community cannot exceed 25,000.  Many mortgage loan specialists speculate that before rendering these areas ineligible to participate in the Single Family Housing Program, the USDA will take into consideration the following factors:

1. The rate and percentage of increase in an area’s population between the 2000 and 2010 Federal Census.
2. The average income of a rural area.
3. The percentage of unemployment of a rural area.

However, these are merely speculations.  According to Linda McCaslin with the Arkansas USDA Office of Rural Development in Little Rock, if the 2010 census officially reports that the population of a rural area has surpassed 25,000, “...[the] national office will continue business as usual until otherwise stated”.  This provides a bit of hope for rural real estate markets such as Van Buren, Bentonville, Russellville, Paragould, and other cities which are just on the threshold of becoming ineligible for Rural Development funding.

If you have further questions regarding the 2010 Census and its impact on Arkansas Rural Development, contact Linda McCaslin at (501) 301-3235 or by email at linda.mccaslin@ar.usda.gov.

Here are a few other 2010 residential financing statistics according to CARMLS:

CARMLS Residential Financing Statistics for 2010*
Financing Type:	Units Sold:	% of Total:
Rural Development	800.00	7.39%
Cash	1,868.00	17.25%
FHA Fixed Rate:	3,046.00	28.14%
VA	924.00	8.55%
Conventional Fixed Rate:	3,045.00	28.13%
Bank Financing:	327.00	3.03%
Other:	813.00	7.51%
TOTAL:	10,823.00	100.00%
*Based on residential units sold between Jan-Dec 2010 in CARMLS.