We’ve spent a lot of time and money in recent years to get better broadband for rural America. I thought it would be of interest to look at who lives in rural America. The statistics in this blog come from a recent blog published by FHFA, the Federal Housing Finance Agency. The data comes from the U.S. Census Bureau and is supplemented by data from the Census’s American Community Survey (ACS).
Rural Population. There are 81.7 million people living in rural areas, or 24.4% of the total population. The percentage of rural residents varies widely by state, with Massachusetts being the most urbanized state with 4.1% of people living in rural areas, and Vermont the most rural state with 80.9% of residents living in rural areas.
Ages of Residents. There is a higher percentage of senior residents over 65 in rural areas, at 19.2%, compared with urban areas of 15.7%. A lot of the reason for this is the lower percentage of residents between the ages of 18 and 64 in rural areas, at 44.6%, compared to 49.7% in urban areas. This highlights one of the biggest issues for rural America – working-age people leave rural areas to find employment. Both rural and urban areas have 22% of the population under 18 years of age, but 5% of rural people leave to join the workforce.
The age issue is a real concern for rural counties. According to Census estimates, almost half of U.S. counties have lost population since 2021. The fear is that an aging rural population will mean an acceleration of the population loss issue.
Incomes. Median household incomes are lower in rural America. 39.5% of rural households have a household income under $50,000, compared to 32.5% of urban households. Rural areas also have what FHFA calls income compression, meaning that there is not as much difference between the poorest and wealthiest in rural areas. For example, around 13.5% of rural households have annual incomes over $150,000, while that percentage in urban areas is over 22%.
Housing. As you might expect, the rest of the FHFA report focuses on housing statistics. One of the most interesting statistics looks at the percentage of homes purchased as second homes or for investment purposes. In rural areas, those categories represented 18% of homes in 2018 and 21% of homes in 2019. That dropped to 11% of home purchases in 2023. In urban areas, these categories totaled to 11% in 2018, down to 9% in 2023. I can only guess, but factors that would contribute to this change in rural areas might be related to the overall economy, but also to the fact that a lot of retiring baby boomers may have invested in second homes in the earlier time frame.
A really interesting statistic is the median household income of those who bought homes. In rural areas, that was around $87,000 in 2019 and grew to almost $90,000 in 2023. In urban areas, the median household income of home buyers was $95,000 in 2019 and grew to over 102,000 by 2023. These statistics point to two trends. First, homes in rural areas tend to cost less, meaning that borrowers can qualify for loans with a lower household income. But the high level of the median household incomes in both rural and urban areas highlights the difficulty that young households have in affording to buy a home.
Fun anecdote. My family had a farm in Kansas that they spec’d to run an HVDC line across, from wind farms by Dodge City, heading towards Chicago (I use present continuing… the project is a mess, not done, afaik).
As part of that process I spoke a fair amount to one of the project managers who had the difficult job of contacting all of the owners of the farms in a line from Dodge City to Chicago. And, what he related was… they were almost all old. Many were landlords living in Florida or other retirement states with tenants doing the actual farming. (One of my cousins does tenant work for fourteen small farms with landlords who live elsewhere — most of them relatives).
The basic deal, in my observation, is that we filled the interior of the country with farms and people and then un-filled it with people.
When the railroads were put through, the government stimulated consumer demand and production by giving away land on either side of the tracks as homesteads. Then lots of small towns grew up, more land was developed into farms, etc. All, mostly, before the turn of the 20th century.
As automation took over, way fewer people were required. My grandfather had the first fully automated farm in his county in Illinois (different farm) in the 1920s. And, so it’s gone. Post-WWII, when the rest of the world came back on line there has been intense price pressure.
At the same time, farmland has been taken as an investment with PE, etc., muscling in to add its inflation resistance to their portfolios, pushing prices up. My father’s generation is very old and many of them still hold the land that their parents owned as part of the last broad expansion in the 20s and 30s.
As a result… now… farming, proper, is a phenomenally bad ROI given the land prices and low commodity prices (Brazil is now #1 soybean producer, globally, btw).
There are still millions of small “family” farms… but they’re mostly all owned by the old. There are estate tax carve outs intended to make transfer to the next generation possible, but not that many people want to keep an asset with a 2% ROI. People live longer so anyone inheriting will probably be late career or retired, besides.
Young people can’t really get into farming easily from the outside, because it needs lots of $$ or big loans which are hard to pay back for the land, then other big loans required to pay for machinery (which is all very sophisticated and pricey). Young people need to move away… they can’t form the next generation of farmers.
The only entities making farm expansion work are in Big Ag which has the economies of scale, equipment, and capital to keep the low margin machine running.
So, our rural population is a time bomb about to go off. Another 10-20 years of attrition (read: remaining old people dying) and it will be even more sparse and even more corporate…
Which leads me to the basic belief that, absent things like Starlink, rural internet is really unlikely ever to hit critical mass. All of the numbers are running in the wrong direction.