The Spring Street Brief

The Housing Assistance Council's latest research brief confirms what many rural housing advocates have feared: USDA's Section 515 Multifamily Housing portfolio is shrinking faster than scheduled maturities alone would explain. With 504 properties already gone ahead of their loan maturity dates and seven Midwestern states each losing more than 10% of their Section 515 stock since 2021, the affordable rural housing supply is eroding now — and USDA's own projections show the worst is still ahead, with exits peaking around 2040 and the program potentially depleted by 2056.

Show Notes

The Housing Assistance Council's latest research brief confirms what many rural housing advocates have feared: USDA's Section 515 Multifamily Housing portfolio is shrinking faster than scheduled maturities alone would explain. With 504 properties already gone ahead of their loan maturity dates and seven Midwestern states each losing more than 10% of their Section 515 stock since 2021, the affordable rural housing supply is eroding now — and USDA's own projections show the worst is still ahead, with exits peaking around 2040 and the program potentially depleted by 2056.

Key Takeaways:

  • 504 Section 515 properties have exited the portfolio before their mortgage maturity date — signaling early opt-outs and deterioration, not just scheduled wind-down.
  • Seven states — Nebraska, North Dakota, Michigan, South Dakota, Wisconsin, Indiana, and Iowa — each lost more than 10% of their Section 515 housing stock between 2021 and 2026.
  • Michigan recorded the largest unit loss: 2,072 affordable rural housing units departed the program in just five years.
  • Losses are concentrated in the Midwest and Upper Great Plains, where early Section 515 loans are now reaching maturity — making this a regional crisis first, but a national one soon.
  • USDA projects annual exits will accelerate sharply, peaking around 2040, with complete program depletion possible by 2056.
  • Section 515 markets largely fall outside the LIHTC financing stack, meaning lost units are rarely replaced by conventional affordable housing mechanisms.
  • Preservation opportunities exist now in the seven hardest-hit states — before the exit curve steepens further.

For LIHTC investors, syndicators, and rural lenders, this brief is a signal to watch for preservation vehicles targeting Section 515 — including potential loan restructuring programs, new USDA appropriations, and rural housing tax credit proposals that have been circulating in Congress. The states losing the most units today are also the states most likely to assemble preservation pipelines first. That's where the near-term deal flow will be.

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