We are all aware of the current crisis hitting North Dakota in regards to the drop in oil and agriculture prices, two key industries in the state. So how does this affect the 2015 Housing Market in South Dakota real estate? The answer is very little. South Dakota has its own agriculture issues, but the state also heavily depends on the service industry (retail, finance, health care) as well as tourism (Black Hills, Deadwood, Mount Rushmore). So the slow recent home buying trends are not a result of the same issues as North Dakota.
According to the National Association of Realtors (NAR), existing home sales have been increasing, but on the other hand first time homebuyer sales have decreased to their lowest level since January. This could be due to the low inventory in the state, and the subsequent rise in home values due to the demand. But overall total existing home sales grew 2% between June and July of this year, and the sales have increased for 10 straight months. Sales are 10% higher than they were this time last year. So why are people buying? “The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,” says NAR’s chief economist Lawrence Yun. To back up her point, Freddie Mac reports that the average fixed-rate for a conventional 30-year mortgage rose to 4.05% in July, up from 3.98% a month earlier.
Although the oil boom has started to dwindle and the prices of agriculture products is slowing down in the region surrounding South Dakota, the home values in the state are still up. And even more encouraging is that economists have reported an increase in the value of agricultural land in South Dakota in the past year. The increase is not as large as years previous but it still shows that the South Dakota real estate market is holding up. So to sum up the housing market predictions for the state in 2015: Houses will keep selling as homebuyers look to take advantage of interest rates while the rates are still low and while the land and property values are still increasing.
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Influencing Factors for the 2015 South Dakota Real Estate Market
- According to Zillow the home value index for the South Dakota real estate market is $166,900. This is a 15.7% increase in the past year.
- From information gathered from rental websites and online classified website Craigslist South Dakota has a median rental price in South Dakota is $1,135.
- The average list price in the state is $169,000.
- Homes spend an average of 83 days on the market.
- Although interest rates are slowly rising there is still a lot of help for first time homebuyers. The South Dakota Housing Authority offers incentives and there are different loans being offered by numerous groups such as the VA, FHA, and World Development.
- The percentage of delinquent mortgages in the state is 2%, lower than the national average of 6%.
- The unemployment rate is 3.7%. National average is 6.3%.
- South Dakota has a cost of living that is 2.4% lower than the national average.
Best Places to Live in South Dakota
Right now on Trulia Sioux Falls has over 700 active listings. Home appreciation rates have increased 5.75% in the past year, but in recent months it has slowed down considerably. Sioux Falls SD real estate has home values that are moderate, coming in at a median home value of $162,951. Those not looking to buy a home will be pleased to see that rental units in Sioux falls are incredibly priced due to a high inventory. According to Zillow Sioux Falls SD has a median rental price in the city of $760, well below the national average. The age makeup of the city is diverse, and it shows that people of all ages tend to be drawn to this market. Sioux Falls has a highly educated populace with nearly 33% of adults having at least a bachelor’s degree.
Sioux Falls is the 47th fastest growing city in the U.S. and the fastest growing city in the state of South Dakota, with a total increase of 22% in the past 15 years. And since it is the largest community in the state this makes sense. What’s the reason for the city’s growth? There are a couple of factors. First the city has a strong economy. Due to the lack of a state corporate income tax many financial companies are located in Sioux Falls. These include Wells Fargo, and Citigroup. And because of the distance between the city and other business hubs, Sioux Falls has become a regional center of commerce, arts, and recreation.
The Rapid City SD real estate market is looking up due to the city’s economic growth. Housing sales have been on the rise and homes are selling within 2 months of being placed on the market. The average sale price for a home is currently $205,000, and sellers have been receiving 99.18% of their listing price. But while sales are up new construction is down. So far this year Rapid City has issued fewer building permits than last year. Not a major cause for concern but definitely shows that expansion is beginning to wind down.
Rapid City sits on the eastern side of the Black Hills mountain range, and the city’s economy draws on two things. One is the Ellsworth Air Force Base. Second are the popular tourist attractions Deadwood, Mount Rushmore, Crazy Horse Memorial, and Custer State Park. And despite all of the outside visitors Rapid City ranked number 13 on Farmer’s Insurance Group’s Most Secure U.S. Places to Live in 2011 (in the small towns category).
The Pierre SD real estate is geared more toward an older and settled down demographic. The median age for the capital city is 40 years old and nearly 60% of the population is married. Median home cost is $152,300, and Pierre boasts a great local economy. Low unemployment and low cost of living make this a great destination for families. Pierre is the second least populous state capital in the country. Currently there are 139 listings available on Trulia for homes in the Sturgis SD real estate market. The average home price in the town is $123,000.
One thing that holds back Sturgis real estate values may be its economy. Unemployment is at a low rate and job growth is steady, but not increasing at a noticeable pace. However, both the household income and family income is lower than the state average. The median age in the city is 44, and nearly 50% of the population is married. Since there is not a large influx of new residents the economy in Sturgis maintains a steady balance. Located to the northwest of Rapid City, Sturgis does have an attractive downtown area, beautiful landscapes, and a low cost of living (nearly 6% lower than the U.S. average) that draws people with a less active lifestyle. Perhaps not appealing to an upstart millennial, but definitely a place of interest for retirees and families.
The Aberdeen SD real estate has seen consistent growth in home appreciation rates. In the last 12 months there has been a nearly 7% increase. One of the benefits of Aberdeen is the lack of traffic congestion. The average commute in the Aberdeen city limits is only 12 minutes, much lower than the national average. Not only does this result in less stressful traffic conditions but it also means that the city has lower levels of noise and air pollution. Aberdeen has the distinction of being a college town as it is home to Northern State University and Presentation College. This is the reason that Aberdeen has a respectable arts and culture scene that includes an arts newspaper, community theatre, and the South Dakota Film Festival. The city also houses 4 art galleries.
Located just north of Sioux Falls the Brookings SD real estate market is a real gem. Like Aberdeen the average commute is 12 minutes. Median age in the city is 23 years old. Unemployment rate is 3.2%. Cost of living is comparable to that of Sturgis. You get the benefits of being close to Sioux Falls but the small town amenities of Aberdeen and Sturgis. Brookings real estate is affordable too, having a median home price of $143,500. Like Aberdeen, Brookings is home to a university. South Dakota University is the largest institution of higher learning in the state and it too brings added amenities to its city. Aberdeen is home to several museums and arts festivals and retains a large number of the Universities graduates.