S.D.'s Housing Market Feels the Pinch
New Nationwide Study: Fewer Homes, Higher Prices Leave Many Behind
(Broadcast version follows the main story.)
By Todd Epp, Northern Plains News
Home construction is falling behind demand in South Dakota while prices climb to record highs, according to new state data and a national housing study.
A new study by Harvard and University of Pennsylvania researchers shows the problem goes beyond South Dakota. The study, published by the National Bureau of Economic Research, found that if the U.S. had kept building homes at the same rate as the 1980s and 1990s, we'd have 15 million more homes today.
The study found that home building has declined sharply over the past 50 years. Prices have shot up everywhere – even in places like the Plains and Midwest that used to be affordable. The researchers say, "America's suburban frontier appears to be closing."
Home Prices Outpace Paychecks
State data show the housing crunch is real in South Dakota. The Dakota Institute reported that the typical home price jumped $170,085 from 2016 to August 2024. That's an 80 percent increase in just eight years, according to the Institute.
The Dakota Institute also found that even when accounting for rising costs of everything else, home prices still went up $103,776 – a 37 percent jump. Most of that happened in 2021 and 2022.
The typical home in South Dakota now costs $384,000, according to the Institute. In Sioux Falls, Zillow reported homes average around $325,000, up about 4 percent from last year.
But paychecks haven't kept up. The U.S. Census Bureau estimates the typical South Dakota household earns about $72,000 a year. The gap between rising home prices and incomes means more families can't afford to buy homes.
Not Enough New Homes
Despite soaring prices, the Dakota Institute found that South Dakota doesn't have a dramatic shortage of homes for sale right now. The Institute reported that the number of new listings each month stays normal. The ratio of new listings to active listings is higher than before the pandemic, according to the Institute.
But there's a catch. U.S. Census Bureau building permit data show only about 7,000 new homes were approved in 2023. The Census Bureau reports that it's not nearly enough for South Dakota's growing population.
The U.S. Census Bureau estimates the state's population grew 4.3 percent from April 2020 to July 2024, reaching about 925,000 people. Growth in Sioux Falls and other cities puts more pressure on the housing market.
Affordable Housing Gets Squeezed
The problem hits hardest for families earning low and moderate incomes. The South Dakota Housing Development Authority operates a program to assist families with incomes up to 115% of the area's median income.
In 2024, the program had $1.56 million to support new construction, home buying, and homelessness prevention. But requests for help totaled about $3.76 million – more than twice what was available.
"Every year since the program started, people ask for more money than we have," the housing authority reported.
A study by Augustana University found that while new construction is occurring in Sioux Falls, most new homes are too expensive for lower-income families. The Augustana report said, "rising demand and higher prices will spur construction, but not of units affordable to lower income households."
The study found that renters face especially tough times. The Augustana research showed many spend more than 30 percent of their income on housing.
Rural Areas Face Extra Challenges
The South Dakota Housing Development Authority says rural and tribal communities have their own problems. The agency reports the biggest obstacles are affordability and finding builders willing to work in these areas.
The state's Continuum of Care for the homeless reports that service providers often lack the money and expertise to develop new housing. The group says builders rarely get involved in projects for the most vulnerable groups.
What's at Stake
Without major policy changes, South Dakota risks pricing out the workers and families it needs to sustain its growth. Changes could include more support for affordable housing, faster permitting, or incentives for builders.
As the state's housing authority puts it: "We remain committed to providing affordable housing and innovative solutions." However, the gap between what is needed and what is available continues to grow.
Radio/Broadcast Version
A new national study shows why South Dakota's housing market is tightening – and it's not just a local problem.
Harvard and University of Pennsylvania researchers published a study through the National Bureau of Economic Research showing that if the U.S. had kept building homes at 1980s and 1990s rates, we'd have 15 million more homes today. The study shows home construction has dropped sharply nationwide over 50 years.
Here in South Dakota, the housing crunch is hitting hard. The Dakota Institute says the typical home price rose 80 percent in eight years, reaching $384,000 in 2024.
State housing officials warn that affordable housing is especially scarce for low and moderate-income families. Funding requests far+ outpace available money.
The state's population grew by over 4 percent since 2020, adding pressure to the market. Experts say that unless more homes are built, South Dakota risks pricing out the workers and families it needs to grow.