With the second best employment rate in the U.S. South Dakota is leading the nation into an economic recovery with its adjacent sister state North Dakota, especially in the housing market. But as two of the least populated states in the nation hardly anyone is noticing their improvements.
Home sales modestly rose in South Dakota as a result of the federal home buyer tax credit, but the incentive had little real impact on the real estate market. With a population nearing just 900,000 residents there just isn’t much velocity in South Dakota housing markets. In a good year the largest metropolitan areas top slightly more than 1,200 home sales.
The sales of homes in Rapid City rose in 2010 above the low numbers the previous year, indicating that conditions are improving in the marketplace. The prices of homes are also beginning to show signs that they are also moving upward, but any appreciation will be minor compared to previous levels and other parts of the country. Conservative lending standards helped keep both South Dakota and North Dakota out of the housing bubble for the most part as local bankers offered mainly just old standard mortgages during the bubble elsewhere.
Rapid City is in a lot better shape than most of the country, and is forecast to experience a higher volume of home sales towards the warmer spring and summer months as the region becomes more accustom to the nations’ new economy. Average home prices are forecast to rise 2.7% in 2011.
Outside of town in the Black Hills, where new subdivisions of homes popped up during the national boom to house new residents working in the energy fields home sales are slightly slower than during the federal tax credit period. As newcomers move to the region prices on homes will slowly rise supported by more workers moving to Black Hills, triggering home appreciation. In 2011 the forecast calls for just a 2.4% rise.
In Sioux Falls a healthy agriculture industry is feeling the effect of a stronger economy. Near record low mortgage rates are aiding the housing market as the community remains one of the strongest for its size in the nation. Employers are adding jobs in Sioux Falls as the economy pulls into a stabilizing mode in the state’s largest city. Average home prices are forecast to increase 2.3% by year’s end.