South Dakota, and Sioux Falls in particular, saw a significant increase in real estate development in 2012 and is expected to see even more through 2013.
At the same time, a rebounding construction industry in the state is lending a much needed boost to the overall economy.
KDLT reported (“Sioux Falls Home Prices Could Rise,” Jan. 7, 2013) that while Sioux Falls home prices actually dropped somewhat in two out of the last four years, home prices are nevertheless due to rebound. “Home prices appear to be starting an upward trend. Forecast-Chart.com publishes forecasts for the trend in home prices in 380 metropolitan areas. According to their calculations, in Sioux Falls, there is an 83 percent chance home prices will be higher in 2013 than in 2012.”
The report continued, “the latest data shows home prices in the Sioux Falls real estate market have gained 1.09 percent in 2012. That’s good news for sellers when you consider home prices dropped in 2011 and in 2009. According to Realtor Jackie Fischer when we compare the Sioux Falls housing market to other parts of the country, we remain in calm waters. We haven’t seen the dramatic ups and downs. For example the worst real estate market last year was Brunswick, Ga., with depreciation of -7.7 percent. The top market during the last year was Midland, Tex., with appreciation of 11.2 percent.
“Fischer says she doesn’t expect prices to increase dramatically, but if they do increase, she hopes to bring more sellers to the market. ‘We’ve got a little bit of a shortage now, I know a lot of people are sitting on the fence (waiting) to see what they are going to do. Interest rates have brought the buyers out in droves and so what has happened is we’ve got a buyers market however as prices start to creep up and more and more sellers are going to be qualified to move up.’
“Realtor Mike Winter agrees there is a shorter supply of homes on the market, and that goes for newly built homes as well. ‘I work with a couple of contractors, they usually build several spec homes every year right now they are so busy with custom homes that I won’t have any spec homes to sell this spring,’ he said. ‘But that’s good because those folks who are buying custom homes will then in turn sell their existing homes.’”
According to the City of Sioux Falls, new home construction was up in 2012, with a total of 628 permits issued for single-family homes, compared to 348 in 2011.
As with other Plains States that serve as home to industries that employ a large number of people, South Dakota is enjoying relatively low unemployment. In fact, at 4.4 percent, the state’s unemployment rate is the third lowest in the U.S. at the moment.
Conversely, its home prices are the 44th-lowest in the U.S., with the median home price at $101,700. Home prices are forecast to rise 4.6 percent from the first quarter of 2013 to the first quarter of 2014.
However, with Sioux Falls gaining national attention for its quality of life, more people might relocate there. In early April of 2013, Huffington Post named the city one of “The 10 Most Relaxing Places to Retire in the U.S.,” noting that “Sioux Falls is South Dakota’s largest city, and was ranked the NO. 1 small metropolis for successful aging by the Milken Institute for its low crime rate and high rate of employment for adults over the age of 65. Seniors can also take comfort knowing that hospitals have low inpatient expenses and strong geriatric facilities. Surrounded by natural beauty, retirees can enjoy cultural activities in the city while also taking advantage of hiking and other recreation activities around the Big Sioux River Falls.”
Meanwhile, Walmart recently proposed building two stores in Sioux Falls. KSFY ABC reported (“New Walmart sites could spur neighborhood growth,” March 12, 2013) that some people living nearby are expressing concerns about the impact to their neighborhoods, but that real estate professionals say the stores would be a good thing. “Real estate agent Tara Allen, Keller-Williams Realty Sioux Falls said ‘(It) is always a big controversial thing when Walmart’s being added, but let’s face it, it’s jobs, it’s growing our economy, it’s Sioux Falls, it’s inevitable.’”
Allen said the south side of Sioux Falls offers enough vacant land to build a number of businesses, as well as many single-family or multi-family homes. . “’If people are going to be buying their second homes, they’re looking for a home they are going to be in for a lot of years,’ she said. ‘And that’s where the building comes in, which is where Walmart sees the opportunity. I think it’s all the new houses that will be built around that area.’”
Sioux Falls is poised to make commercial development easier, according to KELO TV (“Commercial Developers Step up to Encourage Ordinance,” March 20, 2013): “Developers say the city’s new zoning plan is what they were hoping for. The Shape Places master plan … steers Sioux Falls’ commercial and residential growth in the coming decades. It’s largely pro-development.
“Commercial developers say the new plan lays out expectations for the city’s zoning areas that are much clearer to understand. It also eliminates many conditional uses, which up until now have been the norm as developments and retailers wanted to expand. … The Shape Places Plan is modeled after Sioux Falls’ growth goals for the coming decades. It defines commercial intersections by size and traffic patterns, and allows various commercial square feet properties based on the commercial definition.
“The plan eliminates nearly 200 conditional uses that would have required special permits and taken longer time for approval. The swifter process, as long developers comply with zoning standards, means fewer questions for developers, where time is sometimes the barrier between a project moving forward or dying before the dirt moves.”
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