South Dakota Housing Market Increasingly Expensive For Many

Homeowners in every state but Alaska spent more of their incomes on housing costs last year than at the start of the decade, according to data released by the U.S. Census Bureau.

In South Dakota, where residents’ median income is $40,310, 25 percent of all homeowners with a home mortgage spent 30 percent or more of their income for housing. For renters, that figure jumps to 35 percent.

The median monthly housing cost for home loan holders in South Dakota was $986. For renters, it was $500. The government considers housing costs excessive if they top 30 percent of household income.

Hugh Grogan, director of the Minnehaha County Human Services Department, said 30-35 percent of an income going to housing and utilities is typical.

“The issue is with low-income residents. We see so many people not in subsidized housing paying 40-45 percent. Thirty percent plus utilities could be a stretch for people, and it’s a definite stretch for people at the low end,” he told the Sioux Falls Argus-Leader.

While residents of smaller towns often pay less for rent, that could be balanced by the higher cost of utilities. Housing costs, by definition, are mortgage payments, taxes, insurance and utilities.

That’s why when looking at home ownership, a person must look at more than just the South Dakota mortgage payment, said Lorri Halverson, director of Consumer Credit Counseling of Lutheran Social Services.

“So it’s never something as simple as, ‘At this percentage you can do it and at another percentage you can’t,’” she said.

“If you’re making $2,000 a month and paying 30 percent for housing, you have quite a bit more discretionary income to balance the buffers. That’s not to say someone on a lower fixed income can’t do home ownership, but it’s very individually based.”

There is no easy way to decide if it would be better to rent or to own.

“We’ve known for quite time the cost burden in South Dakota is high because incomes are lower. So when we’re working with someone who’s considering home ownership, there are a number of things to look at,” she said.

That includes the stability of their jobs and how long they plan to stay there. In the Upper Midwest, the Minnesota real estate market has the most expensive average housing.

The median housing value of owner-occupied housing units in Minnesota is $198,800, compared to just $101,700 for South Dakota and an even smaller $88,600 in North Dakota.

Those Minnesota homeowners also pay the most for their homes per month: $1,351, compared to $986 in South Dakota and $972 in North Dakota.

America’s home ownership rate is at a near-record 68.7 percent, but despite that, many housing advocates warn that declining amounts of affordable housing made it hard for low-income owners to keep their homes.

The Sioux Falls housing market is stronger than the U.S. market, according to Barton Hacker, director of the Realtors Association of the Sioux Empire.

There is a slowdown in new construction, but sales continue at the same level. The only real slowdown he has seen is in the number of buyers for houses that cost more than $250,000. Those homes are staying on the market a little bit longer, and the inventory of those homes is a little bit higher than it was a year ago.

Home prices still are much higher than they were in 2000. Nationally, the median home values jumped 32 percent from 2000 to 2005, to $167,500. In this area, the increase in median home values is much more reasonable, in the 5-7 percent range. Median home value in Sioux Falls has increased from $152,000 to $157,000.