The Sioux Falls housing market has been on a roller coaster ride for the past year, with rising interest rates, limited inventory, and affordability challenges causing fluctuations in buyer and seller behavior. As we move into 2023, let’s take a closer look at the latest market statistics to gain insight into what we can expect in the coming months.
Sioux Falls Housing Market Trends
The housing market is an ever-changing landscape influenced by various factors such as interest rates, buyer affordability, and inventory levels. The REALTOR® Association of the Sioux Empire (RASE) has released its May 2023 market statistics for Sioux Falls, SD, shedding light on the current state of the local housing market. Let’s dive into the key findings and understand the implications for buyers and sellers in the region.
Existing-Home Sales Decline Continues
According to the National Association of REALTORS® (NAR), existing-home sales in the United States have experienced a second consecutive month of decline, falling 3.4% as of the latest measurement. This drop can be attributed to higher interest rates impacting buyer affordability. In comparison to the same period last year, sales are down by a significant 23%, while contract signings have dropped by 20.3% year-over-year.
Relief for Buyers in Some Areas
While the overall sales figures show a decline, some parts of the country have experienced a silver lining. Buyers in these areas have found relief in declining sales prices, which have decreased by 1.7% year-over-year on a national scale. However, it’s important to note that more affordable markets are still seeing price gains, indicating a complex and diverse housing landscape across different regions.
Positive Indicators in Sioux Falls
The Sioux Falls region has shown positive indicators in May 2023. New listings increased by an impressive 16.2% to reach 652, while pending sales saw a significant rise of 24.8% to reach 569. However, inventory levels fell by 4.2% to 1,285 units, potentially limiting the options for buyers. Despite this, prices continued to rise, with the median sales price increasing by 1.1% to $310,350. Days on the market also saw an increase of 5.8% to 73 days.
Limited Inventory and Buyer Empowerment
One factor contributing to the lower-than-average home sales in the current market is the shortage of inventory. Many current homeowners, who secured mortgages at rates lower than today’s prevailing rates, are choosing to delay selling until market conditions improve. With only 2.9 months’ supply heading into May, homes available for sale are moving quickly. On average, homes spend just over three weeks on the market, reinforcing the competitive nature of the market.
New Residential Construction Takes the Lead
As existing-home inventory remains limited, new residential construction has gained momentum. The increased demand from buyers has shifted towards the new construction market. Monthly new-home sales exceeded expectations, rising 4.1% to a seasonally adjusted annual rate of 683,000 units, the highest reading since March 2022, according to the U.S. Census Bureau. Housing starts were up 2.2% month-over-month, and permits for future single-family homes reached a 7-month high.
Sioux Falls Pending Sales and Pricing Trends
Analyzing the Sioux Falls region’s housing market over the period spanning June 2022 to May 2023, pending sales experienced an overall decline of 16.4%. However, within specific price ranges, notable gains were observed. The $900K to $1M range saw an impressive increase of 81.3% in sales. The median sales price for the region rose by 11.1% to $299,900, with the previously owned segment witnessing a significant price gain of 9.8% to reach $290,000.
Varying Market Dynamics
The time taken to sell a property also varies across different price ranges. The $200K to $250K range tends to sell the quickest, with an average of 60 days on the market. On the other hand, the $1M and above range tends to sell at a slower pace, with an average of 116 days on the market. These varying market dynamics highlight the importance of pricing strategies and market positioning based on the target price range.
Sioux Falls Housing Market Forecast 2023-2024
The housing market in Sioux Falls, SD, has shown positive trends and promising growth. The average home value in Sioux Falls is currently $320,269, which has increased by 3.5% over the past year. This indicates a steady appreciation in home values in the region.
The market is highly competitive, with homes going pending in an average of around 7 days. This rapid pace of sales demonstrates the high demand for homes in Sioux Falls. Buyers need to act quickly and be prepared to make competitive offers to secure a property.
In terms of pricing, the median sale to list ratio in Sioux Falls was 0.999 as of March 31, 2023. This ratio suggests that homes in the area are typically selling very close to their list price. Additionally, a significant portion of sales, approximately 36.9%, have been recorded as selling over the list price, indicating a competitive bidding environment.
On the other hand, around 46.8% of sales in Sioux Falls were under the list price, suggesting that there are still opportunities for buyers to negotiate and potentially find properties at a lower price point.
Looking ahead, the forecast for the Sioux Falls Metropolitan Statistical Area (MSA) indicates positive growth. As of May 31, 2023, the forecast suggests a 0.5% increase in the housing market. By July 31, 2023, the forecast predicts a further 1% growth, and by April 30, 2024, the market is expected to experience a substantial 4.3% growth. These forecasts indicate a positive outlook for the Sioux Falls housing market, with continued appreciation and market activity.
Overall, the Sioux Falls housing market is characterized by a competitive environment, rising home values, and rapid sales. Buyers should be prepared to act swiftly and strategically, while sellers can take advantage of the favorable market conditions to maximize their returns. Working with experienced real estate professionals who have a deep understanding of the local market can provide valuable guidance in navigating the Sioux Falls housing market successfully.
Source: Zillow
Should You Invest in the Sioux Falls Real Estate Market?
Sioux Falls, South Dakota is a city that has been attracting a lot of attention from real estate investors in recent years, thanks to its strong economy, affordable housing, and high quality of life. If you’re considering investing in the Sioux Falls real estate market, there are many compelling reasons to do so. The city’s economy is diverse and growing, with major employers in healthcare, finance, and manufacturing, which has created a strong demand for housing, especially in the rental market.
Additionally, Sioux Falls has a growing population and is consistently ranked as one of the best places to live in the United States. With a focus on the keyword “Sioux Falls real estate market,” it’s clear that this city is a promising destination for real estate investors looking for a stable and profitable market. However, as with any investment, it’s important to weigh the potential risks and benefits before making a decision.
If you’re considering investing in the Sioux Falls real estate market, here are some top reasons why it might be a good idea:
Strong job market: Sioux Falls has a diverse and growing economy, with major employers in industries like healthcare, finance, and manufacturing. This means that there is a steady demand for housing, and the rental market is particularly strong.
Affordable housing: The cost of living in Sioux Falls is relatively low compared to other parts of the country, which means that housing prices are also relatively affordable. This can make it easier to generate cash flow from rental properties, and there may also be potential for appreciation over time.
Growing population: Sioux Falls has been consistently growing over the past decade, with a population increase of more than 14% since 2010. This means that there is likely to be continued demand for housing in the city.
Quality of life: Sioux Falls is consistently ranked as one of the best places to live in the United States, with a high quality of life, a strong sense of community, and abundant outdoor recreation opportunities.
The Low Tax Rate: One advantage of investing in the Sioux Falls real estate market is the low tax rate, as there is no state or local income tax or state business income tax. Although the state has a slightly higher than average property tax rate of 1.2 percent, the low overall property costs in Sioux Falls result in average to below-average property tax bills. Additionally, property owners in Sioux Falls benefit from the state’s lack of laws on certain issues, such as the requirement to provide receipts for deposits or record deposit withholdings, though it’s recommended to do so. With no state or local income tax or state business income tax, investors can potentially save money on taxes and increase their overall return on investment.
Despite these benefits, there are also some potential drawbacks to investing in the Sioux Falls real estate market. One potential concern is the risk of overbuilding, particularly in the apartment sector. There is also the risk of a downturn in the local economy, particularly if there are major shifts in industries that drive job growth in the region.
Overall, however, Sioux Falls appears to be a promising market for real estate investors, particularly those looking for strong cash flow from rental properties in a growing and stable community. As with any investment, it’s important to conduct thorough due diligence and work with local experts to make informed decisions.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Sources:
https://www.zillow.com/sioux-falls-sd/home-values/
https://rase-inc.org/rase-members/monthly-rase-mls-statistics/
https://www.redfin.com/city/15282/SD/Sioux-Falls/housing-market
https://www.realtor.com/realestateandhomes-search/Sioux-Falls_SD/overview
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