Housing options are few and far between in Rapid City, meanwhile the demand continues to increase for affordable homes
RAPID CITY, S.D. — The housing crisis existed long before COVID-19, but the pandemic and the effects thereof have only created more challenges for the real estate market. Now approaching the “seller’s market,” where the demand is greater than the inventory, realtors urge people interested in selling their home to act now.
“It’s in the seller’s best interest right now for us to try and sell because when supply is low and demand is high, prices go up,” says Realtor, Broker and President of Black Hills Association of Realtors, Steve Anderson.
Anderson explains that Rapid City’s real estate market has always been “unique” compared to other places. In some areas of the country there is little construction or developing occurring due to delays created by COVID-19 which is different in Rapid City where construction permitting and projects can be seen on an upward trend through the months of the pandemic.
Some of the reasons for the low inventory; low interest rates allows for homeowners to refinance if they aren’t interested in selling, sellers will have to find their own home amid the low inventory and there is also the lack of affordable housing.
“There is a real demand in housing right now,” says Rapid City Mayor Steve Allender. “That can present a problem with housing prices, including rentals. If you’ve seen a lot of apartments being built around town in the last few years, that’s on purpose. We need more apartment units. Builders will continue to build more apartment buildings because of that fact. But as we progress and add higher paying jobs then the lower paying workers get kind of left behind in the housing market.”
In 2018, U.S. Census Bureau reports the median income for South Dakotans was roughly $56k . The median rent per month at $722 and median home mortgage, for the same period, was about $1,300 a month. Today, online realty groups such as Zillow and Realtor.com estimate a Rapid City home costs on average $250,000. These numbers are only the average cost of housing and annual income, not displaying those making less.
“There’s old and crumbling housing in every town,” says Mayor Allender. “That’s typically where the lower income people end up until they’re bought out to make room for higher-end rentals or redevelopment. There’s a bit of a gentrification issue that occurs everywhere. Housing in Rapid City is not all what we wish it was.”
Allender says the city is experiencing the best scenario, opposed to a surplus of houses that sit months, maybe years, unsold.
In a “healthy” real estate market, there is a four to six months supply of homes. Currently, Rapid City has less than one months inventory. Anderson says there have been instances where a sale happens almost over night from the time it goes to market until the owner gets their keys. He says the issue of inventory, or the lack thereof, has been so for the last two years.
More sellers may drive down prices, but incomes haven’t caught up to inflation and lower-income families will still struggle to find access to affordable homes.
To calculate the consumer price index inflation visit HERE.