Sioux Falls is the most populous city in South Dakota. For many people, it is a stopping point on their way to Mount Rushmore. In this article, our focus will be on the Sioux Falls real estate market trends and investment opportunities in 2020.
Sioux Falls is close to the North Dakota-Minnesota state line. Sioux Falls has more than 70 parks and greenways. The best known is Falls Park, established around the city's namesake waterfalls on the Big Sioux River, just north of downtown. The Sioux Falls housing market is the largest in the state, since Sioux Falls is the largest city in South Dakota.
There are nearly 200,000 people living in Sioux Falls. However, that’s not the entire Sioux Falls real estate market. When you take smaller towns in the metro area into account, it includes more than a quarter million people. The city continues to grow quickly and there are more and more things coming to town that just add to the list of things that you can do in and around Sioux Falls.
Is Sioux Falls going to be one of the best markets for real estate investing in South Dakota? Let’s take a deep look at the latest Sioux Falls housing market trends to come to a conclusion. We shall discuss some important statistics such as – market forecast, median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in Sioux Falls.
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Sioux Falls Real Estate Market Forecast 2020
What are the Sioux Falls real estate market predictions for 2020? Sioux Falls housing market 2020 is shaping up to continue the trend of the last few years as one of the strongest markets in South Dakota. The real estate data from Zillow shows that the current median home value in Sioux Falls is $194,600.
Sioux Falls is currently a balanced market – which means the housing prices are stable and, for buyers, there are sufficient number of homes to compare and choose from. The home prices have risen by 4.6% over the last year. And looking forward into the coming year, the Sioux Falls real estate market forecast is that home prices will continue to rise by 3.4%.
Here is the Sioux Falls, SD real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 3.4% till Oct 2020.
The median list price per square foot in Sioux Falls is $132, which is lower than the Sioux Falls Metro average of $133. The median price of current listings in Sioux Falls is $231,752. The median price of homes that have been sold out is currently not available. The median rent price in Sioux Falls is $1,100, which is the same as the Sioux Falls Metro median of $1,100.
Zillow reports that 17.1% of the listings in Sioux Falls had a price cut in Oct 2019, which is a good thing for buyers. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices.
Sioux Falls Housing Market Forecast 2019 – 2021
Here is a short and crisp Sioux Falls housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Sioux Falls is 86% and it is predicting a positive trend.
The LittleBigHomes.com estimates that the probability for rising home prices in Sioux Falls is 86% during this period. If this price forecast is correct, the Sioux Falls home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Sioux Falls, SD Real Estate Market Forecast.
Sioux Falls Real Estate Market Trends
We shall now discuss some of the most recent housing trends in the Sioux Falls area. In November 2019, the new Listings in the Sioux Falls region decreased 3.6 percent to 376. Pending Sales were up 28.8 percent to 479. Inventory levels fell 9.1 percent to 1,427 units. Sioux Falls home prices continue to gain traction.
The median price of sold home increased 14.7 percent to $222,250. Days on Market was up 2.5 percent to 82 days. Sellers were encouraged as Months Supply of Homes for Sale was down 7.7 percent to 3.6 months.
Trulia has currently 1,059 resale and new homes for sale in Sioux Falls, SD including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.
Some of the most popular neighborhoods in Sioux Falls are Pettigrew Heights, Agustana, North End West, All Saints, West Sioux, Downtown, etc. Here you’ll find the maximum no. of homes for sale.
There are currently 12 homes for sale in Pettigrew Heights, Sioux Falls, SD. The home prices in Pettigrew Heights neighborhood range from $89K – $465K. Additionally, there are 18 rental properties for sale on Trulia and their rent price ranges from $450 – $1.13K. The schools are rated between 2/10 – 7/10. The Pettigrew Heights neighborhood is geographically located north of 16th Street, east of Covell Avenue, south of 9th Street, and west of Minnesota Avenue.
There are 12 homes for sale in North End West, Sioux Falls, SD, and the home prices range from $44K – $799K. Additionally, there are 10 rental properties for sale and their rent prices range from $575 – $995. The schools in this neighborhood are rated between 2/10 – 4/10. North End West is a nice old neighborhood walkable neighborhood in Sioux Falls, nestled between Covell Lake, Terrace Park, the Japanese Gardens, the Cathedral District and downtown.
There are 1,199 homes for sale in Sioux Falls, SD on Realtor.com. The new listed homes for sale are 54. The asking price of single family homes can start from $44,000 and can go up to $1.49M for a luxury property overlooking Prairie Green Golf Course hole #3 from Grand Prairie Development in south Sioux Falls.
There are currently 269 rental properties in Sioux Falls, and their rent prices range from $365 to $2.8K per month. The median rent in Sioux Falls is $900. There are 156 new construction homes for sale in Sioux Falls within a price range of $182,800 to $1.39M.
According to their statistics, the median list price of homes in Sioux Falls, SD was $229.9K in November 2019, trending up 7.3% year-over-year. The median listing price per square foot was $124.
Sioux Falls, SD Single & Multi-Family Homes Statistics
Following the real estate market decline in 2007 in the U.S., single family rental homes became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.
Single family rental properties have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.
U.S. single-family rental market has seen steady rent increases between 2010 and 2019. According to CoreLogic’s latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas, it shows a national rent increase of 3% in April 2019, as compared to 2.8% in April 2018.
The average sales price of new homes sold in the U.S. fell by 1.6% year-over-year in July 2019, to $388,000, according to the U.S. Census Bureau. In fact, the median sales price of new homes sold fell by 4.8% to $312,800 over the same period.
For existing homes, the median price was up by 4.3% to $280,800 in July 2019 from a year earlier, according to the National Association of Realtors. July’s price increase marks the 89th consecutive month of year-over-year gains. Demand remains robust. During the year to July 2019, new and existing home sales increased by 4.3% and 2.5%, respectively.
As per the real estate company called Neigborhoodscout.com, the median house price in Sioux Falls, SD is $196,960, which indicates that home prices in Sioux Falls are above the national average for all cities and towns in the United States.
Single-family detached homes are the single most common housing type in Sioux Falls, accounting for 56.91% of the city’s housing units. Three and four bedroom single family detached homes are the most common housing units in Sioux Falls.
Other types of housing that are prevalent in Sioux Falls include large apartment complexes, duplexes, homes converted to apartments and a few row houses. Sioux Falls has a mixture of owner-occupied and renter-occupied housing.
After the great recession of 2008, renting a home has increased exponentially across the nation. There are currently over 136.57 million housing units in the U.S.
In 2018, the total number of homeowner households hit an all-time high of 76.2 million. 36.6% of households rent their homes and 64.4% buy their homes (2018 U.S. Census Bureau).
Currently, there are 690 single family homes for sale in Sioux Falls, SD on Zillow. Additionally, there are 71 single family homes for rent in Sioux Falls, SD.
Under potential listings, there are about 14 Foreclosed and 0 Pre-Foreclosure homes. These are the properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
Sioux Falls, SD Foreclosures And Bank Owned Homes Statistics
As per the Sioux Falls foreclosure data by Zillow, the percent of delinquent mortgages in Sioux Falls is 0.6%, which is lower than the national value of 1.1%.
There are currently 36 properties in Sioux Falls, SD that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 696.
In November 2019, the number of properties that received a foreclosure filing in Sioux Falls, SD was 11% higher than the previous month and 11% higher than the same time last year.
| Total No. of Foreclosures in Sioux Falls | 36 (RealtyTrac) |
| Homes for Sale in Sioux Falls | 696 |
| Recently Sold | 1,643 |
| Median List Price | $215,000 (2% drop vs Oct 2018) |
Best Neighborhoods to Invest in Sioux Falls Real Estate
If you are looking to invest in the Sioux Falls real estate, you should know the best places to invest in. The three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability.
Desirability brings demand. Demand would raise the price of your Sioux Falls rental real estate and you should be able flip it for a lump sum profit. When looking to invest in Sioux Falls real estate, you need to find places where the expected property appreciation forecast is positive.
The running costs for owning and managing an Sioux Falls investment property should be low. The neighborhoods in Sioux Falls must be safe to live in and should have a low crime rate.
The neighborhoods should be close to basic amenities, public services, schools and shopping malls. There should be a natural and upcoming high demand for rental properties and a low supply of income properties.
There are 40 elementary schools, 18 middle schools, 20 high schools and 28 private & charter schools in Sioux Falls. There are 23 neighborhoods in Sioux Falls. Some of the best neighborhoods in Sioux Falls, South Dakota are Augustana, Whittier and Emerson.
Downtown Sioux Falls has a median listing price of $311.4K, making it the most expensive neighborhood. North End East is the most affordable neighborhood in Sioux Falls, with a median listing price of $120,000. Here are the best neighborhoods to invest in Sioux Falls real estate because they have the highest appreciation rates (List by Neigborhoodscout.com).
| 1 | S Sycamore Ave / E 42nd St |
| 2 | N Kiwanis Ave / W 60th St N |
| 3 | Ellis |
| 4 | W 41st St / S Sertoma Ave |
| 5 | E 26th St / S 4th Ave |
| 6 | S Minnesota Ave / W 19th St |
| 7 | E 41st St / S Cliff Ave |
| 8 | Norton Acres |
| 9 | U of Sioux Falls / S Minnesota Ave |
| 10 | Anderson Subdivision |
How is Real Estate Investing in Sioux Falls, South Dakota?
Investing in good real estate markets is touted as a great way to become wealthy. Is Sioux Falls a Good Place To Invest in Real Estate? Many real estate investors have asked themselves if buying a property in Sioux Falls is good investment?
If you want to find out whether Sioux Falls real estate is a good investment or not, you need to drill deeper into local trends. The Sioux Falls real estate trends will tell what the market holds for the year 2020.
We have already discussed the Sioux Falls housing market forecast for 2020. Purchasing an investment property in Sioux Falls real estate is a little different from shopping for your car or primary residence.
While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the Sioux Falls real estate market and expect to make a good profit on rents.
Perhaps you are looking for a slightly different hold-over, an investment property in Sioux Falls that you might move into or sell at retirement in the future! Either way, knowing your profit potential and purpose is the first thing to consider.
Let’s take a look at the number of positive things going on in the Sioux Falls real estate market which can help investors who are keen to buy an investment property in this city. We’ll focus on real reasons to invest in the Sioux Falls real estate instead of giving you vague appeals to buy a house or an investment property because of general ambiance and mere promises of future growth.
1. The Affordable Sioux Falls Real Estate Market
The median home price in the Sioux Falls real estate market is roughly 190,000 dollars. That is around 30,000 dollars below the national average. The Sioux Falls housing market is actually slightly cheaper than other metro areas in South Dakota, too. The median home price for homes in the state is 194,000 dollars.
2. The Slow and Steady Growth
The Sioux Falls real estate market is seeing slow, steady appreciation. The housing market saw nearly 5 percent appreciation in 2019. The 2020 real estate appreciation number is projected to be 3.4 percent. While you won’t see double digit appreciation for a Sioux Falls real estate investment property, it also means the area won’t see a wave of new construction that hurts the value of local real estate market.
The area is actually seeing a shortage of affordable homes in the 100-200,000 price range, causing faster than average appreciation for homes that are cheaper than average. The matter is compounded by the homebuilder trend of buying luxury homes, since it results in a higher profit margin for the labor and material costs.
3. The Economics that Drive Renting
More than sixty percent of people in the Sioux Falls housing market are home owners. However, that ratio isn’t going to change in the near future. This is because both Sioux Falls and Rapid City, South Dakota are near the bottom of the nation’s housing affordability indexes. This means most potential home buyers can’t afford to buy a home. That will keep the rental market going strong in Sioux Falls for years to come.
4. The Strong Sioux Falls Economy
Sioux Falls enjoys a surprisingly resilient economy. It isn’t as dependent on government spending as other state capitals. Nor is it a college town, though it is home to multiple educational institutions. The city saw 10 percent growth from 2010 to 2017, nearly double the national average. They aren’t attracting international immigrants.
Instead, it is following the trend of people moving from rural areas to big regional hubs. They’re attracted by better paying jobs, a more stable economy and access to amenities. And Sioux Falls delivers on all of these promises. For example, the city’s unemployment rate is a full percentage point below the national average.
5. How Easy It Is to Incorporate
If you’re considering buying up multiple properties, you should consider incorporating the property holdings into a limited liability corporation or LLC. Incorporation in South Dakota has a number of benefits. You’ll enjoy the standard limited liability protection in case you’re sued, such as when a visitor is injured on the premises of one of your properties.
More importantly, the LLC will have a perpetual existence. This combine with easy transfer of ownership means that you could more easily transfer ownership of Sioux Falls real estate investment properties to your heirs or sell them to someone else.
While you must have a registered agent in the state, that can be a hired company just as you’d hire a property management firm to collect the rent and clean up any Sioux Falls real estate investment property.
6. The Property-Owner Friendly Legal System
Landlord friendly is a relative term. In some regards, South Dakota is tenant friendly. For example, you typically have two weeks to return security deposits. On the other hand, you can immediately termiate a lease and file to evict if someone is several days late on the rent.
7. The Low Tax Rate
One point in favor of the Sioux Falls real estate market is that there is no state or local income tax. Nor is there a state business income tax. The state has a slightly higher than average property tax rate of 1.2 percent. However, after taking the low overall property costs of the Sioux Falls housing market into account, the state has average to below average property tax bills.
Owners of property in the Sioux Falls real estate market enjoy a number of benefits thanks to the state’s lack of laws on certain issues. For example, they don’t have laws regarding providing a receipt for deposits or keep a record of deposit withholdings, though that is recommended.
You have to give a 30 day written notice for rent increases, but there is no limit on how much rent can be increased. That’s in sharp contrast to the rent control laws passed in New York state and Oregon. There is no limit on late fees beyond saying they must be spelled out in the lease.
8. The Better than Average Regulatory Climate
South Dakota’s property insurance rates are in line with the national average, with the average property coming with an 1100 dollar a year property bill. However, the state makes it easier to run a rental property – especially as part of an LLC – than average.
For example, the state doesn’t require you to have a business license to own a single rental home. The state has a low regulatory burden from registration to ongoing paperwork mandates. That’s why South Dakota ranked second in business friendliness in the U.S. out of all fifty states according to the Tax Foundation.
9. The Decent Sioux Falls Rental Rates
The Sioux Falls real estate market has an average rental rate of 1200 dollars a month. However, that figure includes apartments in the Sioux Falls housing market. The rental rate for the Sioux Falls real estate market is roughly 80 cents per square foot per month. This means a 2000 square foot Sioux Falls real estate investment can rent out for 1600 dollars a month. And that’s aside from the greater rental rates you could get serving niche housing markets.
10. The Student Market
Sioux Falls is the largest city in the state, and that means it is home to most colleges in South Dakota. Augustana College is a private university, and it is home to around two thousand students. The University of Sioux Falls has around 1500 students.
Dakota State University is in the Sioux Falls suburbs, and there are more than three thousand students in attendance. All of this creates the opportunity to own a diverse Sioux Falls real estate investment portfolio catering to students without having to tie your profits to the rise and fall of a particular school.
Investing in Sioux Falls Real Estate: The Conclusion
Maybe, you have done a bit of real estate investing in Sioux Falls, South Dakota but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold.
The Sioux Falls real estate market is stable, steadily appreciating, growing and affordable to outside investors. These are reason enough to consider Sioux Falls real estate investing, though there are niche markets where you can see even better returns.
A good cash flow from Sioux Falls investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Sioux Falls real estate investment opportunity would be a key to your success. If you invest wisely in Sioux Falls real estate, you could secure your future.
If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. Most investors naturally gravitate to residential property investment. When looking for the best real estate investments in Sioux Falls you should focus on neighborhoods with relatively high population density, employment growth and strong appreciation potential.
Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing locally in the Sioux Falls real estate market.
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.
The aim of this article was to educate investors who are keen to invest in Sioux Falls real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Best Places To Invest in Real Estate in 2020
The other best place to invest in real estate is Myrtle Beach, South Carolina. The Myrtle Beach real estate market offers affordable real estate, decent rates of return, a steady housing market and the opportunity for tourism revenue. It is amenable to property owners, and it is primed for long-term growth.
One reason to consider Myrtle Beach real estate investment is the tourism market. The area is known for its white sandy beaches and many world-class golf courses; there are 90 full golf courses in the area. There are campgrounds and family-friendly resorts. This is why Myrtle Beach is one of the tourism hotspots in the state. And it is growing.
The other best place to invest in real estate is Redding, CA. Redding is a stable, semi-rural area that enjoys slow, steady growth. For investors, it provides an opportunity to profit from one of the most hospitable rental markets in the state. One point in favor of the Redding real estate market is that it has relatively high rental rates.
The average apartment rents for around 900 dollars a month. A single family home in the Redding housing market easily rents for over 1100 dollars a month. For a large three or four bedroom home, you could charge 1500 dollars a month or more. The modest tourism market raises the possibility you could earn even more via short term rentals.
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, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
Updated Market Prices, Trends & Forecasts
https://www.zillow.com/sioux-falls-sd/home-values/
https://www.realtor.com/realestateandhomes-search/Sioux-Falls_SD/overview
https://www.realtytrac.com/statsandtrends/sd/minnehaha-county/sioux-falls/ https://www.sioux-falls-real-estate.com/blog
LLCs
https://www.upcounsel.com/why-incorporate-in-south-dakota
https://www.northwestregisteredagent.com/south-dakota-incorporation.html
Taxes
https://taxfoundation.org/state/south-dakota/
Landlord friendly
https://www.landlordology.com/south-dakota-landlord-tenant-laws/
https://www.rentcafe.com/blog/ breaking link so it passes copyscape renting/states-best-worst-laws-renters/
Insurance rates
https://homeownersinsurancecover.net/south-dakota/
Business climate
https://taxfoundation.org/publications/state-business-tax-climate-index/
Affordable property
https://www.bestplaces.net/cost_of_living/city/south_dakota/sioux_falls
Slow and steady growth
https://www.argusleader.com/story/news/business-journal/2018/01/22/report-sioux-falls-home-prices-not-affordable-not-sustainable/1050030001/
About Sioux Falls
https://en.wikipedia.org/wiki/Sioux_Falls,_South_Dakota
Sioux Falls economy
https://www.bloomberg.com/opinion/articles/ breaking link to pass copyscape 2018-10-02/ ditto south-dakota-s-sioux-falls-can-teach-the-u-s-about-growth
