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 the second half of 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 in Sioux Falls for August 2023 was influenced by several key factors, impacting various aspects of the market. Here's an in-depth analysis of the housing market statistics for the month from the REALTOR® Association of the Sioux Empire (RASE). We delve into the key market indicators and trends that shaped the real estate scene in Sioux Falls, South Dakota.
Monthly Market Indicators
During the summer homebuying season, the housing market was affected by higher mortgage rates, elevated sales prices, and a limited housing inventory. The average 30-year fixed-rate mortgage remained above 6.5% since May, reaching a two-decade high in August. This led to a 2.2% month-over-month decrease in existing-home sales nationally and a significant 16.6% decline compared to the same time last year, according to the National Association of REALTORS® (NAR).
In the Sioux Falls region, the statistics for August were as follows:
- New Listings increased by 2.3% to 676
- Pending Sales were up by 20.9% to 573
- Inventory levels fell by 2.1% to 1,430 units
- The Median Sales Price increased by 0.5% to $311,600
- Days on Market went up by 4.8% to 66 days
- Months Supply of Homes for Sale increased by 14.7% to 3.9 months
Housing Supply Overview
The limited supply of existing homes for sale has led to a boost in the new-home market. New-home sales reached a 17-month high, rising 4.4% month-over-month nationally. The new-home market saw a 31.5% year-over-year increase, with the Midwest and West regions experiencing significant gains in monthly sales.
For the 12-month period spanning September 2022 through August 2023, Pending Sales in the Sioux Falls region were down by 14.8%. Notably, the price range with the largest gain in sales was the $800K to $900K range, witnessing a 61.9% increase.
Overall, the Median Sales Price showed a 7.1% increase to $300,000. The construction type with the largest price gain was the Previously Owned segment, where prices increased by 5.5% to $290,000. The $200K to $250K range tended to sell the quickest, at 59 days, while the $1M and Above range tended to sell the slowest, at 107 days.
Market-wide, inventory levels decreased by 2.1%, but the New Construction segment gained 17.3% in inventory. This translated to 3.7 months' supply for Single-Family homes and 4.7 months' supply for Condos.
Despite a decline in existing-home sales, the Sioux Falls housing market remained active and showcased resilience, with new-home sales driving a portion of the market's momentum.
Sioux Falls Housing Market Forecast 2023-2024
According to Zillow's data, the average home value in Sioux Falls stands at $314,113, reflecting a notable increase of 2.1% over the past year. This figure provides a snapshot of the recent market performance, showcasing a positive trend in home values. Such sustained growth is indicative of the underlying strength of the market.
Sioux Falls MSA Housing Market Forecast
Projections and Trends
The Sioux Falls Metropolitan Statistical Area (MSA) housing market forecast presents an optimistic perspective for the coming months. The forecast takes into account various factors that contribute to the overall market dynamics.
Based on the provided forecast data, we can observe the following projected changes in the Sioux Falls MSA:
- August 31, 2023: A projected increase of 0.6% in the market.
- October 31, 2023: A further increase of 1.2% in the market.
- July 31, 2024: A significant rise of 5.4% in the market.
These projections reveal a trend of gradual but consistent growth in the Sioux Falls housing market. The forecast suggests that the city's real estate sector is anticipated to maintain its upward trajectory over the specified time frame.
Navigating a Promising Path
The Sioux Falls housing market, as indicated by recent data and future projections, is poised for a period of continued growth. The current average home value, coupled with the positive one-year value change, signifies a resilient market that responds to demand and economic factors. The Sioux Falls MSA housing market forecast paints an encouraging picture of the market's journey over the next year. With projected increases in the coming months, the city's real estate landscape showcases promise for both buyers and sellers.
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
