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Tue September 17, 2013
SD Housing Trends Toward Sales
daInkotadakota South Dakota, the housing crisis never lead to a real crash. The market saw a few wobbles, but home sales in the state stayed pretty much on track. Five years after the initial downturn, an annual fall home showcase in Sioux Falls is attracting crowds. Hundreds are filing through those new houses, but the real estate event is only part of greater growth across the state.
Homebuilders in Sioux Falls are opening their doors, flipping on light switches, and inviting people inside brand new homes.
Dawn Stenberg highlights features in this home on the southeastern side of Sioux Falls. The brand new 2,700 square foot house boasts four bedrooms, an open-concept floor plan and a sunroom off the back. This is a twin home. On the other side of the west wall, another similar home stands on the same lot. It's listed at just under $300,000. Stenberg says she’s seeing more people – especially people getting older – who are looking for the amenities and space twin homes offer.
"It’s really exactly like a home, any normal home, with the exception we’re not going to have windows on the common wall side. As long as you have windows out the back of those rooms, and those rooms that we have over here, the bedroom? There’s a window going to the back. There is a window going out the front of the house, so there’s still a window in that room, just nothing on that one side," Stenberg says.
Stenberg is vice president of Built by Joshua, a Sioux Falls-based company that builds twin homes and single-family houses. She says houses are moving off the market much faster now than just a couple of years ago.
"We are really staying very busy right now. Interest rates, obviously are helping that. And people are always going to be aging and always going to be thinking about downsizing, simplifying their life and getting rid of the responsibilities large homes require," Stenberg says.
The South Dakota Housing Development Authority says Sioux Falls isn’t the only metro area seeing foundations poured and walls framed. Executive Director Mark Lauseng says he sees the construction statewide.
"I think in the major cities, I don’t know if you’d call these major in other states, but for South Dakota, they’re all seeing a lot of building going on. Cities like Watertown, Mitchell, Aberdeen, Pierre, Rapid City, Spearfish, those types of cities," Lauseng says. "It’s the smaller communities that are 3000 or less that don’t see that type of activity but are trying to develop some type of housing."
Lauseng says South Dakota communities need more workforce housing – rental and purchase options working people can afford on low-end salaries. He says the Housing Development Authority is collaborating with other groups to establish strategies for rural communities to encourage housing development.
"It just costs more to built the housing because the contractors aren’t there. The land is cheaper, but to build the actual home it costs more, because contractors have to include travel, getting materials there and things like that," Stenberg says. "Appraisals are also somewhat of an issue in rural areas, trying to find comparibles and trying to get appraisals enough to meet the amount of the loan that you need to finance a particular project."
Those aren’t the only barriers to rural development, according to real estate sales manager and designated broker Dave Mortimer.
"Well, I think some of the differences we can really, truly attribute to the cost of gasoline. In some senses, the markets are always going to move better in the areas where transportation to work is a lot closer, transportation to grocery stores and to shopping, retail markets and those kinds of things," Mortimer says.
Mortimer works for Coldwell-Banker Lewis-Kirkeby-Hall Real Estate in Rapid City. He oversees about 60 broker associates in real estate west river.
"You know, our first-time homebuyer market is actually our largest portion of the market that’s out there that’s able to buy. And then the move-up buyer moving from maybe that 125,000 amount up to $250,000 mark is our second busiest or more demanding part of the market. And anything over $300,00 tends to be a little bit slower," Mortimer says.
What used to sell in months is now turning over in just weeks, sometimes even days. Mortimer says a robust first–time homebuyer market indicates people experience positive life changes: solid employment, marriage, families. Mortimer says one challenge for people looking in lower price ranges is that those homes often require updates.
"The real estate itself will be older in age," Mortimer says. "The condition will generally mean, that because it is of older age, hey it will have been worn a little bit more."
Upgrading that gets expensive, and Mortimer says lenders are hesitant to approve fixer-uppers for first-time homebuyers. He says that’s a reason lower-income families can’t necessarily purchase lower-priced properties.
"So what you see is that the lower-priced real estate tends to be picked up by investors that can pay cash, they can afford to put the improvements into those kinds of things," Mortimer says.
Back in Sioux Falls, Dawn Stenberg points out features in a $299,9000 home. Current trends show the house is likely to sell much more quickly now than it would have in the middle of the housing crunch. But realtors note that, around the state and across all income brackets, lenders tend to be more conservative now. They’re concerned about their risk and whether applicants can actually afford the homes they want. That's one product of the housing crisis South Dakota couldn't escape.
Sioux Falls’ Parade of Homes properties are open for tours this weekend.
Saturday, September 21 1-5 p.m.
Sunday, September 22 1-5 p.m.
Monday, September 23 5:30-8:30 p.m.
For additional details, visit the Home Builders Association of the Sioux Empire's website.