A new study from the Black Hills Knowledge Network shows high demand for affordable housing in the Rapid City area.
The study also shows that while the average income in the state and country went up from 2010 to 2016, in Rapid City it went down.
While state lawmakers are looking at addressing affordable housing statewide in South Dakota, the Rapid City market has its own unique challenges.
Jared McEntaffer is a project director and regional economist with Black Hills Knowledge Network. That group just wrapped up an 8 month housing market analysis to quantify and understand the need for affordable housing in Rapid City.
McEntaffer says Rapid City has an unusually large demand for affordable housing.
“It’s a very tourism driven economy, so we have a concentration of workers in lower to middle income jobs in retail and sales and the restaurant industries,” McEntaffer says. “They’re good jobs, but their not as well paying as, maybe, in other markets. So, we have a slightly larger demand with lower cost housing than you might see in other places.”
That demand, McEntaffer says, is driving lower income families into medium income households, where most of their buying power is lost to rent and housing costs.
The study also finds a lack of housing for higher income households.
“So, what happens is everyone’s competing for the limited slice of the pie,” McEntaffer says. “When you have lower income people competing, higher income people preferring modest living and not wanting to spend and exorbitant amount of money on their housing, they’re all competing for the middle piece of the pie. And in any market when you drive that type of competition, again, it tends to increase prices.”
The Housing Summit study also finds that over a 6 year span, from 2010 to 2016, household incomes in Rapid City fell by 3 percent. McEntaffer says that’s largely due to a tourism focused economy, which accounts for around 25 percent of the labor force in the area. He says wages and incomes grow more slowly in these services.