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.
Current Sioux Falls Housing Market Trends
The housing market in Sioux Falls for October 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.
While purchase activity has seen a notable decline compared to the previous year, rising interest rates are influencing current homeowners’ decisions, contributing to historically low inventory levels across the nation.
Key Metrics Overview:
- New Listings: The Sioux Falls region experienced a substantial increase of 16.2 percent in new listings, reaching a total of 604.
- Pending Sales: There was a notable surge of 17.2 percent in pending sales, totaling 477.
- Inventory Levels: Despite the increase in new listings, inventory levels rose by 3.9 percent, reaching 1,435 units.
Price Trends:
The housing prices in Sioux Falls continued to show positive momentum during October 2023. The Median Sales Price witnessed a 5.2 percent increase, reaching $305,000. However, this upward trajectory in prices comes with implications for both buyers and sellers.
Market Dynamics:
Days on Market: The Days on Market metric increased by 15.6 percent, indicating that properties are taking longer to sell, potentially due to the evolving market conditions.
Buyer Empowerment: Despite the challenges, buyers seem to be in a more empowered position. The Months Supply of Homes for Sale increased by 21.2 percent, resulting in a 4.0 months supply. This suggests that buyers may have more options and time to make decisions in the current market.
Factors Influencing the Market:
Rising Interest Rates: The overall decrease in purchase activity could be attributed, at least in part, to the impact of rising interest rates. Higher rates may discourage potential buyers and affect the overall demand in the market.
Seller Market Challenges: Current homeowners, despite a potentially lucrative market, are hesitant to sell, contributing to the low inventory levels. This cautious approach may be influenced by uncertainty or concerns about finding suitable replacement properties.
Sioux Falls Housing Market Forecast 2023-2024
Let’s delve into the specifics of the Sioux Falls housing market. As of October 31, 2023, the average home value in Sioux Falls stands at $311,973, exhibiting a 2.2% increase over the past year.
The current inventory, as of the same date, indicates 736 homes for sale, with 231 new listings contributing to the market’s vitality. The median sale price, as of September 30, 2023, is $291,667, while the median list price, as of October 31, 2023, is $336,600.
Sioux Falls MSA Housing Market Forecast (2023-2024)
Examining the forecast for the Sioux Falls Metropolitan Statistical Area (MSA) provides a glimpse into future trends. According to the forecast data, as of October 31, 2023, the market is anticipated to remain stable with a forecasted change of 0%. Looking ahead to January 31, 2024, a slight decrease of -0.2% is projected, and by October 31, 2024, the forecast indicates a more substantial decrease of -0.6%. These figures suggest a potential cooling of the market over the forecast period, emphasizing the importance of staying informed about evolving conditions.
The Sioux Falls Metropolitan Statistical Area (MSA) encompasses various counties within the state of South Dakota. An MSA is a geographical region with a significant population center and its surrounding communities. In the case of Sioux Falls, the MSA likely includes counties such as Minnehaha and Lincoln, forming a cohesive economic and social unit.
Are Home Prices Dropping in Sioux Falls?
As of the latest available data, the Sioux Falls housing market shows a positive trend with a 2.2% increase in average home value over the past year. The median sale price has reached $291,667, and the median list price is $336,600 as of October 31, 2023. While individual property values may vary, the overall market indicates stability and even growth, rather than a decline in home prices.
Is It a Buyer’s or Seller’s Housing Market?
The current dynamics of the Sioux Falls housing market suggest a balance between buyer and seller influences. Although purchase activity has decreased compared to the previous year, rising interest rates and a 3.9% increase in inventory levels (1,435 units as of October 31, 2023) contribute to a more balanced market. The Months Supply of Homes for Sale has increased by 21.2%, giving buyers more options and potentially empowering them in their decision-making process. Therefore, Sioux Falls currently reflects a market where both buyers and sellers can find opportunities.
Will the Sioux Falls Housing Market Crash?
Based on the available data and forecasts, there is no immediate indication of a housing market crash in Sioux Falls. The forecast for the Sioux Falls Metropolitan Statistical Area (MSA) suggests a stable market with a forecasted change of 0% as of October 31, 2023. While a slight decrease of -0.2% is projected for January 31, 2024, and a more substantial decrease of -0.6% for October 31, 2024, these figures indicate a gradual adjustment rather than a sudden crash. However, it’s essential to monitor evolving market conditions and factors that may influence the real estate landscape in the future.
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.
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
