South Dakota - Real estate is expected to grow significantly in South Dakota over the next few years. The workforce is transitioning to a work-from-home mindset, meaning fewer people need to live in expensive urban areas. As a result, people will move out to the suburbs, where the price of real estate will increase.
Land values
The state of South Dakota has an extensive history of Native Americans. Various tribes over the centuries inhabited it, and during the past century, there were battles over agricultural land. Even today, the land values of South Dakota still reflect this rich history, and the state is a prime place to buy real estate.
The most important factor influencing land values is the low land inventory. If you purchased your land in the last five years or are considering selling, this is the best time to do so. You'll get the best value for your land if you act quickly.
Home prices
The state of South Dakota is expected to see a moderate decline in home prices in 2023. GOBankingRates used Zillow's home price forecast tool to determine the median home price in the state. This number takes more factors into account than the median list price. The market's supply and demand determine the median price of a home.
Although home prices are rising nationwide, the pool of first-time homebuyers is still large. This is due in large part to the massive Millennial generation. This group, between the ages of 29 and 33, is highly educated and very independent. In addition, the Millennial generation is comfortable with locking in a fixed-rate mortgage for seven to 10 years. After that, a buyer can make adjustments to the rate.
Millennials
Millennials are delaying life milestones such as marriage, starting a family, and purchasing a home. The average age for a first-time male marriage is thirty years old, while the median age for a first-time female marriage is 28. Although the housing market is shifting toward more balanced conditions, the millennial generation still faces challenges in saving for a down payment, especially with rising mortgage rates and inflation.
Millennials are expected to lead an increase in home prices nationwide, as their numbers are growing at record levels. Experts predict that a massive wave of millennial first-time buyers will emerge in the next few years, pushing higher home prices and rents. After all, the Fed increased the money supply by 50% over the past two years to spur the economy and deal with the aftermath of a pandemic. As a result, more money is driving up home prices, and that trend is likely to continue into the foreseeable future.
Price growth
While the housing market continues to grow, it's not expected to continue at a rapid pace. Despite the rising cost of living, there are still some indications that the market will slow in the years to come. According to GOBankingRates.com, median home values in 2023 are expected to decrease. The reason for the slowdown is not yet clear, but rising interest rates will be a contributing factor.
The overall market is experiencing continued price growth, with inflation nearing a four-decade high. In addition, Class A office space and bulk land are in high demand, and retail is expanding steadily. However, borrowing costs are rising, and rental growth only keeps pace with labor and material costs. Banks have been busy this year, with over 2,000 acres of land sold and over three million square feet of new industrial construction projected.
Job growth
According to the state's Department of Economic Development, South Dakota's job growth rate is expected to continue to grow at an average annual rate of 2.8 percent through 2023. This growth is expected to spur several different industries, including manufacturing, retail, and education. Inflation is expected to reach a forty-year high this year, and the demand for industrial space is expected to remain strong, with rental rates reaching double digits. However, the industrial market's rental growth is limited by the cost of materials and labor.
While this growth is expected to continue through at least 2023, many factors, including the economy and job market, could change. The real estate industry in South Dakota could see major changes in the coming years.
