The real estate market in Sioux Falls has been a prominent indicator of the city’s economic health. Despite the recent rise in interest rates, the local real estate market remains red-hot, defying expectations. This writing explores the factors unique to Sioux Falls that contribute to this unexpected trend and delves into the reasons why the market continues to thrive amidst high borrowing costs.
Robust Local Economy
Sioux Falls boasts a resilient local economy characterized by low unemployment rates, steady job growth, and a diverse range of industries. The city’s economic strength has bolstered consumer confidence and increased homeowners’ purchasing power, offsetting the impact of higher interest rates. Sioux Falls and South Dakota employment as a whole went up 0.8% year on year from April 23, according to the South Dakota Department of Labor. With a strong job market and positive economic indicators, residents of Sioux Falls are more inclined to invest in real estate, driving demand even as interest rates climb.
Limited Housing Inventory
Like many other cities across the United States, Sioux Falls faces a shortage of available housing inventory. The demand for housing far outweighs the supply, creating a highly competitive market. Limited inventory leads to bidding wars and increased property prices, which sustains the market’s upward trajectory despite higher interest rates. Average home listing price in Sioux Falls was 323k in April 2022. As of April 2023, it is now 352k, according to Zillow, Redfin, and Realtor.com research . Even though in 2022, with the interest rates being as low as 4.33%, prices still haven’t failed to go up due to interest rates being towards 7% and above. Buyers in Sioux Falls understand the urgency to act swiftly, accepting the cost of higher borrowing to secure a property in this tight market.
Growing Population and Migration Trends
Sioux Falls is experiencing steady population growth and attracting a significant influx of new residents. The city’s reputation as a vibrant and livable community, coupled with its strong job market, has enticed individuals and families to relocate to the area. This population growth, combined with changing preferences in the wake of the pandemic, has created a surge in demand for real estate in Sioux Falls. Buyers are willing to navigate higher interest rates to secure their place in this thriving city.
Local Investment Opportunities
Sioux Falls has emerged as an attractive destination for real estate investors. The city’s economic stability, couple with the potential for long-term growth, makes it an appealing investment opportunity. Real estate investors see the value in Sioux Falls properties, as rental demand remains high and property values have consistently appreciated. This influx of investment capital sustains the market’s momentum, mitigating the impact of higher interest rates on the overall real estate landscape.
As full-time investors in the Sioux Falls area, we notice the market trends are still no surprise in the spring of 2023. Due to the demand for single-family housing in Sioux Falls and the continuation of upward population growth, it is no surprise to us that the market continues to soar. Many may ask, “How are people still buying when the interest rates are so high?”. Well it’s simple. With the soaring economy with jobs and influx of people relocating to Sioux Falls, people are simply moving towards a better quality of life. Which, seem to be stepping away from louder cities and higher housing prices.
Confidence in Long-Term Market Outlook
Other buyers and investors in Sioux Falls along with us recognize that interest rates are subject to fluctuation over time. The perception among market participants is that the current high rates may be temporary. Many buyers opt for adjustable-rate mortgages or anticipate future rate decreases, making the current borrowing costs more manageable. The confidence in the long-term outlook of the Sioux Falls real estate market allows buyers to focus on the potential benefits of property ownership despite short-term interest rate challenges.
Conclusion
Contrary to expectations, the real estate market in Sioux Falls continues to thrive even in the face of high interest rates. The city’s robust local economy, limited housing inventory, population growth, attractive investment opportunities, and the confidence in the long-term market outlook contribute to this resilient trend. While interest rates do play a role, the unique factors specific to Sioux Falls outweigh their impact. As long as the local economy remains strong and the supply-demand imbalance persists, the Sioux Falls real estate market is poised to maintain its upward trajectory, demonstrating the city’s unwavering appeal to buyers and investors alike.