By Bill Conroy
What the locals say
South Dakota thrives on agriculture and finance.
The first permanent outpost by white settlers in what is now South Dakota was
established by the explorers Lewis and Clark in 1804 at Fort Pierre, which is
named after a French fur trader from St. Louis. White settlers later clashed with
Native Americans in the territory over land that had been granted to the indigenous peoples by prior treaties.
The history of that clash of cultures has since been etched into the Black Hills
of South Dakota. The famous Mount Rushmore bears the images of four U.S.
presidents while a memorial to Lakota Sioux leader Crazy Horse also is located
in the Black Hills and is designed to be the largest statue in the world, at some
563 feet high and 641 feet long, when it is completed.
Today, those works of art and history, along with other scenic landscapes —
such as Badlands National Park, Custer State Park and Wind Cave National Park
—help to fuel South Dakota’s $2.5 billion tourism industry, which accounts for
about 5. 4 percent of the state’s gross domestic product (GDP), according to a
study by research company Tourism Economics.
The real heartbeat of South Dakota’s economy in the modern era, however,
are the finance and agriculture sectors, which represent about 16 percent
and 14 percent of the state’s GDP, respectively. South Dakota’s business costs
are among the lowest in the nation, some 16 percent below the national
average, according to Forbes magazine. South Dakota also took advantage
of a 1978 U.S. Supreme Court decision that allows credit card companies to
export interest rates from where they are located to other states.
The combination of those factors helped to establish South Dakota as a major haven for financial-services companies such as Citibank and Wells Fargo.
The state is now home to some $3 trillion in bank assets, or about one-fifth
of all bank assets in the nation, according to Forbes and the South Dakota
Governor’s Office of Economic Development.
South Dakota also is among the nation’s leading agricultural producers and
regularly ranks among the top states for the production of hay, sunflowers,
rye, honey, corn, wheat, bison and cattle, according to the South Dakota Department of Tourism. Some 19 million acres of land are devoted to crops and
another 23 million acres to pastureland, the state’s Department of Agriculture reports. The ag industry also supports more than 115,000 jobs, when
value-added industries are thrown into the mix.
South Dakota’s dependence on the finance and agricultural sectors is a source
of economic prosperity in good times, but it also can lead to slower growth
when those industry segments are not performing well. The state’s GDP grew
at an anemic 0.7 percent in 2016, compared to the national GDP growth rate
of 1.5 percent that year, according to the U.S. Bureau of Economic Analysis. n
Sioux Falls home sales and prices
Like many areas of the country, South Dakota’s largest metro area, Sioux
Falls, which accounts for the bulk of the state’s housing market, has been
marked by high housing demand and low supply over the past few years.
That trend is not expected to abate in 2018, according to the Realtor Association of the Sioux Empire Inc. (RASE).
Over the 12 months ending this past December, pending home sales in
the greater Sioux Falls area were up 5. 5 percent while the median sales
price jumped 4. 5 percent, to $190,000. RASE notes that homes selling
for $1 million and above recorded the largest bump in sales during the
12-month period, up 146.2 percent. The overall inventory of homes for sale
declined by 11. 3 percent year over year as of this past December, lowering
the available supply of single-family homes for sale to 2.6 months.
Home Sales in the Greater Sioux Falls Area
Source: Realtor Association of the Sioux Empire Inc.
Closed sales Median sales price
Realtor Association of the Sioux Empire Inc.
“The Sioux Falls market is certainly growing by leaps and bounds
every year. Unfortunately, [home] inventory is still an issue here,
like it is in much of the country, especially in the more affordable
price range. … Ten years ago, lots of first-time homebuyers were
buying new-construction houses. Today, however, because the
cost of construction has gone up faster than incomes, we’re seeing fewer new-construction properties in that first-time homebuyers’ range.”