There are currently 426 Realtors listed in the Black Hills Realtor Association, and right now, there is approximately just ONE house per realtor on the market!
We’re in a significant demand for real estate listings in the Rapid City area, and it’s impacting the livelihoods of everyone in the housing market, as well as the availability of properties for families to purchase. This is part of a larger “Buyer’s Market” happening across the nation.
Realtor/Broker Tony Hensley of Re/Max Results here in Rapid recently sat down and told me about the current real estate market in Rapid City.
“Locally it is like it is nationally – we have a lack of inventory. We also have rising interest rates which isn’t as big a problem as the lack of inventory. We see a lot of people coming in who are qualified to buy, but we just don’t have exactly the right priced home. It seems like the $500 thousand market, and up, we have plenty of inventory, but the $175 to $350 thousand market is very, very low in inventory. If those homes are priced right and ready to sell, those sellers right now are receiving multiple offers within hours which is a national problem at the moment.”
What’s going to happen when (not if) mortgage rates begin to increase? This past week mortgage rates for 30-year fixed notes rose from 4.29 percent to 4.30 – thanks, in part, to the Trump Administration. Recent setbacks in Trump policies (the botched Health Care plan, and the Democratic filibuster for Supreme Court nominee Neal Gorsuch, for instance) have caused the market to reassess. This has, in turn, reversed some recent gains in the stock market and pushed mortgage rates down, although likely that’s only temporary. But as the Federal Reserve hikes interest rates, the chances of seeing the under-4 percent mortgage rates of the last few years are unlikely shortly.
Rapid City has always been a unique market, one that doesn’t always reflect the national averages and that includes the housing market. Like the rest of the nation we suffer from a dearth of available properties, but unlike many other parts of the U.S., we see our population grow significantly. We need suitable homes for those moving into our area or those with changing needs.
Tony and I talked about the recent report from United Vanlines that South Dakota has replaced Oregon as the “Top Moving Destination” in state-to-state moves in the U.S. This has a significant impact upon the housing market, including rental properties.
“We (Rapid City) have multiple apartments being built, and from what people are telling me, those are being filled quickly. My wife runs a property management company, and they have virtually nothing to rent. I think the base (Ellsworth) is still full of people and I don’t think we’ve seen the influx of people expected for Black Hills Corp yet, so there’s, even more, buyers coming. I just think the beautiful Black Hills and the pace of life here brings people to our area.”
While business may be driving some folks to Rapid City, nostalgia is another factor. “I know a lot of young professional, people that grew up here, who said they’d never come back. They go out in the world, but something brings them back to the Black Hills. I mean, you’ve got rock-climbing, mountain biking, hiking, and skiing. All these activities bringing people back, plus the cost of living is relatively cheap compared, even to Denver.”
The challenge is that while properties are in the highest demand we’ve seen in years, there’s no real incentive to sell your home unless you’re looking to build or move out of the area. After all, where are you going to move if you sell your house?
“The people that have the great locations – houses they’ve been in for fifteen to twenty years – when they look at what they can buy, they’re discouraged.” Hensley confided. “They’d rather sink money into remodeling their house. They can refinance, take the money out and upgrade.” This fuels the lack of available properties in our housing market.
In additional to houses in the $175-300 thousand price range, another thing realtors are desperately seeking are one-level houses. Many people retire in the Black Hills region, and it’s easier for seniors to have everything on one level.
According to a recent press release from PR.com: “There are only 14 current listed homes in the Northwest area of Rapid City. Of those 14 listed single-family homes, only six are not under contract. Northwest Rapid City is highly desired due to the incredible school districts and easy access to West/South Rapid City. This area also has easy access to parks, downtown Rapid City, Nemo Road and I-90 via Black Hawk or Deadwood Avenue.”
As rates begin to rise in early 2017, it’s likely to more and more home buyers are going to opt out of the market this season. They’ll look instead at refinancing and remodeling, or they’ll put the decision to move off by a year or more. That’s not good news for realtors, home appraisers, mortgage lenders and others who rely upon the constant back-and-forth of a healthy market.
This week a symposium was held in Rapid City to talk about interest in building a low-income Tiny House community. Rapid City Mayor Steve Allender has long talked about finding more permanent housing options for our homeless population, but this Tiny House development might be an option also for students, seniors and those looking to downsize and save costs on rent.
I’m not sure a single Tiny House development clustered together, serving the homeless, seniors and students is the best option. But as single property developers look at available land, instead of building one $250,000 to $500,000 home, perhaps they could build four Tiny Houses (or very small houses, since a “tiny house” is specifically categorized as a home that is 400 square feet or smaller).
The Trump Administration has brought uncertainty to our future. This has been, inarguably, the biggest political game change we’ve seen in our lifetime. It’s impossible to predict what is going to happen at all, let alone specifically with the real estate and financial markets. But people still need to find homes and sometimes to sell them. If a current homeowner were even considering the idea of selling, this is probably the best moment to do so. Rates are rising which will lower demand and right now, some new listings are receiving offers in less than 24 hours. 24 hours, people!
Rapid City is growing. We are seeing people move into our state from elsewhere, including folks who grew up in the area and are now returning to raise their families. We’re also likely to continue to see Rapid City and the Black Hills attract retirees and snowbirds. These people (in the latter category) will not necessary bring a large income with them. Having affordable housing is imperative if we want them to settle here. Rapid hasn’t always been known as the most welcoming community, but it has improved in the past decade or so. Let’s hope that our developers keep that welcoming spirit in mind as we look to the future and where Rapid City folks would like to live.