South Dakota Real Estate Market Outlook

South Dakota’s general economy is likely to shrug off the recession despite minimal slumps in manufacturing and financial industries in its key cities. Although there is an observed rise in unemployment insurance claims, officials are bent on keeping the state from being down in the dumps. The Department of Labor has launched a program to retrain laid off workers for their easy transition to other industries.

The unemployment situation is the same in Sioux City. The largest city in the state drew major financial and healthcare companies to the area through a zero corporate income tax benefit. It was a successful move that saw the rise of Citigroup, Wells Fargo, BankFirst and HSBC as well as healthcare companies that remain as top employers. Compared to other cities, Sioux Falls’ unemployment rate remained below 3 percent only to go higher last December by 1.1 percent.

Despite this strong showing, the national real estate market is burdened by a rising case of foreclosures which is likely to swell in the city this year. The city may not keep its impressive foreclosure rate for too long that has been the country’s third-lowest rate this year.

In Piedmont, a town lying at the foot of the Black Hills, the real estate condition is on pins and needles. The property boom a few years back brought a new wave of construction in the area but the lack of sustained demand dwindled home sales. This year, RealtyOutlook.com expects the same trend to continue but will only fall by 1.5 percent. In Black Hills, a decline in tourism activity in Custer State Park, Crazy Horse Memorial and Mount Rushmore won’t significantly hurt the real estate market. Expect a 2 percent drop in home values in 2009.

Once regarded as the Best Place to Live in America in 1992 by a leading publication, Sioux Falls will be not be immune to the property crunch anymore. RealtyOutlook.com estimates home values to fall only by 2.5 percent, a reduction after five years of steady growth.

Perhaps the best real estate market ahead belongs to Rapid City. A number of companies have withstood the effects of the national downturn that include healthcare, tourism and retail firms. A rise in new home constructions is an effect of the impervious property market.

The state once got down to brass tacks in promoting the business opportunities in Rapid City. And it did reach its goal of establishing itself as a major industrial area for mining, logging, agriculture and business services. One major employer is the Ellsworth Air Force Base which guarantees residents to keep their homes through stable, long-term employment contracts.

This year, RealtyOutlook.com forecasts a 2.5 percent improvement in the Gateway to the Black Hills’ home prices. Thanks to the growth of new businesses that encourage spending among the community.