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Residential Department: Spotlight: South Dakota: April 2018


Spotlight: South Dakota

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.

skip to 3 Cities to Watch>>  

Sioux Falls home sales and prices

r_2018-04_Spotlight_chart-1.jpgLike 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.


The U.S. unemployment rate peaked at 10 percent during the Great Recession while South Dakota’s high mark during the period was about half that level, according to data from the U.S. Bureau of Labor Statistics. That gap has narrowed considerably since that time as the overall U.S. economy has improved, with South Dakota reporting an unemployment rate of 3.5 percent as of this past December, compared with the national unemployment rate of 4.1 percent.

South Dakota’s nonfarm employment-growth rate exceeded the U.S. employment-growth rate during the last downturn. It has run consistently below the national figure since 2012, however, coming in at an anemic 0.2 percent for the 12 months ending November 2017, according to the South Dakota Bureau of Finance & Management. By comparison, U.S. employment growth for the same period registered at nearly 1.5 percent.

Delinquencies and foreclosures     

r_2018-04_Spotlight_chart-2.jpgThe percentage of all mortgages in South Dakota that were 30 days or more past due as of this past November stood at 2.7 percent, well below the 5.1 percent rate nationally and down from 3.0 percent a year earlier, according to a report by CoreLogic. The housing-foreclosure rate for the state as of this past November stood at 0.5 percent, compared to the national mark of 0.8 percent.

South Dakota is a small state in terms of population, with only 384,000 housing units as of 2016. Consequently, foreclosure activity in the state totals in the hundreds, not thousands, of filings. Even so, foreclosure filings (as measured by auctions and real estate owned) are down significantly in the state since first-quarter 2013, when there were some 302 filings, according to Attom Data Solutions. Foreclosure activity has trended downward since then, with only 57 filings recorded in fourth-quarter 2017.

Sources: CoreLogic, Dakota Farm Show, Forbes,,, Realtor Association of the Sioux Empire Inc., South Dakota Bureau of Finance & Management, South Dakota Department of Agriculture, South Dakota Department of Tourism, South Dakota Governor’s Office of Economic Development, Tourism Economics, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Census Bureau, University of South Dakota, Vermillion Economic Development, Wall Street Journal

3 Cities to Watch


Home to the University of South Dakota, which includes the state’s only law school and medical center, this city of some 11,000 people offers a mix of academic and rural flavor. For the past 35 years, Vermillion has hosted the Dakota Farm Show, which draws some 25,000 ag producers from a four-state region and features nearly 300 exhibitors specializing in various farm technology, products and services. Companies with operations in Vermillion include Alleviant LLC, part of Navigant Healthcare; Polaris Industries, which operates a distribution center in the city; and Masaba Inc., a maker of mining equipment.

Sioux Falls

r_2018-04_Spotlight_city.jpgWith some 174,000 residents, Sioux Falls is the largest city and business center in South Dakota. The community was a farming town driven by a slaughterhouse, grain elevators and a livestock auction for decades. That all changed in the early 1980s, however, when Citibank moved its credit card operations to Sioux Falls, and other lenders then followed suit, including Wells Fargo. The city also enjoys a strong health care sector and one of the lowest unemployment rates in the nation.


Located near the first permanent settlement in South Dakota, which dates back to 1817, Pierre has been the capital of South Dakota since the late 1890s. The city of some 14,000 offers residents and visitors alike plenty of outdoor sporting activities, including hunting and fishing in and around the many nearby lakes, ponds and prairies of the Fort Pierre National Grassland. The city also is home to a number of attractions, including Casey Tibbs South Dakota Rodeo Center, the Lewis & Clark Family Center and the architecturally unique state capitol building, which was completed in 1910.

What the locals say

“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.”


Gregg Gohl  
Realtor Association of the Sioux Empire Inc.


Bill Conroy is editor in chief of Scotsman Guide Media. Reach him at (800) 297-6061 or

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