Housing Affordability in South Dakota Got More Expensive
The state was once among the most affordable in the American Midwest. That advantage is gone, and today’s buyers are paying 30% more for the same home they could have bought before the pandemic.
Imagine two identical homebuyers: the same salary, the same city, the same goal of buying a three-bedroom house in South Dakota. The first closed the deal in 2018. The second is trying to do the same today. The first homebuyer paid around $296,000 and took out a loan equivalent to 2.5 times their annual income. The second homebuyer, seven years later, will need around $390,000 and will carry a debt of 2.7 times their yearly earnings. The house is the same, what changes is the financial burden.
For decades, South Dakota held a comfortable place on the American housing map — cheaper than Minnesota, and comparable to Nebraska and North Dakota. It wasn’t the most affordable state in the region, but it offered a reasonable combination of price and quality of life that attracted both local residents and newcomers. That position has shifted since the pandemic, and the data shows precisely how and by how much.
First, prices rose sharply but didn’t come back down. Between 2018 and 2024, the median home price in South Dakota grew by about 30% in real terms — that is, adjusted for inflation. Minnesota, Nebraska, and Iowa all saw increases, but South Dakota’s was sharper; it went from sitting in the middle of the regional pack to surpassing Nebraska and North Dakota, and pulling close to Minnesota
By 2023, prices in several states had started to fall. Nebraska dropped 8.6% from its peak, Iowa nearly 12%, and Minnesota 6.7%. South Dakota fell only 2.3% — meaning it gave back almost none of its gains. In real terms, prices across the region are still above where they were before the pandemic. No state fully reversed the course, but South Dakota reversed the least.
Second, homebuyers are having to take on more debt, and the recent relief is more of an illusion. To understand this, it helps to know what economists call the loan-to-income ratio — the relationship between the loan amount and the buyer’s annual income. The higher that number, the more stretched the household budget is to service the debt.
In 2018, the typical South Dakota buyer took out a loan equal to 2.46 times their annual income. In 2021, that number climbed to 2.96 — the highest in the available historical record. Since then, it has eased slightly to 2.70 in 2024. At first glance, that looks like an improvement, but it isn’t necessarily.
This happens with higher interest rates; families can borrow less for the same home. So even though the loan amount fell on paper, household budgets got tighter. In Nebraska, Iowa, and Minnesota, prices also declined, so both the loan and the overall burden decreased. In South Dakota, prices stayed high, loans kept rising, and higher interest rates made monthly payments more expensive.
Between 2018 and 2024, the average loan value in South Dakota grew by 21%. Buyer income, over the same period, grew by only 10%. In other words, debt grew twice as fast as income. That explains why the financial pressure on today’s buyers is greater than it was a few years ago.
The third fact disconstructs a common justification that homes didn’t get better. If houses had become larger, better finished, or better located, part of the price increase would have a reasonable explanation. The data doesn’t support that. The median square footage of homes sold in South Dakota remained unchanged between 2018 and 2024. The average number of rooms did too. Buyers are paying more to get the same space.
And of particular interest to those following the local political debate. Building more homes didn’t solve the problem. South Dakota leads the region in new construction per capita. For example, in 2024, it issued 6.49 building permits per thousand residents, compared to 5.22 in Nebraska, 3.88 in Iowa, and 2.92 in North Dakota. And yet prices rose. This happens because construction takes time, and a permit issued today may result in a home becoming available months or years later. So, in that window, demand grew faster than supply could keep up.
That doesn’t mean building more houses is irrelevant; it means that construction alone, without measures that also address demand or directly guarantee affordable housing, has clear limits. Candidates who promise to fix the problem through construction alone face the uncomfortable fact that South Dakota already did so more than any of its neighbors, yet housing costs still went up.
What emerges is a picture of a market that has shifted to a new level and a new position. South Dakota is still cheaper than Minnesota in absolute terms. But it is no longer the affordable middle ground it was before the pandemic. Today’s buyers pay more, borrow more, and get the same house as before. If population growth continues and supply doesn’t accelerate significantly (through broader policies than simply issuing more permits) there is no reason to expect this situation to reverse on its own.
