Is This The Solution To High Home Prices In Sioux Falls?

Home prices in the US and South Dakota are at historic highs and with higher interest rates, home affordability is lower than it has been in a long time. Despite that, people are stretching their mortgage budgets and still buying, granted at a lower clip than maybe a year or two ago.

Experts are quick to point out that high prices are caused in part by a shortage of homes in the US and they might be on to something. According to research, there is a 4.5 million home shortfall. That's huge and there isn't any quick solution other than to build, build, build.

However, simply building like crazy isn't an airtight solution either. Thanks to higher prices in building supplies and labor, the cost to build a home per square foot has never been higher and those costs get baked into the listing price.

It's a perfect storm where the solution to make homes more affordable is a factor in keeping prices higher. But there is one way to maximize cost per square foot; build more multi-family homes and that's exactly what's happening in South Dakota. These homes can offer shelter for more people in a smaller footprint and the building costs can be spread out over multiple units.

New research from building permits shows that 54% of new home builds in South Dakota are multi-family. That's good for number 5 in a ranking of small metros. In the Sioux Falls area, we rank number 11 in smaller US metros. According to the website Construction Coverage, 66.4% of all new builds are multi-family in the city.

Is buying a duplex, townhouse, or condo for everyone? No, but it's just one way that we can put a dent in the home shortage issue.