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Shortage of houses in South Dakota called 'crisis' during legislature's study session

A committee of lawmakers will study a workforce affordability housing shortage in the state, with state officials saying housing stock is roadblock to population growth

Sioux Falls open house.jpg
The home for sale in northern Sioux Falls was priced at $470,000 in early May. Open houses for homes in the $200,000 price range have drawn dozens of potential buyers amid a seller's market with low inventory. (Danielle Ferguson / South Dakota News Watch)

PIERRE, S.D. — Amid what officials say is an unprecedented interest in out-of-staters moving to South Dakota, there's been one big hurdle.

Lack of housing in the Rushmore State.

And a legislative summer-study committee wants to fix that.

On Wednesday, June 9, lawmakers heard testimony from realtors, builders, and economic developers on ways to build more homes for working and lower-income families.

But the chair of the housing workforce committee, Rep. Roger Chase , a Huron Republican, sought to level-set that he wasn't just focused on houses for those who can't afford one.


"You'll notice, I didn't use 'affordable,' and I didn't use 'workforce,'" said Chase, insinuating those terms are often used "in order to qualify for some funding programs." Instead, stated Chase, the committee would also look at "elevated housing," which he said would "free up existing house stock."

But the gaggle of South Dakota lawmakers, a normally cost-averse crew, raised a number of problems at the outset of addressing an issue that a similar summer-study commission tried tackling four years ago in 2017.

Rep. Scott Odenbach , R-Spearfish, reminded the committee he moved from Florida and was wary of growth for growth's sake, saying "We have a beautiful thing in the Black Hills and in South Dakota, and we'd like to keep it that way."

Sen. Herman Otten , R-Lennox, asked if the state could influence local, sometimes private homebuilder decisions "without straight-up mandating that they have to have inclusions for this stuff."

And others noted the few state-backed housing programs that do exist — such as the Governor's House program, built by inmates at the Mike Durfee State Prison — only tackle 150 homes a year, which would not be enough to fill the needed stock in Custer County, let alone the entire state.

"What happens if you got told you had to build 1,000 a year?" Rep. Tim Goodwin , R-Rapid City, asked Lorraine Polak, of South Dakota Housing. He added "I'm serious," when Polak laughed.

"I think we need to build 2,000 a year, we're in a crisis right now," said Goodwin.

The housing shortage is not new in South Dakota, but officials say it's been exacerbated by migration during the pandemic. The state is far from unique in facing a housing shortage. An estimate earlier this year found the nation at-large is millions of homes short , particularly as people look for more space.


The trend to lower-cost, more-space homes should, in theory, be a boom for a rural, tax-light state such as South Dakota, said a number of legislators. But others noted the boom may've already passed the state by.

Rep. Jennifer Keintz , an Eden Democrat, and realtor by day, said that she's already witnessed fewer phones ringing now than a year ago.

"The last month or two has really fallen off to our typical amount of contracts," said Keintz. "It's not a slowdown in a bad way, but a slowdown maybe in a good way."

But Keintz noted that doesn't fix the housing situation in South Dakota, which continues to be dire for middle and low-income residents.

Rep. Mary Fitzgerald , R-Spearfish asked Todd Kays, of the First District Association of Local Governments, whether a person making $40,000 income can afford to buy a home in Watertown, South Dakota in 2021.

"I don't really have a good answer to that," replied Kays.

Asked by Goodwin a similar question, Kays said, "You're a renter."

Meaning the committee — and the state — will have its work cut out for it, long after the pandemic boom subsides.

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