Between national campaign fundraising trips to sunny Texas and Florida last winter, part-time Governor Kristi Noem muttered something about wanting to make South Dakota housing more affordable. That statement was just a pretext for more gutting of local control branded as deregulation (not an original or effective idea, just another borrowing of ideological bushwah from the last guy in the White House).
But all the Snow Queen pretexts and retread summer studies and crony capitalist tax breaks in the world won’t change market fundamentals: demand is up, wages are not, and South Dakotans are being priced out of their own housing and rental market:
The frenzied market is pushing up home prices and making it more difficult for low- to medium-income residents to achieve homeownership. The $45,000 average yearly income in South Dakota cannot compete with the purchasing power of a six-figure, out-of-state salary. Those longtime residents who normally would be able to purchase a home are forced to remain in rental properties, further putting a limit to the available rental units for families in need of affordable housing.
“All of this demand doesn’t seem to be able to be fed with home purchases, so it’s going to the rental market,” said Bryan Achbach, director of the Pennington County Housing and Redevelopment Commission.
Many of the major complexes the coalition uses in Rapid City are at 100% capacity with waiting lists, which is not normal, Achbach said. The commission’s clientele has had trouble finding units to rent and existing renters are seeing rents rise rapidly, Achbach said.
“Families are being put in a really tough spot for circumstances that are really out of their control,” he said [Danielle Ferguson, “Frenzied Housing Market Putting Homeownership out of Reach for Some South Dakotans,” South Dakota News Watch, 2021.05.14].
Even the cheap houses the state builds with prison labor cost more due to tight supply of construction materials:
Last year, lumber for a house would cost Sioux Falls area builder Mike Schlapkohl about $30,000 on average. This year, prices are averaging more than $52,000, a 73% increase. Other construction material prices are also rising, especially those manufactured in parts of the country that shut down for longer periods of time during the pandemic, such as California. A lot of resin used to make PVC and OSB pipes is brought in from Texas, where a February deep freeze halted manufacturing.
“The mills shut down and were not producing material, but the demand stayed the same or went up,” Schlapkohl said.
…Costs for materials to build homes in the Governor’s House Program have gone up about 19%, said Lori Moen, chief operating officer for Grow South Dakota. Governor’s houses are affordable homes built at the Mike Durfee State Prison in Springfield for low- to medium-income families [Ferguson, 2021.05.14].
South Dakota could end up like Vail, with rich folks from elsewhere scooping up all the prime real estate and leaving its workers with no place close to live. Luckily for Vail and for South Dakota, the Biden Administration is willing to spend $213 billion on affordable housing:
Biden’s NHIA [Neighborhood Homes Investment Act] proposal is part of a $213B commitment to “Produce, preserve, and retrofit more than a million affordable, resilient, accessible, energy efficient, and electrified housing units. Through targeted tax credits, formula funding, grants, and project-based rental assistance, President Biden’s plan will extend affordable housing rental opportunities to underserved communities nationwide, including rural and tribal areas.” This includes $40B for public housing capital improvements, as well as “a $27 billion Clean Energy and Sustainability Accelerator to mobilize private investment into distributed energy resources; retrofits of residential, commercial and municipal buildings; and clean transportation. These investments have a particular focus on disadvantaged communities that have not yet benefited from clean energy investments” [Buzz Roberts, “The Biden Infrastructure Plan and Its Effect on Housing,” National Housing Conference, 2021.04.04].
The Biden infrastructure plan also recognizes that affordable housing is part of infrastructure:
“Housing is critical infrastructure,” Philip Stoker, a professor of landscape architecture and planning at the University of Arizona, said. Stoker’s research has looked at how housing affordability impacts commuting. If workforce housing stock isn’t available, he explained, that simply causes people to commute further and further distances, which puts a strain on the roads or public transportation.
And that’s not just academic theory to [Moab city manager Joe] Linares…. When he tries to hire someone to work for the city of Moab, it’s often difficult to get them to stay.
He’ll make them a job offer, they’ll accept, move to the city and live in a trailer or RV while searching for more permanent housing. But after two months go by, they give up and return to wherever they originally moved from. “They say ‘I can’t afford to live here. I can’t find housing.’ That happens a lot,” Linares said [Sofia Jeremias, “How an Infrastructure Bill Can Help Rural Communities in the West,” Deseret News, 2021.04.23].
…and infrastructure is essential to housing:
Biden’s plan also calls for investments in water infrastructure, including upgrades to drinking and wastewater systems and replacing lead pipes. The plan put forth by Republicans would also dedicate $35 billion for drinking water and wastewater, and $14 billion for water storage.
Planning for future water needs, and future availability amid warming temperatures and drought, is another key need for rural communities, experts said. Seth Arens is a researcher for Wester Water Assessment, a program funded through the National Oceanic and Atmospheric Administration. The goal of the program is to help regions understand, prepare for and adapt to changes in climate.
When it comes to infrastructure, Arens said in some cases additional water storage might be needed, although building dams is far more difficult today than it was in the 20th century [Jeremias, 2021.04.23].
Of course, the biggest thing the Biden infrastructure plan may do to put more South Dakotans and other workers back into the housing market is create millions of good-paying construction jobs. No matter what else we do, an affordable housing market depends on jobs and wages. South Dakota’s current housing shortage is driven by buyers who can import their higher wages (and, in many cases, thanks to the Internet, their higher-paying jobs) to scoop up South Dakota houses for prices oriented toward depressed South Dakota wages. Raise South Dakota wages, especially for the working class, not just the trust lawyers and other wealth hiders, and a big part of the housing crunch disappears.