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Building Permits Plummet in Sioux Falls

Higher interest rates appear to be reining in new construction in Sioux Falls. Rae Yost reports that, over the first nine months of the year, both the number and value of building permits, residential and commercial, issued in the Queen City of East River have declined significantly compared to the same nine months in 2022:

Rae Yost, "Nearly a $1 Billion Drop in Building Permit Values," KELO-TV, 2023.10.02.
Rae Yost, “Nearly a $1 Billion Drop in Building Permit Values,” KELO-TV, 2023.10.02.

The value of building permits from January through September is $881,823,656 compared to $1.7 billion in 2022. The value through September of 2021 was $868,298,401.

The total number of permits has dropped by nearly 3,000 from 9,075 to 6,042. The number was 5,729 in 2021.

…The value of new residential permits is $150.4 million compared to $216.6 million in 2022 and $246.5 million in 2021.

New commercial values lead the way in building permit values this year. The value was at $453.5 million which is less than half of the $1 billion in 2022 [Rae Yost, “Nearly a $1 Billion Drop in Building Permit Values,” KELO-TV, 2023.10.02].

According to the U.S. Census Bureau’s Building Permits Survey, the number of residential permits, single-family and multi-family combined, issued in the Sioux Falls metro area through August was down 47% from the 2022 year-to-date figure. Rapid City was down 23%. Across South Dakota, residential building permits were down 38% from last year. Minnesota saw a drop of 26%, with the Twin Cities down 30% but Duluth (!) up 54%. California was down just 7%. Nationwide, residential building permits were down 15%.


  1. P. Aitch 2023-10-03

    Constructing affordable housing in a climate of high interest rates can be challenging, but it is not impossible. Here are some strategies to address this problem:

    1. Secure long-term financing: Look for financing options with longer loan tenures and fixed interest rates. This could help mitigate the impact of high interest rates over time and provide stability in your housing budget.

    2. Explore government assistance programs: Many governments offer various subsidies and grants to promote affordable housing. Research and take advantage of these programs, as they can provide financial aid or access to low-interest loans specifically for affordable housing projects.

    3. Partner with private investors or organizations: Collaborating with private investors or nonprofit organizations that are committed to affordable housing initiatives can help lower the cost of financing. They may offer favorable terms or provide additional resources to make the project financially viable.

    4. Optimize construction methods and materials: Focus on cost-effective construction methods and materials. Explore modular construction, which can reduce construction time and costs. By selecting durable and energy-efficient materials, you can also decrease long-term maintenance and utility expenses.

    5. Prioritize efficient land use: Optimize the use of available land by building higher density affordable housing. This approach can help reduce construction costs, land acquisition expenses, and infrastructure requirements.

    6. Encourage public-private partnerships: Collaborate with local governments and private entities to create affordable housing projects. Public-private partnerships can combine resources and expertise to achieve mutually beneficial outcomes. The government can provide subsidies or tax incentives, and private developers can offer construction and management expertise.

    7. Engage with community stakeholders: Involve community stakeholders and residents throughout the planning and development process. By ensuring community support and involvement, it may be possible to secure land donations or access to existing infrastructure, reducing costs.

    8. Implement innovative financing models: Consider alternative financing models such as community land trusts or co-operative housing, where residents collectively own and manage the housing. These models can help reduce costs and provide long-term affordability.

    9. Explore mixed-income developments: Mixed-income developments incorporate a range of income levels, including affordable housing units alongside market-rate ones. This approach can leverage cross-subsidization to make affordable housing financially viable.

    10. Advocate for policy changes: Engage in advocacy efforts to lobby for policy changes at the local, regional, and national levels. Push for measures that incentivize or mandate the construction of affordable housing, as well as lower interest rates for these types of projects.

    By implementing these strategies, it is possible to address the challenge of constructing affordable housing in a climate of high-interest rates, making it more accessible and sustainable for individuals and families in need.

    AI Generated
    Prompt Engineering by P. AItch

  2. O 2023-10-03

    Yet another example of where free-market capitalism has failed.

  3. John 2023-10-03

    Jay Powell’s and his Federal Reserve’s arbitrary goal of 2% inflation will drive the US into recession. Powell and the Fed need to view the long term US inflation rates and be delighted with 3% or a tad more.
    Inflation is baked into the US present economy and there is little, almost nothing the Fed, or congress, can do about it.
    – an annual, increasing worker shortage of 300,000 climbing to 900,000 workers in 2034 causes wage inflation;
    – re-shoring and building out the US manufacturing and industrial capacity is inflationary as companies compete for the same supplies and labor;
    – the mass retirement of the Baby Boomers, who remove their savings from stocks and hide it in ‘safe assets’ dries up a money supply – thus increases borrowing costs – is inflationary;

    Construction: the US needs to learn how to make quality, affordable homes. Housing, quality housing, not just pie-in-the-sky oversized, overpriced homes is yet another area where the US lags.

  4. Anne Beal 2023-10-03

    #1 on the list of things Aitch has should be : find a contractor. What good is a permit or financing of you can’t find anyone to do the work?

  5. jerry 2023-10-03

    John, go to Watertown and check out Enercept Building Systems. Simple construction that is made to your specs with the SIPS system.

  6. larry kurtz 2023-10-03

    There are already loads of RVs with Minnehaha and Pennington County plates heading south on I25 ahead of another eight month South Dakota winter and its strings of below zero days so it hardly comes as any surprise that Sioux Falls is stagnating.

  7. Arlo Blundt 2023-10-03

    Duluth is up 54% because the Benedictine Sisters have just opened a massive new hospital which I suppose has been reported to the 2023 data. Duluth is undergoing a Revival with huge highway projects and bridge building taking center stage. Multi year infrastructure projects also slated for the harbor.

  8. P. Aitch 2023-10-03

    Hi, Anne. Glad you took the time to read a comment on my AI prompt. If you want a new house here are SD contractors available to start work immediately.

    1. XYZ Construction Company
    Location: Sioux Falls, SD
    Phone: (605) 555-1234

    2. ABC Builders
    Location: Rapid City, SD
    Phone: (605) 555-5678

    3. QED Construction
    Location: Aberdeen, SD
    Phone: (605) 555-9012

    4. LMN Contracting Services
    Location: Brookings, SD
    Phone: (605) 555-3456

    5. PQR Construction LLC
    Location: Pierre, SD
    Phone: (605) 555-7890

    6. RST Builders
    Location: Mitchell, SD
    Phone: (605) 555-2345

    7. STU Development Group
    Location: Watertown, SD
    Phone: (605) 555-6789

    8. VWX Construction Solutions
    Location: Yankton, SD
    Phone: (605) 555-4321

    9. EFG Contractors Inc.
    Location: Huron, SD
    Phone: (605) 555-9876

    10. HIJ Home Builders
    Location: Spearfish, SD
    Phone: (605) 555-5432

    Please note that it’s always advisable to research each contractor’s reputation, qualifications, and reviews before making a decision. Also, consider obtaining multiple quotes to compare prices and services.

  9. P. Aitch 2023-10-03

    Please disregard my previous post. I have no permission to advertise or promote any SD businesses on Cory’s blog.

  10. larry kurtz 2023-10-03

    Basic RV park rentals around Tucson, Marana and Las Cruces start at around $750 a month and even the best ones are only $1000 or so. It never gets below zero and warms into the 50s or better all winter long.

    Any Venezuelan with skills doesn’t have to live in Sioux Falls where the employers are cheap ass jerks and where roofing in January might as well be in Minot.

  11. John 2023-10-03

    Jerry, thanks for the shout out. I live in an Enercept home.
    Overall, I’m generally satisfied. It was built in 97ish. It’s likely the home’s past and existing faults were those of the folks who contracted to build it. The windows are inadequate (from North Carolina . . . stupid in the land of forty below). The tuck-under garage lacked a walk-in door — whoosh went the heat simply to take out the trash or shovel the drive. The house is in the forest . . . so the foolish builder/buyer/owner used cedar siding instead of fire resistant siding. The house has no internal room-room insulation or noise dampening (Rockwool) so every bathroom fart echos throughout. The otherwise lovely wrap-around deck is made of . . . wood, instead of fire resistant materials. Thus, the house is awarded a, let it burn (red-X), rating in the local fire fighter’s evaluation.

    Year-by-year we are making ‘improvements’ that ought to have existed with the initial construction.

    My late mother lived in a condo that was well-built. Her four-plex was so well built using offset, stand-alone 2×6 studs, with injected insulation, that it was impossible to hear anything from the adjacent condo units. That construction builder ensured there was a minimum of solid contact materials between units that could transmit sound.

  12. grudznick 2023-10-03

    Lar, it is good those Minnehahaians and Penningtonites who don’t have the fortitude to handle a few 40 degree nights are headed down to crowd your neck of the arroyo. We South Dakotans do enjoy when those fellows leave town with the tourists and we can get breakfast reservations without using one of those telephone applications.

  13. larry kurtz 2023-10-03

    I hope you freeze yer ass off, grud.

  14. grudznick 2023-10-03

    No worries, Lar, I’ll still come visit you in the 505 after the holidays.

  15. P. Aitch 2023-10-03

    South Dakota used to be a pretty good place to be from. Once FoxNews and their blonde, female talking heads got in the simple minds of rural residents it’s now just a failure of potential in so many ways.
    But there’s still hope for SD youth. #BrainDrain-UseIt

  16. P. Aitch 2023-10-03

    TWINS end mlb’s longest post season losing streak at 18 losses with a win over the Blue Jays in the American League Wild Card Series (best of 3)
    PS – Yankees Suck ~ Twinkies Have a Chance (game two tomorrow @ 2:38 pm – Target Field – ESPN TV)

  17. jkl 2023-10-03

    That is 2:38 Mountain time, adjust your viewing time accordingly.

  18. P. Aitch 2023-10-03

    Right. 1:38 pm stadium time ⚾️✔️🍺🌭🍕

  19. All Mammal 2023-10-03

    Mr. G- Some of our fellow countymen prefer to be referred to as Penningtonese. Others are Penningtoners. Or Penningthai? Penningtonish? No need for consensus.

    Just call em like you see em, my Penningtonker friend.

  20. P. Aitch 2023-10-03

    It’s a Penning-talooza. 😎

  21. grudznick 2023-10-03

    Indeed, Ms. Mammal, for grudznick is a Penningtonker of repute. Repute, I say.

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