A study by the Joint Center for Housing Studies of Harvard University points out that in the wake of the collapse of the housing bubble in 2008, the national rate of homeownership has fallen and the percentage of Americans who are renters has increased.
The Harvard study focused on cities with more than 100,000 people, so the Rapid City metropolitan area (which includes Pennington, Meade, and Custer counties) did not make the list. The South Dakota Dashboard has the relevant data, so we looked at how our region would have fared if we had been included.
Homeownership Versus Renting
In the United States, the rate of homeownership has declined from its peak of 67.3 percent in 2004 to 63.5 percent in 2013. This means nearly 42 million households across the country are renters. In South Dakota, homeownership suffered a more modest decline. From a peak of 69.2 percent in 2006, homeownership fell to 67.2 percent in 2013. The decline was far greater in the Rapid City Metro area falling from a peak of 71.7 percent in 2006 to 65.8 percent in 2012, though it has increased to 68.1 percent in 2013. Sioux Falls also saw a decline (from 69.7 percent in 2006 to 64.6 percent in 2012), although it, too, has increased to 68 percent in 2013.
Unlike the rest of the nation, Rapid City has seen a significant decrease in the share of cost-burdened households since the peak of the recession. In 2008, 34.9 percent of households in the Rapid City metro area were paying 30 percent or more of their income for monthly housing costs. In 2012, that rate fell to 27.1 percent, though it has increased to 31.1 percent in 2013. Sioux Falls shows similar trends with percent of cost-burden housing peaking in 2009 at 28.3 percent but has decreased to 22.4 percent in 2013.
The Harvard study also looked at trends in rental prices in relationship to median household incomes. Nationally, they found that while real median rents increased 6 percent between 2000 and 2012, real median incomes for renters fell 13 percent. In the United States in 2012, according to statistician Ben Engebreth, the median annual rent as a percentage of median household income was about 20.7 percent. In the Rapid City metro area, where the median annual rent was $9,372 (or $781 per month), the ratio of median rent to median income was 18.6 percent in 2012, lower than the nation, but higher than the statewide rate of nearly 16.2 percent.
Governing magazine provides an interactive tool that allows the user to see how cities rank in terms of housing cost burden. According to this tool, Sioux Falls, with a rent-to-income ratio of 27.3 percent ranked 282nd among 302 cities in terms of housing cost burden, making it one of the most affordable major cities in the country for rental housing. If Rapid City had been included in this chart, with its 18.6 percent ratio, it would have beaten all other cities on the list.
To view more statistics on homeownership rates visit the Housing Cost Burden page on the South Dakota Dashboard.