A recent Rapid City Journal article previews a new report on the state of affordable housing in Rapid City by Black Hills Knowledge Network Project Director and Regional Economist Jared McEntaffer, Ph.D. The report describes the current shortage of affordable housing due to wage stagnation, a growing demand for single-person homes, and an overdependence on the tourism industry for personal income.
The 95-page report will be released later this summer and discusses how median household incomes state and nationwide have increased since 2010, but Rapid City’s median household income has declined - from $50,380 in 2010 to $48,784 in 2016. This is explained by the aging population, an increased number of one-person households, and the overdependence on the tourism industry for income. 25 percent of Rapid City residents are currently employed in retail, accommodation, food service, and/or arts and entertainment industries, all of which center around tourism.
This decrease in median income and aforementioned increased demand for single-person housing units has caused the demand for small, inexpensive housing, which includes units priced between $500 and $899 per month, to far surpass Rapid City’s current supply. As a result, many of Rapid Cities’ low-income households were forced into more expensive housing that often cost more than thirty percent of the household’s annual income. On the other end of the spectrum, upper income households were found to often seek out more modestly priced housing than might be expected given their incomes. Therefore, people from both low- and high-income brackets were competing with the middle-income bracket for housing, which led to even higher housing costs overall.
McEntaffer suggests several solutions to this housing dilemma in the report, including recycling old units and adding to Rapid City’s existing housing stock in the $400-$600 price range. There are several tools that the city and developers could utilize to develop more affordable housing, such as the Department of Housing and Urban Development’s HOME and Community Development Block Grant programs, as well $12 million available annually from the South Dakota Housing Development Authority.
Adapting Rapid City’s current building and housing codes to accommodate its changing demographics and preferences in also necessary, as well as improved coordination between the city and developers to reduce development costs and create incentives for building affordable housing.
McEntaffer also suggests the possibility of the formation of a nonprofit development and/or property management group like CommonBond Communities, which is a nonprofit organization that provides affordable housing in Iowa, Minnesota, and Wisconsin, for more that 12,000 residents.