New data make it clear the housing market is challenging right now for first-time home buyers. But an industry group in South Dakota says all hope is not lost.
Last month, the National Association of Realtors announced that the share of first-time home buyers dropped to a record low of 21%. Analysts say the numbers underscore how hard it is for younger generations to build wealth through homeownership.
Chas Olson, executive director of the South Dakota Housing Development Authority, said there’s no doubt affordability is a problem right now.
“The increased costs for materials, labor, land, that sort of thing, primarily make new construction loans less affordable,” said Olson. “Now, for a first-time home buyer who’s primarily going to be looking at existing homes, factors like high interest rates probably have a greater impact on affordability.”
He said market woes place pressure on some SDHDA programs. But he said they’re also coming off a year in which they were able to help more than 2,000 first-time home buyers, up from around 700 the year before.
Olson said younger working adults who might think the market is out of reach need to look into assistance options and see if they’re eligible. One of his team’s programs helps buyers with maximum family incomes of around $120,000.
A new study from the home improvement website Fixr looks at housing shrinkflation. It says newly built homes are getting smaller even as prices continue to rise, with the Midwest not immune.
While buyers are working with tight budgets, the authors say smaller home options do offer lower operating costs when measuring the good and bad.
Olson said it’s important to still have conversations about the dream of homeownership and the long-term investment gains.
“It really is thought to be a key factor to long-term financial success,” said Olson, “and not just financial success, but kids’ success in school, people’s success at their workplace, all that. It all kind of ties in.”
Olson said he feels South Dakota is making good use of $200 million, approved by the Legislature in 2023, to spur more housing development. He predicted the projects coming together will help with the affordability issue.
