The Growing Affordability Gap

Rising Housing Prices and Slow Wage Growth in the Black Hills of SD have widened the gap between what locals can afford for housing vs the cost of housing

The Black Hills — anchored by Rapid City, Spearfish, Sturgis, and surrounding communities — has long been a place where natural beauty and modest cost of living coexisted. But a post-pandemic surge in demand, fueled by remote workers and tourism growth, has transformed the housing landscape.

• Rapid City population growth at 15% from 2010-2020
• An estimated housing shortage of 5,000 homes

Housing Prices have Surged

Since 2019, the median sale price in Rapid City has climbed 64% — from $221,700 to roughly $364,000 in 2026. Spearfish has seen even steeper gains, with median sale prices reaching $485,000.  Other communities like Belle Fourche, Lead and Deadwood are experiencing similar increases.  And many of the existing homes are being sold to out of state buyers who use them as second homes, vacation homes and short term rentals, placing further stress on the local workforce to find a place to call home.

Source Redfin and Zillow April 2026

Wages cant keep up!

While home prices have soared, local incomes have grown at a fraction of the pace. The result: a widening affordability gap that prices out working families from the communities they serve.

According to the US Census Bureau in 2024:

• The Median Household Income in Pennington County was $74,517
• You needed to earn $83,578 to purchase a median priced home in SD
• HUD’s most recent income figures published in spring of 2026,  showed only a small year over year increase in median household income in Lawrence County while Meade County showed no increase while construction cost continue to rise.

The Human Cost

• Priced out of a home- A household earning the median renter income of $40,800 can afford less than half of the $83,578 needed to buy a median-priced home in South Dakota
• Rent burden rising-  1 in 11 South Dakota households spend more than half their income on housing. Average rent in Rapid City has reached $1,369/month — requiring $24.99/hr just to afford rent.
• Workforce at risk- Sanford Health and Ellsworth AFB are adding thousands of jobs, but support staff can’t find housing they can afford — threatening the region’s economic growth.

Sources: Habitat for Humanity, Elevate Rapid City, SDPB, BLS

Bridging the Gap

Not for Profit organizations like NeighborWorks, local government, and federal partners are working to close the affordability gap — but the scale of the challenge demands broader, sustained action

NeighborWorks DHR programs works to keep the American Dream alive by offering:

• Down Payment Assistance to new homebuyers
• Homebuyer Education
• Construction of Affordable starter homes and use of the Governors House Program
• Homes Rehabilitation Services with affordable funding option

Strategic Housing Trust Fund

• ~$15M revolving fund led by Black Hills Area Community Foundation — over 500 affordable units planned in Rapid City, including The Radiant (30 units) and Sagebrush Flats (179 units).

Housing Infrastructure Financing Program (HIF)

• The Housing Infrastructure Financing Program (HIFP) is a state-funded initiative administered by South Dakota Housing to provide loans and grants for the construction of housing-related public infrastructure

Regional Collaboration strive to keep homes affordable

• Organizations like NeighborWorks DHR, GROW SD, Lakota Funds and Lewis & Clark Development Group have formed the NeighborWorks Dakota Coalition.  These Community Development Financial Institutes have found that by working together they can have a greater impact in the region
• Other collaborations like Homes for SD, a loosely formed coalition of non-profits work closely on everything from housing legislation to leveraging programs to keep housing affordable across the state of SD
• And a recently formed partnership between Western South Dakota Community Action, Black Hills Habitat for Humanity and NeighborWorks Dakota Home Resources work together to Repair and Rehabilitate owner occupied homes in the Black Hills region.