SCOUTING YESTERDAY | South Dakota banks grapple with housing crisis

This week in South Dakota history: Sept. 6-12

South Dakota home buyers were increasingly finding themselves priced out of the housing market a half-century ago.

According to the Lead Daily Call, a meeting of the South Dakota Bankers Association on Sept. 11, 1974, identified increasing inflation and a lack of available lending funds as the two primary contributors to the state’s declining housing market.

SCOUTING YESTERDAY: After governor balks, South Dakota counties foot bill for soldier travel

Construction of new homes was falling across the nation at the time, dropping from two million built in 1972 to just over a million in 1974, according to the Argus Leader. In Sioux Falls, the market saw a decline from 1,072 new housing units built in 1972 to 743 through the end of 1973. Home sales and construction levels in Sioux Falls in 1974 were consistent with the previous year.

As fewer homes were being built, the cost of a new home also rose dramatically. Between 1973 and 1974, the median price for a new home climbed 27.5 percent to $38,900 — an increase of $8,400 in a single year, according to Census Bureau figures.

Dr. Michael Sumichraft, then chief economist for the National Association of Homebuilders, said higher home costs and higher interest rates had priced 60 percent of Americans out of the housing market, explaining why home sales dropped by half.

South Dakotans looking to buy a home were able to receive help from the state in 1974 following the South Dakota Housing Development Authority’s sale of $27 million in bonds. Using the funds from those sales to purchase mortgages from lenders, home buyers meeting certain eligibility requirements were then able to secure lower mortgage interest rates under the single-family mortgage purchase program.

The state also received millions of dollars in federal funding to stabilize the housing industry. Legislation sponsored by U.S. Rep. Frank Denholm provided $10 million for new housing projects in Sioux Falls in addition to $3 million for rural housing in the state.

Not all programs were increasing home sales, though, according to the Rapid City Journal. The effect of a 5 percent savings on the price of an existing home — in the form of a federal tax credit of up to $2,000 — was “practically nil,” according to a local realtor cited by the newspaper. “It appears this tax credit program, along with a lot of other federal housing programs, is designed for the more heavily populated metropolitan areas. A lot of times these programs do not fit the needs of areas like western South Dakota.”

As the housing industry began to rebound, a short-lived trend took place. New homes were built smaller with fewer bedrooms, bathrooms, and garages and were less likely to have central air-conditioning. By 1976, the National Association of Home Builders predicted that this behavior — buying a “basic home” — would fade away as financial situations improved.

Housing continues to be a challenge across the country and in South Dakota fifty years later. In 2023, state legislators earmarked $200 million for housing infrastructure grants, with supporters touting the use of state and federal funds as a means to address workforce housing shortages.

Notable events in South Dakota history

25 years ago — The Sept. 10, 1999, edition of the Rapid City Journal reported Box Elder will be home to People for the Ethical Treatment of Animals’ newest billboard. According to PETA, billboard companies in South Dakota, Texas, Nebraska and other cattle producing states had earlier refused to put up the sexually provocative sign — an image of a bikini-clad woman attempting to link eating meat with impotence. South Dakota Cattlemen’s Association President Cal Sandmeier responded to the sign, saying he didn’t mind if it went up in his state. “If they want to waste their money, let them do it in South Dakota.”

75 years ago — An early morning blaze on Sept. 8, 1949, destroyed the L.M. Ventling saw mill in Custer, according to the Rapid City Journal. Built three years earlier, the loss was estimated at $20,000.  

100 years ago — Once wanted dead or alive, lecturer Al Jennings appeared at the Liberty Theatre on Sept. 11, 1924. The Kansas lawyer-turned-bandit exiled himself from society following his brother’s murder. Becoming the head of a notorious gang before his capture, Jennings’ life sentence was commuted, turning the outlaw into an evangelist.

125 years ago — A Watertown restauranteur was facing an uphill battle for justice, according to the Sept. 9, 1899, edition of the Kimbal Enterprise. After paying a 20 cent lunch tab with a confederate $20 bill, a Madison, Minn. man was able to leave with the change before the error was noticed. Later seen on the street, the diner fled before police arrived. When reported to federal authorities, the restaurant owner was told the government didn’t regulate the use of confederate currency.