How Much Does it Cost to Build a House in Sioux Falls?

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Sioux Falls is named after the Sioux tribe of native Americans and the Big Sioux river waterfalls which can be found a few blocks away from the city’s downtown. It is the biggest city in South Dakota (SD) by population and is the seat of Minnehaha County. The city hosts a number of attractions, such as the Shoto-Teien Japanese Gardens and one of the few life-size bronze casting of Michaelangelo’s statue of David. The city also has a significant contribution to the automobile industry when Sioux Falls local, Thomas Fawick, designed the first four-door car which the late U.S. president Theodore Roosevelt rode during a city parade.

All over the world, businesses and organizations have adjusted to the remote work set-up or have implemented a hybrid workplace to prevent the widespread infection of the COVID-19 pandemic. With the new form of freedom and the ease of restrictions, people began moving out of expensive cities to live in more affordable ones, and this includes Sioux Falls. Overall, the city’s cost of living is 11.4% lower than the national average, while housing is 18.6% lower than the U.S. average, which makes it an ideal area to live in. Ranking and review website, Niche, even ranks it as the seventh best city to buy a home in America and the 28th city with the lowest cost of living. As of January 2022, Sioux Falls’ population has surpassed 200,000, an increase of 6,750, or roughly 3.45% from the year before, which is currently placing a big responsibility on the local government to implement and approve more affordable housing in the city.

With all this information, future developers and homeowners may ask: how much does it cost to build a home in Sioux Falls?

The Cost of Building a Home in Sioux Falls

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Nationally, building a 2,000-square-foot home costs an average of around $300,000 according to Forbes, which in South Dakota would cost $204,420 to construct. In Sioux Falls, a local contractor shares that the cost of a custom single family home may cost anywhere from $154,185 to $477,534 depending on several factors like the property location, amenities, client preferences, materials, and design. Realtor reports that the median home listing price in Sioux Falls is around $285,000. This is an increase of 16.3% in March 2022 compared to the previous year, with the average cost per square foot at $163.

The cost of building a custom single family home in Sioux Falls generally depends on the materials, labor, and professional services it may require since every project is unique. Some of the components may fluctuate independently from each other, like foundation, framing, exterior, and interior finishing. Project owners may also come across various fees prior to the construction. This includes, but is not limited to, architecture and design, building permits, and other permits such as land and zoning, plumbing, electrical, and home additions.

Hard Costs

The hard costs help construct the physical structure of the home, like the materials, labor, and even the total project cost. The prices may vary with the quality or brand and the waiting time. Local contractors share the different price ranges of custom home building costs in Sioux Falls. Budget or basic homes cost around $101 per square foot, while middle-range or market price homes are around $180 per square foot. Luxury or high-end homes cost at least $259 per square foot.

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest.

As per Manta, framing in Sioux Falls costs an average of $4,907. Lumber costs all over the U.S. skyrocketed in 2021, reaching its peak at almost $1,700 per thousand board feet, compared to $350 a year prior. This increased the cost of lumber packages used to build a starter home by around $36,000.

For other components, HomeBlue shares that drywall installation in the area costs around $1.40 to $2.10 per square foot, and this already includes labor and half-inch of drywall material. When it comes to the various systems inside a home, costs can go as low as $97 or as high as $783. Manta reports that electrical wiring installation in Sioux Falls ranges anywhere from $97 to $783, while plumbing costs around $97 to $706.

Soft Costs

Soft costs are expenses that go beyond the physical construction of the home, like the architecture and design, land development, and permit fees such as building, new construction, plumbing, water, and others.

Cost of the Land

Finding the perfect property is one of the first steps in constructing a custom home since there may be special considerations for the architectural design. Prices vary due to several factors, but generally these include the land topography, amenities, and distance from metropolitan or commercial areas. Land prices in Sioux Falls start at $40,000, which on Zillow will get a 5,980-square-foot property. Currently, the most expensive piece of land on the website is a 2.7-acre property listed at $425,000. Land values may still increase depending on their development status, or if it is fit for residential construction since some properties listed on websites may be undeveloped or for commercial development.

Permits and Other Fees

Securing a permit may be required prior to any project that has a contractor. According to the Sioux Falls City Government, residential permits can be issued within 10 to 15 minutes after submitting the application at the Building Services office. Residential permits are calculated based on the square foot size of the different sections of the project. For example, in single family dwellings, project owners are charged $112 per square foot of finished habitable space and $67 per square foot of finished basements. Inspections also have fees depending on the schedule. Inspections done beyond the regular business times cost $70 per hour with a minimum of one hour, while inspections with no fees indicated are $70 per hour, with a minimum of 30 minutes.

Architecture and Design Fees

The architecture and design fees before and during construction vary with the size, scope, and complexity of the project. The final design also depends on the client’s needs and preferences. While some projects may be simple and straightforward, some may require extensive research, attention to detail, and even consultation with other industry professionals. In the U.S., architecture and design fees range from 5 to 20% of the total construction cost. According to Manta, hiring a draftsperson in Minnehaha County costs an average of $788, while an interior designer’s professional fees would cost around $6,300.

How do the home costs in Sioux Falls compare to other nearby cities?

Tea is a city in Lincoln County, SD, located minutes away from Sioux Falls. Redfin reports that home prices in the city are up by 40.6% since the previous year, with the current average at $338,000. The median cost per square foot is at $209, an increase of 31.4% from 2021. Homes typically sell for about 0.9% higher than the listing price, and spend 61.5 days on market before it gets sold. With some homes getting multiple offers, Redfin categorizes Tea city as a somewhat competitive market.

Brandon is a city in Minnehaha County and can be found almost 17 miles away northeast of Tea city. It is ranked first in several lists on Niche, including best place to buy a house in SD, best place to raise a family in SD, and place with the best public schools in SD. Redfin shares that the median home price is $435,000, with the average cost per square foot at $207. The current median home price is an increase of 52.6% from the previous year, while the cost per square foot is an increase of 50% from 2021. Homes typically sell for about 2.2% over the listing price, and spend 49 days on market before it gets sold. With some homes getting multiple offers, Redfin similarly categorizes Brandon as a somewhat competitive market.

Lastly, Brookings is the fourth largest city in SD, and is ranked third by Niche in the list of best places to live in SD, fifth in the best places to raise a family in SD, and sixth best place for young professionals in SD. According to Realtor, home prices in Brookings are listed at an average of $269,900, which is around $189 per square foot. The March 2022 median price is an increase of 28.6% from the previous year.

The Future of Sioux Falls’ Residential Construction Industry

More and more people are moving to Sioux Falls thanks to the affordable housing and decent taxes. However, neighborhoods are slowly becoming more competitive and expensive, which was first observed back around last year when first-time home buyers often found themselves joining bidding wars. Some were even competing against other home buyers that were willing to spend an additional $20,000 to $60,000. It is reported that the battle for affordability is to the advantage of out-of-state residents who are moving to the area for work or lifestyle improvements. This year, Sioux Falls is expecting a record increase in population, and as seen with rising cities, is also a catalyst to a tight housing market and business expansions to accommodate the new residents. Some contractors even moved to building apartments, which are almost completely rented out as soon as the units are completed. While other cities are experiencing labor shortage, construction jobs in Sioux Falls increased by about 19%, or approximately 2,000 jobs, which is the highest average increase in the country.