Minnehaha County is growing significantly, according to recent reports from the directors of planning and equalization departments.
Last month, Minnehaha County Commission heard presentations from Planning Director Scott Anderson and Equalization Director Chris Lilla on multiple indicators for county growth. Those include building and septic permits, subdivision plats, property transfers and assessments – all of which witnessed increases in 2021.
Here’s a rundown of those two reports.
Minnehaha County’s new homes jumped 43%
The county’s planning department processed nearly 700 project submittals last year, issuing a total of 504 new building permits and 147 septic permits.
Those building permits have a total valuation of about $68 million, Anderson said at the Feb. 22 meeting.
“It's about half of what the city of Rapid City issued,” he said. “If you think about that, it is quite impressive.”
To put that into perspective, the planning director told county commissioners his department issued permits to 66 new residences constructed in “the unincorporated parts of Minnehaha County in 2021,” which was a 43% increase in the number of homes constructed in 2020.
“We issued more new single-family residences than all of the combined cities of Crooks, Dell Rapids, Garretson and Hartford,” said Anderson.
The 147 new septic permits are an indicator for new homes in the county, too.
“That reflects those new homes because each new home basically has a septic permit,” said Anderson.
Some of those issued permits are for homes that need old septic tanks replaced. Maybe people will add a new bedroom, Anderson explained, which requires a permit for drain field expansion.
Indicators for future development, like plats, showed substantial increases from 2020. Anderson says the county did 132 plats in 2021, when it typically ranges from 60 to 70 in a year.
“That's the indicator of how much growth we're seeing or the demand for growth in our county,” he said.
Equalization department “muddling through” 15% more property transfers
Equalization Director Chris Lilla reported to county commissioners there were 9,017 property transfers, 7,724 new building permits and more than 2,000 new owner-occupied applications during the period from Nov. 2020 to Oct. 2021.
“That is a huge number,” Lilla said of the 9,017 property transfers, compared to just 7,816 in the previous year.
2022 building permits were up 333 at a total of 7,724. That includes a $536 million increase in building permit values, which Lilla clarified is based on building permit value and not the county.
Minnehaha County’s preliminary assessed values came out to about $22 billion, a $2.85 billion rise from last year’s assessment.
“There's a lot of counties in South Dakota that don't have that much value in their county period,” said Lilla. “Our increases are larger than a lot of taxing entities.”
Lilla informed the five-member panel that as they’re hearing from every other department the county is growing, equalization is “getting stretched thinner and thinner.”
Minnehaha County sees 'aggressive market' with high demand, low supply
As for the 2022 assessment year, the equalization director wrote in a briefing memo, “We have found ourselves in an extremely aggressive market, the likes of which we have never seen before.”
Interest rates remained historically low, and high demand coupled with low supply has created a “perfect storm” for record transfers causing high assessment increases, according to the memo.
Sale prices for Minnehaha County properties have “exploded.” The equalization department created new cost tables to account for greater market increases than normal.
“It used to be 3 to 4% annually, and all of a sudden you start seeing 8%,” Lilla said.
Cost tables, coupled with other factors, were getting excessive, so the department put in new cost tables for residential and commercial this year, he said.
The county ended the 2021 assessment year at 90.5%. When Lilla began looking at 2022 market analysis, the county’s beginning level of assessment was at 76.5%.
Lilla says the 18.3% rise during the past year is a “measure of how much our market has increased in one years time.”
“That [average increase in sales county-wide] is absolutely unheard of,” he said.
Some property valuations over
The part that worries him is that he’s ending up with more property valuations that are over.
“I shouldn’t be over… but I look at the sales,” explained Lilla. “If they sold in November, December last year, and January and February, those are the ones I'm over on. I've never seen this before.”
His office has some assessments going out that are “over-assessed” this year.
Lilla also told the Argus Leader that property value increases and decreases don’t directly correlate to tax increases and decreases.
“Our job is equalization and to make sure the values are fair and equal across the board,” said Lilla. “We don't deal with taxes.”
Taxes come after values are done first, which Lilla says comes from school boards and county board budgets.
“Everyone needs to realize what our market has done,” said Lilla. “Some might think their value is high, but it’s driven by what’s selling in your neighborhood.”
Lilla says buyers and sellers set the market, and the equalization department’s role is to track that activity.
This article originally appeared on Sioux Falls Argus Leader: Minnehaha County housing prices, property growth 'exploded' in 2021