Covid-Era Population Flows to South Dakota As a Factor In Changing Home Values
graham pardun
2024-03-05
INTRODUCTION
2020 was, of course, a pivotal year for the US in many ways. One of the most salient changes was in state-to-state migration flows–huge numbers of people fleeing states, for example, that had formerly been prime destinations for immigration, or vice versa.
If, in the Covid era, some states became the veritable “Egypts” of a mass exodus, others became the “Promised Lands” that people were now heading to. South Dakota – though perhaps not flowing with milk and honey to the same extent that Texas and Florida were, at least in terms of absolute numbers – proportionally saw one of the highest population increases post-2020 in the union.
Like elsewhere in the country – like almost everywhere else – South Dakota saw dramatic increases in property values in the same time period. A natural question arises: To what extent were the post-2020 migration shifts a factor in this? More specifically, does any kind of narrative emerge from the data–that, for example, people fleeing states like California and Colorado tended to settle in western South Dakota, driving up home prices there moreso than in the eastern part of the state, settled mostly by Minnesotans and Iowans, in continuation of previous trends?
The following nine charts are intended to be a “first glimpse” in this direction, suggesting new questions, and the next areas for further research.
CHART 1 ▼
Absolute population flows by state, 2017-20 vs. 2020-23
Description
This chart shows net population increases and decreases for each state in two time windows: 2017 to 2020 (light brown) and 2020 to 2023 (dark brown). The middle line is zero, and right is the positive direction. The blue bars indicate the difference in population change, moving from the pre-Covid time window to the post-Covid one–in other words, blue represents the acceleration of population flow to each state in the post-Covid era. The chart is arranged vertically from the most negative acceleration (bottom) to the most positive (top).
Observations
The bottom cluster–Washington, Pennsylvania, Illinois, New Jersey, California, and New York–suggest a mass exodus from these states in the Covid era. New York, for example, went from an overall increase of ~500,000 residents in 2017-2020, to an overall decrease of ~500,000, a negative acceleration of -1,000,000.
The top cluster–Oklahoma, Arizona, South Carolina, North Carolina, Texas, Florida–seem to be the states that people are now flocking to (or flocking to even more than they once were).
In absolute terms, and as compared to the mass migrations occurring in the post-Covid era nationwide, the population flows to South Dakota are relatively small. Still, South Dakota is tenth closest to the top of the chart, out of fifty states, plus the District of Columbia–a desirable place to live.
CHART 2 ▼
Proportional flows by state, 2017-20 vs. 2020-23
Description
Chart 2 is similar to Chart 1, with the difference that population flows are given as a percent of each state’s 2023 population.
Observations
Relative to its most recently known total population, the positive acceleration of population flows to South Dakota in the post-Covid time window is fourth highest in the set. This suggests the possibility that state-to-state migration in the Covid era has been a significant factor in driving SD property values upward in recent years.
A question that follows quite naturally is: Where are these people coming from?
First, though, we will look more closely at the changes in property values…
CHART 3 ▼
Changes in property values by county
Description
The maps shows the percentage change in Zillow Home Value Index (ZHVI), for single-family homes, by county in South Dakota. Percentages are calculated using ZHVI figures in the month of January for the relevant years. These data are not available below a certain threshold of population density, and counties without a ZHVI in the relevant time periods are colored in brown.
Observations
Not surprisingly, the increases are clustered in the same way the population is: around Rapid City in the west, Pierre in the center, and Sioux Falls in the east.
All counties for which ZHVIs are measured were growing in value before 2020, and grew even more after 2020, with the highest acceleration centered on Rapid City, and the largest number of positive-acceleration counties clustering around Sioux Falls.
Home values in Pierre have been increasing in these time frames, but at a much lower rate than in Rapid City and Sioux Falls.
CHART 4 ▼
Population flows to SD by state (I)
Description
These maps show population flows to South Dakota, 2018-2022, based on American Community Survey (ACS) data. Data was not available for the year 2020, presumably due to the pandemic inhibiting survey activity.
Observations
Both before and after 2020, people have been moving to South Dakota from most other states in the union, with notable surges in a few distant states: CA, GA, FL, and TX.
Geographic proximity to SD is, and has been, a major factor in the higher population flows, with Minnesota in particular experiencing a large post-Covid acceleration.
Thinking again about the first chart, we might wonder to what extent this is related to Minnesota experiencing the eleventh most negative acceleration of population flow, post-2020.
CHART 5 ▼
Population flows to SD by state (II)
Description
This chart answers the same questions, using the same data, as the previous chart does, but organizes that data in a different way. The chart is arranged by total flow to SD, with each total bar broken down further by year.
Observations
In this view of the data, it is more evident that several non-adjacent states are major sources of immigration to South Dakota, for example Colorado and California.
However, for the two states just mentioned, immigration to SD was actually lower after 2020 than before.
At the same time, major increases in post-2020 immigration can be detected for Oregon, Arizona, Georgia, and Florida.
The prevailing source of population flow to South Dakota in these time frames is Minnesota.
CHART 6 ▼
Population flows to SD by state (III)
Description
This is a third view of the same data, with the emphasis now on percentage share of the overall flow, as opposed to geographical relationship (I) and absolute numbers (II). For clarity, only the top seven state sources of immigration to SD are highlighted, with the rest lumped together as “others.”
Observations
The only states that appear on all four donuts are NE, IA, and MN–geographically adjacent states. These seem to be pretty stable sources of newcomers to SD.
States that appear for the first time in the post-2020 donuts are WY, AZ, and MT, two of the three of which are adjacent to SD.
Although MN represents the largest share of population flow into SD–increasingly so, post-2020–there overall mix of sources is relatively balanced. People are coming to SD from a lot of places, with geographical proximity encouraging–but not completely deciding–higher flows.
CHART 7 ▼
Single family home value fluctuations, as compared to top state origins of population flow, 2017-2024
Description
For the sake of clarity, only the top five state origins of migration to South Dakota were included for this chart, which shows the Zillow Home Value Index (ZHVI) for each month, Jan. 2017 through Jan. 2024.
Observations
If people are moving to South Dakota from a significant distance, they are moving from states where average home values are higher–significantly higher, in the case of CO and CA.
Although SD experienced generally the same pre-Covid inflation in home values as other states, and then also roughly the same rapid inflation of values from mid-2020 to mid-2021, home values have been more stable in SD than in the other states since then.
The two major non-adjacent post-Covid sources of migration to South Dakota – California and Colorado – experienced significant declines in home values in the second half of 2022, but on average these home values were still much higher than average values in SD.
CHART 8 ▼
Population flows to regions of SD by state
Description
This is a hierarchical circle chart (or circular tree diagram), where the size of the circles is proportional to population flows by state of origin, and grouped by South Dakota region (west, central, or east), for the years 2016-2020. To apportion these flows, each of South Dakota’s counties was assigned to a district, following the SDACO, and each district was then assigned to the western, central, or eastern regions. The chart is arranged so that the position of the three groupings, left to right, correspond to their geography (western region on the left, central in the middle, eastern on the right).
The most recent data available is from 2020.
Observations
Although people are moving to South Dakota from other states, the majority of the in-flow in each region is from South Dakotans themselves moving around the state.
Proportionally large numbers of Californians are migrating to the western and eastern regions of SD, but not the central region.
Minnesotans are moving in large numbers to eastern SD, and to some extent to the central region, but not to the west.
Since the most recent data available was from 2020, it is not possible to determine to what extent these overall trends were either modified or intensified in the post-Covid era.
CHART 9 ▼
Regional home value fluctuations in SD
Description
This circular bar chart has the same left→right, west→east regional arrangement as the previous chart, so that if the two charts are superimposed (as on the title page), they correspond. Instead of population flows, though, this last chart shows the percentage increase in ZHVI per county (where data is available), per region. The darker bars show % change in ZHVI per county from Jan. 2017 to Jan. 2020, and the lighter bars show % change from Jan. 2020 to Jan. 2024.
The bars are grouped by region, and ordered by % change from 2017-2020.
The highest increases shown (~57%) were in Lake and Custer counties, in the 2020-2024 time frame.
Observations
In every county for which ZHVI data exists, single family home values increased from 2017 to 2020.
The rate of increase accelerated for every county from 2020-2023 as well, but not evenly.
The largest acceleration, comparing 2016-20 to 2020-23, was in Lake County (from +12% pre-2020 to +57% post-2020).
Concluding Thoughts
South Dakota was a desirable state to live in prior to 2020, and, post-2020, still is–for some, even more so. Some of the states which saw major declines in immigration post-Covid (such as Minnesota and Colorado)–or even something of a mass exodus (such as California)–seemed to have directed population flows towards South Dakota. This is likely one factor in dramatically increasing home values, though not the only one, nor perhaps even a major one; more granular data, yet to be gathered, is needed from the 2020-2024 time period, to say anything more definitive than that.
In any case, not living in South Dakota myself (yet), I will, for now, let the charts speak for themselves to those who do. And instead of offering conclusions, I will pose a few questions this study raises for me:
What proportion of recent population flows to South Dakota represent people who work remotely? Is remote work enabling inflation of home values, without necessarily increasing the state’s overall productivity?
How many people who primarily live and work in Minnesota are buying second (or third) homes just across the border in South Dakota, as a kind of safety net for the possibility that living conditions in SD and MN rapidly diverge (as suggested by each state’s experience of Covid policy)?
What trends of urbanization (or ruralization) have been occurring within South Dakota, and has the Covid era witnessed any meaningful shifts in these? And if there have been any noticeable shifts in urbanization or ruralization, how is this related to SD’s proportionally high immigration from other states in the Covid era, including non-adjacent states?