Madison is home to the best residential real estate investment market in South Dakota.
The 57042 zip code in Madison presents the greatest opportunity for the best real estate investments among the 128 individual real estate markets in South Dakota we evaluated. We looked at property values, population trends, and six other metrics for each market. We used that data to calculate each market's InvestScore.
5 best places to invest in South Dakota
| Rank | City | InvestScore | Affordability | Property value appreciation |
|---|---|---|---|---|
| 1 | Madison | 100 | 3.3 | 62.22% |
| 2 | Pierre | 86.3 | 3.2 | 36.21% |
| 3 | Sioux Falls | 83.4 | 3.9 | 54.97% |
| 4 | Harrisburg | 80.2 | 3.6 | 45.56% |
| 5 | Dell Rapids | 79.5 | 4.0 | 53.01% |
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1. Madison
We've identified the 57042 zip code in Madison as South Dakota's best real estate investment market. Here's why.
🔎 Key data about Madison
| Data point | Value | Rank in state (of 128 markets) |
|---|---|---|
| Zip code | 57042 | N/A |
| InvestScore | 100 | Highest |
| Typical property value | $229,556[1] | 4th lowest |
| Five-year appreciation | 62.22%[2] | 2nd highest |
| Household income | $70,046[3] | 19th highest |
| Affordability ratio | 3.3 | 4th most affordable |
| Five-year population growth | -12.4%[4] | 32nd highest |
| Unemployment rate | 1.9%[5] | 10th lowest |
| Property taxes | $2,322[6] | 6th lowest |
| Educational attainment | 36.9%[7] | 11th highest |
Madison (zip code 57042) is the best residential real estate investment market in South Dakota. It has the 2nd highest property value appreciation among markets we evaluated, with a 62.22% appreciation of the typical property over the last five years.
Madison is the 4th most affordable market among the 128 South Dakota markets we evaluated, with an affordability ratio of 3.3.
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2. Pierre
The 57501 zip code in Pierre is the runner-up spot for the best real estate investments in South Dakota.
🔎 Key data about Pierre
| Data point | Value | Rank in state (of 128 markets) |
|---|---|---|
| Zip code | 57501 | N/A |
| InvestScore | 86.3 | 2nd highest |
| Typical property value | $273,162[8] | 8th lowest |
| Five-year appreciation | 36.21%[9] | 27th highest |
| Household income | $84,055[10] | 9th highest |
| Affordability ratio | 3.2 | 3rd most affordable |
| Five-year population growth | 3.7%[11] | 20th highest |
| Unemployment rate | 0.4%[12] | lowest |
| Property taxes | $2,485[13] | 10th lowest |
| Educational attainment | 35.2%[14] | 15th highest |
The 57501 zip code in Pierre features a typical property value of $273,162, the 8th lowest in the state.
Property values have appreciated 36.21% over the past five years, the 27th highest increase among evaluated markets in the state. Pierre homes have an affordability ratio of 3.2, the 3rd most affordable in the state.
3. Sioux Falls
The 57104 zip code in Sioux Falls comes in at No. 3 in our ranking of the best residential real estate investment markets in South Dakota.
🔎 Key data about Sioux Falls
| Data point | Value | Rank in state (of 128 markets) |
|---|---|---|
| Zip code | 57104 | N/A |
| InvestScore | 83.4 | 3rd highest |
| Typical property value | $210,390[15] | 2nd lowest |
| Five-year appreciation | 54.97%[16] | 9th highest |
| Household income | $54,003[17] | 30th highest |
| Affordability ratio | 3.9 | 9th most affordable |
| Five-year population growth | 1.3%[18] | 24th highest |
| Unemployment rate | 2.9%[19] | 23rd lowest |
| Property taxes | $2,076[20] | 3rd lowest |
| Educational attainment | 23.8%[21] | 26th highest |
With a typical property value of $210,390, Sioux Falls's 57104 zip code features the 2nd lowest property values in the state.
Sioux Falls homes have an affordability ratio of 3.9, the 9th most affordable among the markets we evaluated.
4. Harrisburg
The 57032 zip code in Harrisburg ranks No. 4 among South Dakota's residential real estate investment markets.
🔎 Key data about Harrisburg
| Data point | Value | Rank in state (of 128 markets) |
|---|---|---|
| Zip code | 57032 | N/A |
| InvestScore | 80.2 | 4th highest |
| Typical property value | $344,513[22] | 21st lowest |
| Five-year appreciation | 45.56%[23] | 21st highest |
| Household income | $96,517[24] | 21st highest |
| Affordability ratio | 3.6 | 6th most affordable |
| Five-year population growth | 20.1%[25] | 5th highest |
| Unemployment rate | 0.7%[26] | 2nd lowest |
| Property taxes | $3,497[27] | 26th lowest |
| Educational attainment | 36.8%[28] | 12th highest |
Property values in Harrisburg's 57032 zip code have seen the 21st highest increase among evaluated markets in the state, with an appreciation of 45.56% over the past five years.
Harrisburg's affordability ratio of 3.6 makes it the 6th most affordable among the 128 markets we evaluated.
5. Dell Rapids
The 57022 zip code in Dell Rapids rounds out our top five residential real estate investment markets in South Dakota.
🔎 Key data about Dell Rapids
| Data point | Value | Rank in state (of 128 markets) |
|---|---|---|
| Zip code | 57022 | N/A |
| InvestScore | 79.5 | 5th highest |
| Typical property value | $352,236[29] | 22nd lowest |
| Five-year appreciation | 53.01%[30] | 12th highest |
| Household income | $87,048[31] | 12th highest |
| Affordability ratio | 4.0 | 12th most affordable |
| Five-year population growth | 14.4%[32] | 7th highest |
| Unemployment rate | 1.3%[33] | 6th lowest |
| Property taxes | $3,175[34] | 23rd lowest |
| Educational attainment | 34.6%[35] | 17th highest |
Property values in Dell Rapids's 57022 zip code rose 53.01% over the last five years, ranking the city 12th highest among evaluated markets in South Dakota.
Dell Rapids homes have an affordability ratio of 4.0, the 12th most affordable among the markets we evaluated.
Investing in residential real estate can be one of the best passive real estate investments in South Dakota.
Residential real estate offers accessible passive income and the potential to compound your original investment.
Renting out residential units is the top way to invest in real estate. House hacking also offers a great opportunity for passive real estate investment income.
How we rank residential real estate markets in South Dakota
To determine the best real estate investments in South Dakota we evaluated 128 markets on eight metrics, and then assigned an InvestScore based on their weighted and combined rankings. Each market corresponds to a specific zip code in South Dakota.
What is InvestScore?
InvestScore is a score on a scale of 0 (worst in state) to 100 (best in state) that estimates the residential real estate investment potential of a given market. It takes into account a suite of key data points for each city.
- Typical property value: This measures the typical home value in this zip code, according to the Zillow Home Value Index. It reflects the typical value for homes in the 35th to 65th percentile range, including all homes, with the numbers smoothed and seasonally adjusted. We prefer lower property values, which indicate both more room for growth and a greater ease of purchase. We assign a weight of 20% to typical property values.
- Property value appreciation: This measures how much property values have increased in the area over the past five years, according to the Zillow Home Value Index. We prefer a higher appreciation, as it indicates better returns on housing. However, past performance isn't indicative of future results. We assign a weight of 20% to property value appreciation.
- Median household income: This is the inflation-adjusted median household income in the zip code, according to U.S. Census American Community Survey data. We prefer a higher household income, as it indicates local residents have more income to spend on housing. We assign a weight of 10% to median household income.
- Affordability ratio: This is the ratio of the typical home value to the median household income in the area. A lower ratio is better because it means more households can afford a home, which indicates higher demand. We assign a weight of 15% to the affordability ratio.
- Population growth: This is how much the area's population has grown over the past five years, according to U.S. Census estimates. Higher is better, as it indicates residents are moving into the area at a rapid clip. We assign a weight of 10% to population growth.
- Unemployment rate: This is the unemployment rate in the area, according to U.S. Census data. We prefer a lower rate, as it indicates the availability of steady employment in the area, meaning residents will find it much easier to afford homes. We assign a weight of 15% to unemployment rate.
- Property tax: This is the median real estate property tax paid in the area, according to U.S. Census estimates. We assign a weight of 10% to property tax.
- Educational attainment: This is the percentage of residents in the area that have obtained a bachelor's degree or better, according to U.S. Census estimates. We prefer a higher rate because it indicates local residents who have higher earning potential and thus should be able to afford homes. We assign a weight of 15% to educational attainment.
🚨 Disclaimer: The information contained in this article isn't intended as, and shall not be understood or constituted as, financial advice. The information in this article isn't a substitute for financial advice from an investment professional or real estate agent who is aware of the facts and circumstances of your financial situation or the specifics of any individual property.
