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American Heartland Escapes the Housing Bust

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American Heartland Escapes the Housing Bust

Business

American Heartland Escapes the Housing Bust

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STEVE INSKEEP, Host:

You've heard the bad housing news. Mortgage defaults are rising, home prices are sinking, and yesterday brought more bad news - pending sales of existing homes are also down.

But there are a few parts of the country where home sales are actually up, and one unlikely city is Sioux Falls, South Dakota.

Here's NPR's Jason Beaubien.

JASON BEAUBIEN: In a baseball cap and a Miller High Life T-shirt, Jesse Logterman looks more like a slacker than a new homeowner. But in Sioux Falls, South Dakota, the 25-year-old gets to be both.

JESSE LOGTERMAN: I'm doing the work on the steps, or trying to.

BEAUBIEN: Two months ago he bought a three-story house in central Sioux Falls for just $115,000.

LOGTERMAN: I'm not sure what the style is. And it's really kind of a big ancient McMansion.

BEAUBIEN: The white clapboard house built in 1915 needs a little bit of work, but the problems are mainly cosmetic. The hardwood floors could use sanding, there was a dilapidated wet bar in the basement that he's ripped out to make room for a recording studio. Logterman works as a sound designer for a local ad agency by day, and he plays in a techno band by night.

The house was advertised as being 2,000 square feet. But that doesn't count the basement or the finished third floor attic.

LOGTERMAN: The electric was redone in 2005, as was the roof. So I thought, heck, for the price and like the square footage, and I thought it was a pretty good deal, really.

BEAUBIEN: In most U.S. cities you can't get much for $115,000, but in the upper heartland, in cities like Sioux Falls, Des Moines, Fargo, real estate remains relatively affordable, with median prices around $140,000. And unlike in many big cities, homes here are holding their value.

DEBRA KIRK: Our market didn't ever escalate like some of the other areas did - like 30, 40, 50 percent appreciation. We didn't have that. We just stayed pretty steady.

BEAUBIEN: Debra Kirk has been selling real estate here since 1994.

She says she keeps hearing on the news about the doom and gloom in the housing market, but she's not seeing it in Sioux Falls. Kirk is in the foyer of a four-bedroom, three bath split-level ranch that's on the market for $162,000; she says both the house and the city are a good value.

KIRK: Even though we have 140,000 people, it still feels like a small town. We have an excellent school system, excellent medical community. We've got arts, entertainment - it's very easy to find your way around town.

BEAUBIEN: And if you want to get to a big city, Omaha is less than a three hours' drive to the south. Minneapolis is four hours to the east. It does get cold here in the winter. The average temperature in January this year was 18 degrees, with a low of minus 20. But when home prices are almost $100,000 less than the national average, some people are willing to put up with a bit of chilly weather.

Barton Hacker moved here two years ago from Washington D.C. and now heads up the local realtors association. He acknowledges that Sioux Falls isn't going to attract 20-something hipsters who yearn for the fast pace of California or New York.

BARTON HACKER: But as those people get married, as they start to have children, as they start to realize that, hey, I can't necessarily live in downtown Manhattan and raise a family and do the things that I want to do, I think you're going to start to see a shift to areas of the country that perhaps hadn't been considered before.

BEAUBIEN: Like Sioux Falls.

HACKER: Like Sioux Falls, absolutely. It's what my wife and I did. And I think it's been an absolutely excellent decision on our part.

BEAUBIEN: And while real estate prices collapse in other parts of the country, Hacker says Sioux Falls is on pace to break last year's record for the most houses sold and at prices that, for here, are at a record-high.

Jason Beaubien, NPR News, Sioux Falls, South Dakota.

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