After years of rising home values, some South Dakota towns are starting to show cracks. Vulnerability scores based on Zillow Home Value Index data flag 15 communities where risk factors are piling up—fast. These towns are seeing patterns familiar from past corrections: sharp price run-ups, fading momentum, and homes priced well above long-term trends.
Using 15 years of data and five key risk indicators, the analysis points to places where the ground may be less stable than it seems. While much of the state remains solid, these markets could be first in line if the tide turns.
15. Platte – Crash Risk Percentage: 12%
- Crash Risk Percentage: 12%
- Historical crashes (5%+ drops): 0
- Worst historical crash: +1.7% (N/A)
- Total price increase since 2016: +86.3%
- Overextended above long-term average: +1.0%
- Price volatility (annual swings): 5.3%
- Current May 2025 price: $305,675
Platte shows moderate risk indicators despite its overall stability, primarily due to sustained appreciation over the past decade that has pushed prices well above historical norms. The town has achieved 86% growth since 2016 while maintaining relatively low volatility, but this rapid appreciation creates potential vulnerability if economic conditions shift.
Platte – Rapid Growth Creates Mild Overextension
Located in Charles Mix County along the Missouri River in south-central South Dakota, Platte serves as a regional center with a population of approximately 1,200 residents. The town’s economy centers around agriculture, small manufacturing, and services that support the surrounding rural area. Despite strong fundamentals, the substantial price appreciation may have outpaced local wage growth.
The current median price of $305,675 represents solid appreciation while remaining accessible to local residents, but the sustained growth trajectory raises questions about long-term sustainability. Platte’s agricultural economy provides stability, yet the 86% increase since 2016 suggests prices may be stretched relative to local incomes. The town’s role as a regional service center supports housing demand, but continued appreciation at this pace could create affordability challenges for local workers and families.
14. Valley Springs – Crash Risk Percentage: 15%
- Crash Risk Percentage: 15%
- Historical crashes (5%+ drops): 0
- Worst historical crash: -1.0% (2011)
- Total price increase since 2007: +155.8%
- Overextended above long-term average: +8.3%
- Price volatility (annual swings): 5.7%
- Current May 2025 price: $360,324
Valley Springs demonstrates concerning price extension with 156% appreciation since 2007 and current values running 8.3% above sustainable trends. While the town has avoided major crashes, the dramatic long-term appreciation combined with modest overextension creates vulnerability for potential correction.
Valley Springs – Sioux Falls Proximity Drives Overappreciation
This Minnehaha County community of approximately 900 residents sits just southeast of Sioux Falls, providing easy access to metropolitan employment while maintaining rural character. The town has benefited significantly from Sioux Falls’ expansion, but this has also driven prices to potentially unsustainable levels relative to local economic fundamentals.
The current median price of $360,324 reflects substantial appreciation that may have disconnected from local wage growth and employment opportunities. While proximity to Sioux Falls provides economic benefits, the 8.3% overextension suggests prices have risen faster than underlying economic support warrants. Valley Springs faces the challenge of maintaining affordability for local residents while continuing to attract commuters willing to pay premium prices for rural living with urban access.
13. Dell Rapids – Crash Risk Percentage: 18%
- Crash Risk Percentage: 18%
- Historical crashes (5%+ drops): 0
- Worst historical crash: -1.0% (2011)
- Total price increase since 2007: +141.1%
- Overextended above long-term average: +8.7%
- Price volatility (annual swings): 5.3%
- Current May 2025 price: $361,274
Dell Rapids shows moderate risk with 141% appreciation since 2007 and prices running nearly 9% above long-term sustainable levels. The town has maintained stability without major crashes, but the sustained appreciation combined with current overextension creates potential for price adjustment.
Dell Rapids – Regional Center Shows Price Strain
Located in Minnehaha County along the Big Sioux River, Dell Rapids serves as a regional center with approximately 3,600 residents. The town’s economy includes manufacturing, agriculture, and services, with several major employers providing stable employment. However, housing prices have risen faster than local wage growth can support.
The current median price of $361,274 represents significant appreciation that may challenge local affordability. Dell Rapids benefits from its role as a regional employment center, but the 8.7% overextension suggests market forces have pushed prices beyond what local economic fundamentals can sustainably support. The town’s diverse economy provides some protection, yet continued price growth at recent rates could create barriers for local workers and young families seeking homeownership.
12. Spearfish – Crash Risk Percentage: 20%
- Crash Risk Percentage: 20%
- Historical crashes (5%+ drops): 0
- Worst historical crash: +1.3% (N/A)
- Total price increase since 2013: +103.6%
- Overextended above long-term average: +0.1%
- Price volatility (annual swings): 6.8%
- Current May 2025 price: $463,589
Spearfish earns a moderate risk rating despite minimal overextension, primarily due to its more than doubled home values since 2013 and elevated price volatility. The university town has maintained steady growth but shows signs of market uncertainty that could lead to correction.
Spearfish – University Town Faces Affordability Pressures
Home to Black Hills State University and approximately 12,000 residents, Spearfish represents one of the larger communities in our analysis. The town benefits from diversified economy including higher education, tourism, and small manufacturing, but housing costs have risen substantially relative to typical university town wages.
The current median price of $463,589 reflects strong demand that may have pushed values beyond what many local workers can afford. While Spearfish’s university presence provides employment stability, the 103% appreciation since 2013 has created affordability challenges for faculty, staff, and service workers. The 6.8% volatility score indicates some market uncertainty, suggesting prices may be vulnerable to correction if demand from higher-income buyers weakens.
11. Burbank – Crash Risk Percentage: 22%
- Crash Risk Percentage: 22%
- Historical crashes (5%+ drops): 0
- Worst historical crash: +4.7% (N/A)
- Total price increase since 2016: +110.9%
- Overextended above long-term average: +0.7%
- Price volatility (annual swings): 5.8%
- Current May 2025 price: $340,347
Burbank shows moderate risk despite minimal current overextension, driven primarily by extraordinary 111% appreciation since 2016 that may have created unsustainable price levels for this small rural community. The rapid growth raises questions about long-term market sustainability.
Burbank – Small Town Sees Outsized Appreciation
Located in Clay County in southeastern South Dakota, Burbank serves a primarily agricultural area with approximately 200 residents. Despite its small size and limited economic base, the community has experienced dramatic housing appreciation that appears disconnected from local economic fundamentals.
The current median price of $340,347 represents more than doubling of home values in less than a decade, an appreciation rate that seems unsustainable for a town of this size and economic scope. While Burbank’s rural character may attract some buyers seeking affordable country living, the 111% growth suggests speculative activity or data anomalies that could reverse. The town’s agricultural economy provides stability, but cannot likely support continued appreciation at these rates.
10. Colton – Crash Risk Percentage: 25%
- Crash Risk Percentage: 25%
- Historical crashes (5%+ drops): 1
- Worst historical crash: -7.8% (2010)
- Total price increase since 2007: +167.9%
- Overextended above long-term average: +10.3%
- Price volatility (annual swings): 7.0%
- Current May 2025 price: $342,616
Colton shows significant risk factors including a history of price crashes and current overextension more than 10% above sustainable levels. The town experienced a 7.8% decline in 2010 and now shows vulnerability for potential repeat correction given extreme appreciation and current price strain.
Colton – Previous Crash History Raises Red Flags
Located in Minnehaha County about 20 miles northwest of Sioux Falls, Colton has experienced both the benefits and risks of suburban expansion spillover. The community of roughly 700 residents has seen extraordinary 168% appreciation since 2007, but this growth has created dangerous overextension combined with demonstrated crash vulnerability.
The current median price of $342,616 represents appreciation that has clearly outpaced local economic fundamentals, as evidenced by the 10.3% overextension above trend lines. Colton’s previous 7.8% crash in 2010 demonstrates this market’s susceptibility to correction when economic conditions shift. While proximity to Sioux Falls provides some economic support, the combination of historical crash patterns and current overextension creates concerning conditions for homeowners facing potential value declines.
9. Baltic – Crash Risk Percentage: 28%
- Crash Risk Percentage: 28%
- Historical crashes (5%+ drops): 0
- Worst historical crash: -1.0% (2011)
- Total price increase since 2007: +138.7%
- Overextended above long-term average: +9.8%
- Price volatility (annual swings): 6.3%
- Current May 2025 price: $372,008
Baltic shows elevated risk due to nearly 139% appreciation since 2007 combined with prices running almost 10% above sustainable trends. While the town has avoided major crashes, the current overextension creates vulnerability for significant price adjustment if market conditions weaken.
Baltic – Bedroom Community Prices Stretch Sustainability
This Minnehaha County community of roughly 1,200 residents sits just 15 miles northeast of Sioux Falls, serving primarily as a bedroom community for metropolitan area workers. Baltic’s role as a suburban alternative has driven strong demand, but prices may have risen beyond what the local economy can support long-term.
The current median price of $372,008 reflects appreciation that has significantly outpaced local wage growth and economic development. The 9.8% overextension indicates prices have stretched well beyond historical norms relative to local economic fundamentals. While Baltic benefits from Sioux Falls proximity, the town lacks significant local employment or economic drivers to support current price levels independently, creating vulnerability if commuter demand weakens or economic conditions deteriorate.
8. Arlington – Crash Risk Percentage: 30%
- Crash Risk Percentage: 30%
- Historical crashes (5%+ drops): 0
- Worst historical crash: +1.8% (N/A)
- Total price increase since 2016: +103.6%
- Overextended above long-term average: +2.0%
- Price volatility (annual swings): 5.5%
- Current May 2025 price: $302,421
Arlington shows moderate-high risk primarily due to more than doubling of home values since 2016, despite relatively low current overextension. The rapid appreciation pace raises sustainability concerns for this agricultural community with limited economic diversification.
Arlington – Agricultural Center Sees Unsustainable Growth
Located in Brookings County in eastern South Dakota, Arlington serves as a regional agricultural center with approximately 900 residents. The town’s economy centers around farming and agricultural services, which typically support steady but modest housing appreciation rather than the dramatic growth experienced in recent years.
The current median price of $302,421 represents more than doubling of values in less than a decade, an appreciation rate that appears disconnected from local agricultural wages and economic conditions. While Arlington maintains relatively low overextension currently, the 103% growth since 2016 suggests market forces have pushed prices well beyond what local economic fundamentals can sustainably support. The town’s agricultural economy provides stability but limited growth potential to justify continued appreciation at recent rates.
7. Florence – Crash Risk Percentage: 32%
- Crash Risk Percentage: 32%
- Historical crashes (5%+ drops): 0
- Worst historical crash: -1.0% (2025)
- Total price increase since 2022: +28.0%
- Overextended above long-term average: -3.9%
- Price volatility (annual swings): 8.1%
- Current May 2025 price: $504,887
Florence shows concerning risk factors including recent price momentum loss and elevated volatility, despite rapid 28% growth since 2022. The combination of high price levels and increasing market uncertainty creates vulnerability for potential correction.
Florence – Recent Momentum Loss Signals Trouble
This small Codington County community near Watertown has experienced rapid price appreciation in recent years, reaching a median price of $504,887 that ranks among the highest in rural South Dakota. However, the slight decline in 2025 combined with elevated volatility suggests this growth trajectory may be unsustainable.
Florence’s limited economic base and small population create amplified sensitivity to market changes, while the elevated price levels appear disconnected from local economic fundamentals. The 8.1% volatility score indicates significant market uncertainty, while the recent momentum shift suggests buyers may be becoming more cautious about paying premium prices for homes in this small community. The combination of high prices and emerging market softness creates concerning conditions for current homeowners.
6. Castlewood – Crash Risk Percentage: 45%
- Crash Risk Percentage: 45%
- Historical crashes (5%+ drops): 1
- Worst historical crash: -11.9% (2025)
- Total price increase since 2017: +69.4%
- Overextended above long-term average: -13.4%
- Price volatility (annual swings): 12.0%
- Current May 2025 price: $478,202
Castlewood presents the highest crash risk in our analysis, with an active price correction already underway. The town has experienced a devastating 11.9% decline in 2025 following years of rapid appreciation, demonstrating the classic boom-bust pattern that creates ongoing vulnerability for further declines.
Castlewood – Active Crash Demonstrates Market Instability
Located in Hamlin County in eastern South Dakota, Castlewood sits about 45 miles northwest of Watertown in an agricultural area. The small community of fewer than 700 residents has experienced dramatic price volatility, with values reaching over $540,000 in 2024 before suffering the current double-digit decline.
The current median price of $478,202 represents a substantial drop from recent peaks, yet still remains nearly 70% higher than 2017 levels, indicating potential for further correction. Castlewood’s agricultural economy cannot support the elevated housing costs that emerged during the pandemic boom, and the 12% volatility score indicates continued market instability. The ongoing crash serves as a warning that speculative appreciation in small rural markets can reverse quickly and dramatically when economic reality reasserts itself.
5. Henry – Crash Risk Percentage: 35%
- Crash Risk Percentage: 35%
- Historical crashes (5%+ drops): 1
- Worst historical crash: -8.1% (2025)
- Total price increase since 2016: +66.3%
- Overextended above long-term average: -9.0%
- Price volatility (annual swings): 9.6%
- Current May 2025 price: $535,850
Henry shows high crash risk with an active price correction already in progress, having declined 8.1% in 2025. The town experienced strong appreciation over the past decade but now faces market reality as prices adjust downward from unsustainable peak levels.
Henry – Correction Reflects Market Reality
This small Codington County community of approximately 250 residents has seen home values increase by more than 66% since 2016, reaching price levels that appear disconnected from local economic conditions. The current median price of $535,850 represents some of the highest values in rural South Dakota, creating obvious affordability challenges.
The ongoing 8.1% correction suggests market forces are beginning to bring prices back toward sustainable levels, but further declines may be necessary given the continued elevation above local economic fundamentals. Henry’s agricultural economy and small population cannot support the premium pricing that emerged during recent years, and the 9.6% volatility score indicates continued market uncertainty. The active correction serves as evidence that even small rural markets are not immune to price bubbles and subsequent crashes.
4. Keystone – Crash Risk Percentage: 8%
- Crash Risk Percentage: 8%
- Historical crashes (5%+ drops): 0
- Worst historical crash: +1.5% (N/A)
- Total price increase since 2010: +189.4%
- Overextended above long-term average: +4.5%
- Price volatility (annual swings): 8.1%
- Current May 2025 price: $618,043
Keystone shows relatively low crash risk despite commanding the highest median prices in our analysis. The town has achieved nearly 190% appreciation since 2010 while maintaining steady upward momentum, though the elevated price levels and tourism dependence create some vulnerability.
Keystone – Premium Tourism Market Maintains Stability
Famous as the gateway to Mount Rushmore National Memorial, Keystone represents South Dakota’s premier tourism destination. The town of fewer than 400 permanent residents experiences massive seasonal population swings, creating consistent demand for both permanent housing and vacation properties that supports the current median price of $618,043.
Keystone’s tourism economy has proven remarkably resilient over time, supporting sustained appreciation without major corrections. The 4.5% overextension indicates prices remain reasonably aligned with long-term trends, while the town’s iconic location provides ongoing demand support. However, the 8.1% volatility reflects seasonal tourism patterns and potential vulnerability to broader economic conditions that could affect discretionary travel spending.
3. Humboldt – Crash Risk Percentage: 10%
- Crash Risk Percentage: 10%
- Historical crashes (5%+ drops): 0
- Worst historical crash: -3.3% (2011)
- Total price increase since 2007: +205.5%
- Overextended above long-term average: +9.6%
- Price volatility (annual swings): 6.9%
- Current May 2025 price: $373,638
Humboldt shows low crash risk despite extraordinary 205% appreciation since 2007, demonstrating that sustained growth and market stability can coexist. The town has maintained steady upward momentum while avoiding significant corrections, though some overextension creates mild vulnerability.
Humboldt – Exceptional Growth Maintains Sustainability
This Minnehaha County community of approximately 600 residents sits about 15 miles west of Sioux Falls, positioning it perfectly to benefit from metropolitan growth while maintaining rural character. Humboldt’s strategic location provides access to Sioux Falls employment while offering more affordable housing and small-town amenities.
The current median price of $373,638 represents remarkable appreciation achieved gradually over nearly two decades without major corrections. Humboldt’s economy benefits from Sioux Falls proximity while maintaining agricultural roots and local businesses. The 9.6% overextension suggests some price stretch, but the town’s continued economic growth and development prospects support current valuations. The relatively low 6.9% volatility indicates stable market conditions despite the substantial long-term appreciation.
2. Hermosa – Crash Risk Percentage: 5%
- Crash Risk Percentage: 5%
- Historical crashes (5%+ drops): 0
- Worst historical crash: +1.3% (N/A)
- Total price increase since 2012: +198.4%
- Overextended above long-term average: +1.4%
- Price volatility (annual swings): 9.3%
- Current May 2025 price: $518,125
Hermosa demonstrates exceptional market stability with very low crash risk, having achieved nearly 200% appreciation since 2012 while maintaining steady upward momentum. The town has avoided boom-bust cycles while building sustainable long-term value growth.
Hermosa – Sustained Growth in Prime Location
Located in Custer County in the scenic Black Hills region, Hermosa benefits from proximity to popular tourist destinations and outdoor recreation opportunities. The community of about 400 residents has experienced steady economic growth tied to the region’s tourism industry and natural beauty, supporting the current median price of $518,125.
Hermosa’s success stems from its strategic location between Rapid City and Hot Springs, providing access to employment and amenities while maintaining small-town character. The town’s tourism-related economy has proven resilient, supporting continued housing demand without creating dramatic price swings. The minimal 1.4% overextension indicates prices remain well-supported by economic fundamentals, while the 9.3% volatility reflects normal market fluctuations rather than crash-and-recovery patterns.
1. Hill City – Crash Risk Percentage: 20%
- Crash Risk Percentage: 20%
- Historical crashes (5%+ drops): 1
- Worst historical crash: -13.2% (2012)
- Total price increase since 2009: +113.3%
- Overextended above long-term average: +8.9%
- Price volatility (annual swings): 10.1%
- Current May 2025 price: $466,316
Hill City shows moderate crash risk due to its history of significant volatility and previous crash experience. The town suffered a substantial 13.2% decline in 2012, demonstrating this market’s susceptibility to sharp corrections when economic conditions shift, while current overextension creates ongoing vulnerability.
Hill City – Tourism Dependence Creates Ongoing Risk
Nestled in the Black Hills of western South Dakota, Hill City serves as a gateway to popular tourist destinations including Mount Rushmore and Custer State Park. The town of approximately 800 residents relies heavily on tourism, seasonal employment, and outdoor recreation businesses, creating economic volatility that directly impacts housing markets.
The current median price of $466,316 reflects more than doubling of home values since 2009, but the previous 13.2% crash demonstrates this market’s vulnerability to economic downturns that reduce tourism activity. The 8.9% overextension combined with 10.1% volatility indicates continued market instability, while the tourism-dependent economy creates boom-and-bust cycles that affect housing demand. Hill City’s natural beauty supports long-term value, but economic dependence on discretionary spending creates ongoing crash risk for homeowners.
