First-time buyers in Sioux Falls are facing a shortage of move-in-ready homes at entry-level prices, leading to challenging negotiations and compromises. While there are plenty of listings in the $200,000 to $250,000 range, few are truly turnkey, creating a mismatch between buyer expectations and available inventory.
Rockwell Tornow, a Realtor® with Amy Stockberger Real Estate, says this gap is particularly acute for first-time buyers. “The biggest disconnect at that $200,000 to $250,000 price point is move-in ready homes,” Tornow explains. “There are a lot of homes in that range, but the great ones go pretty quickly. A lot of buyers want something turnkey, ready to move in, which is totally fair.”
This distinction between available and desirable inventory is changing how transactions play out at the entry level. Buyers searching for move-ready homes at affordable prices find those listings snapped up almost immediately. What remains are properties that require repairs or updates, leaving buyers with fewer attractive options.
Turnkey Homes Command a Premium
The scarcity of move-in-ready entry-level homes has created a premium for properties in good condition. According to Tornow, homes priced between $200,000 and $250,000 that are truly turnkey sell much faster than the citywide average of 86 days on market. “The great ones go pretty quick,” he says, emphasizing the speed with which these homes disappear.
This situation forces first-time buyers into difficult choices. They can settle for a home that needs work and try to negotiate seller concessions to cover repairs. They can stretch their budgets to afford a better-condition home at a higher price point. Or they can wait, hoping that a move-ready home will eventually appear at their target price.
“When we’re looking at homes in that price range, buyers want better quality or condition but can’t always afford to move up in price,” Tornow explains. “That’s when we look at seller concessions or ask for repairs during inspection when making offers.”
None of these options is ideal. Negotiating seller concessions adds complexity and requires skills many first-time buyers lack. Pushing budgets higher can create financial pressure and risk. Waiting means continuing to pay rent and potentially facing even higher home prices if the market appreciates further.
Why First-Time Buyers Avoid Fixer-Uppers
Practical constraints drive first-time buyers’ preference for move-in-ready homes. Tornow notes that most are not prepared to take on renovation projects. “Some people are willing to do a little more work, but that’s the biggest disconnect,” he says.
For buyers new to homeownership, the process is already demanding. They’re learning about mortgages, inspections, insurance, and closing costs simultaneously. Adding renovation management increases the complexity and risk, which many are not equipped to handle.
Financial constraints also play a role. After making a down payment and covering closing costs, first-time buyers often have little cash left. Even if they’re open to renovations, they may not have the funds to pay for them. Seller concessions can help, but they are not guaranteed and add another layer of negotiation to an already stressful process.
As a result, first-time buyers strongly prefer homes they can move into immediately, even if that means paying a slight premium or compromising on other features. The willingness to pay more for turnkey homes reflects a realistic assessment of their own capacity and risk tolerance.
The Renovation Gap in Sioux Falls
The shortage of move-ready homes priced between $200,000 and $250,000 indicates limited renovation activity at this price point. Either homes in this range aren’t being renovated in sufficient numbers, or those that are renovated are priced above $250,000 once the work is done.
Both scenarios result in too few turnkey homes where first-time buyer demand is concentrated. Tornow calls the $200,000 to $250,000 range the “sweet spot” for first-time buyers in Sioux Falls. Below $200,000, homes often need major work or attract investors. For amounts above $250,000, many first-time buyers can’t qualify for financing or are uncomfortable with the higher payments.
This concentration of demand in a narrow price band means that any shortage of move-ready inventory has an outsized impact. It’s not just that a few buyers can’t find what they want – a large segment of the entry-level market is being forced into less-than-ideal transactions because the available inventory doesn’t match their needs.
Tornow adds that homes under $100,000 in Sioux Falls usually attract investors looking to flip properties. In theory, this should create more move-ready inventory, but if those renovated homes are relisted above $250,000, they are out of reach for most first-time buyers and do not address the shortage at the entry level.
Market Implications for Buyers and Agents
The lack of move-ready homes at entry-level prices presents both a challenge and an opportunity. For investors and renovators, there is apparent demand for turnkey homes priced between $200,000 and $250,000, and those that meet the criteria sell quickly. Targeting renovations to hit this price point could fill a market gap and provide more options for entry-level buyers.
For real estate agents, the current market requires setting clear expectations with first-time buyers about the likelihood of finding a move-ready home within their budget. “That’s the biggest gray area for first-time home buyers,” Tornow says, referring to the tradeoff between quality and price.
First-time buyers, in turn, may need to be flexible on the condition to stay within budget. Those willing to accept some renovation work or stretch their budget slightly can access more options than buyers who insist on both move-ready condition and entry-level pricing.
Will the Market Adjust?
Whether the renovation gap will close depends on several factors. If move-ready homes at entry-level prices continue to sell quickly, it should signal to investors and renovators that there is an opportunity in this segment. However, if renovation costs or other barriers make it challenging to offer turnkey homes at $250,000 or less, the inventory mismatch may persist.
For now, the Sioux Falls entry-level market remains defined by a sharp disconnect between what first-time buyers want and what is available. Unless more move-ready homes are renovated and priced within reach, buyers will continue to face tough decisions – and the fastest, best-condition homes will keep vanishing from the market almost as soon as they appear.
