This week in 1991, a little-known band checked into the Sound City Studios in Van Nuys, California to record their first studio album. The band needed to play a few shows on the way just to afford the gas money required to get from Seattle to Los Angeles.
The album, recorded over 16 days and with a budget of $65,000, featured unmistakable power chords and distorted tracks that wavered between soft, almost whispered verses to intense, screaming choruses. The music was a reaction to the previous decade’s synthesizers and easy-to-understand pop lyrics.
The record company thought, at best, the album would sell only 250,000 copies. As of this writing, the album has sold around 31 million copies.
Rolling Stone ranks it as their #6 album of all time.
That album, “Nevermind” from Nirvana, started a run of grunge music that included bands like Soundgarden, Pearl Jam, Alice in Chains, and the Stone Temple Pilots. The album’s signature song, “Smells Like Teen Spirit,” has been viewed over 1.6 billion times on YouTube. And no one can still figure out what the lyrics mean.
This month’s economic indicators are a lot like that—hard to decipher and with little meaning. Let’s start by noting that inflation is down to 5% in the region, so the Fed’s interest-rate hikes are having their intended effect of driving down costs. Just over a year ago, inflation was approaching double digits. So we would expect a decrease in consumer spending and occupancy rates, which we have seen. But what about housing? The truth is that the prices of homes in the area have not come down at all. By now, we should have expected some downward pressure, especially given the continued increase in building permits and valuation. But it’s just not happening. And it doesn’t make much sense.
That is until you realize that people are still moving here regardless of interest rates or economic conditions. Last year alone, Rapid City had a 2.25% growth rate, with a population increase of over 3,000 people. And we estimate that (on average) about 12 people are moving to the Black Hills daily. They’re coming here for all the reasons we’ve discussed before—no income tax, quality of recreational opportunities and amenities, and the Midwest culture with a western climate.
How long will it last?
We’re just not sure. The Black Hills is a special, magical place regardless of the national economy. And all this growth is happening before the B-21 is in full swing, so a national slowdown may not matter. The hope, the come-as-you-are moment, is that housing costs and inflation will decrease while consumer spending and wages remain strong.
