Am I crazy or have rents come way down on SFR's?

[Kirsten C.]

I live in Rapid City and have owned duplexes in the past. Currently my only investment is a commercial property, but now I am trying to rent out my moms house. It has a basement apartment so its actually a duplex but the main house is 3bd/2 bath plus an office. 2080 sq/ft plus  storage in the basement and the 2 car garage exclusive to it. It's in a premium neighborhood of 1-2 acre lots westside with its own hiking trails. 

Anyway, I've been informed by property managers that the market for a 3/bd/2ba sfr in this town is 1800/mo! The same house would cost you 300-400K to buy and supposedly there has been a shortage of housing here. 

They are building apartments that fill up immediately and they rent studios for $1100/mo. 2 bd are $1465 and there doesn't seem to be many 3b/2ba that we can find that aren't in not so good neighborhoods. Just a few years ago when our kids were looking to rent a house, everyone had turned them into STR or medium term rentals. There were no houses available no matter what the size. Now there are quite a few on the market but most are on the north side which is least desirable.

[Soren Loftus]

I was just thinking the same thing earlier today. I just moved back to Rapid City last year and I'm looking to start investing in real estate in the area. I don't have any current properties, I'm just scratching my head because the math doesn't seem to be mathing. Average rent seems far lower than average purchase prices would seem to dictate.

I think it's hard to imagine that 1800 is actually the market rent. I looked today and there isn't a single 3bd house for rent that I would consider living in myself. I would expect a decent SFR in a good location, given purchase prices, would be 3-4k/month.

I would rather invest locally than try to invest out of state in Ohio or something. It's not like we're in Colorado or California!

What's going on here?