“Won’t most if not all home loans in SD be a Jumbo since most people even with 20% down still will be above $417k?”
Only in recent past. Not so pre-bubble. So this is another Tip of the Spear in puncturing (more like bursting) the bubble. No money -> No buyer -> price has to climb down, else the seller will sit on it till time does its job (either by inflation or death).