Fresno is a ‘hot’ housing market. What you need to know about home prices, apartment rents
It’s getting more and more expensive to find a place to live in Fresno.
Selling prices for single-family homes are at their highest level ever in Fresno and the surrounding central San Joaquin Valley. Now they exceed prices observed in the mid- to late 2000s before a monumental collapse of the residential housing market created a forest of foreclosures and stopped most home construction in its tracks.
In the Fresno County housing market, the median selling price of a single-family home – the point at which half of homes sell for more and half for less – has grown by an eye-popping 47.6% over the past four years.
In January 2017, the median home price in Fresno County was about $238,000, according to historical data from the California Association of Realtors. In February 2021, the median selling price was $350,000.
By contrast, amid the housing boom of 2005-2006 – before the wheels fell off the economy in 2007 and the nation slid into a two-year recession – the median price hovered near or above $300,000, peaking at $313,000 in June 2006.
The rising prices are not warding off would-be buyers. In fact, there are more buyers out there than homes to be sold, Fresno real estate agents told The Bee.
“In my 44 years in the business, I have not see a market this hot,” said Don Scordino, past president of the Fresno Association of Realtors, a broker associate with Realty Concepts and host of a weekly radio show on the Fresno real estate market. “And many of the homes are selling inside of three or four days with multiple offers.”
Annie Foreman, a Realtor with Guarantee Real Estate and current president of the Fresno Association of Realtors, noted that the average time that a listed house sat on the market at the beginning of 2020, before the COVID-19 pandemic, was about 50 days. Now, she said, “the statistics tell you it was 21 days in February, but it’s even less than that.”
“We joke with clients that if (their house) hasn’t sold within a couple of days, it’s overpriced,” she added.
Home buyers aren’t the only ones confronting higher prices. Over the past four years, the Fresno market has experienced the highest average increase in apartment rents among large metro areas nationwide.
The average monthly rent for a market-rate, non-subsidized apartment in the Fresno metro area last month was estimated at $1,283, according to data from ApartmentList.com. That’s a whopping 37.4% increase from the rate of $934 reported in January 2017.
‘Inexpensive,’ not necessarily ‘affordable’
Still, the Valley as a whole generally remains less expensive for buyers and renters in comparison to larger metro areas of California. But depending on a household’s income, “inexpensive” does not necessarily equate to “affordable” in a region where average wages tend to be lower than most of the state.
How does the median home price in Fresno County stack up with other parts of California?
California average: $699,000, about double the median in Fresno County
San Francisco Bay Area: $1,151,500, more than three times higher.
Los Angeles metro area: $649,000, about 85% higher.
Riverside County: $519,500, about 48% higher.
Sacramento County: $463,000, about 32% higher.
In fact, only 11 of California’s 58 counties – including neighboring Kings, Merced and Tulare counties – had lower median prices in February than the Fresno housing market.
For apartment renters, only Kern County had a lower average monthly price among California’s major metro areas. Elsewhere in the state, average apartment rent rates in March included:
- $2,179 per month in San Jose-Sunnyvale-Santa Clara.
- $2,168 in Oxnard-Thousand Oaks-Ventura.
- $2,040 in San Francisco-Oakland-Berkeley.
- $1,980 in San Diego-Chula Vista-Carlsbad.
- $1,944 in Santa Rosa-Petaluma (Sonoma County).
- $1,855 in Los Angeles-Long Beach-Anaheim.
- $1,851 in Stockton (San Joaquin County).
- $1,738 in Riverside-San Bernardino-Ontario.
- $1,672 in Sacramento-Roseville-Folsom.
- $1,283 in Fresno (Fresno County).
- $1,103 in Bakersfield (Kern County).
While apartments in Fresno and the Valley tend to cost far less to rent than much of the rest of California, rent affordability remains a concern for many renters in the region, not only low-income families.
About 60% of renters in Fresno County are considered “rent burdened” under federal guidelines because they pay at least 30% of their gross income on rent and related utilities.
In the current Fresno housing market, there are more buyers than there are houses for sale. Similarly, there are more people looking for apartments than there are places to rent at any level, including affordable rental housing. Together, that means the simple principles of supply and demand are creating a seller’s market.
What’s happening out there?
The local real estate market seems to have defied the coronavirus pandemic that has weighed like an anchor on much of the economic activity in the San Joaquin Valley and across California.
“If you had asked me in the beginning of April 2020, when we were all on a complete lockdown, I would have looked at a crystal ball and thought, ‘Oh, boy, this is going to be a tough year,’” Foreman said. “But that turned out to be an incorrect prediction.”
“The pandemic positively affected the market because people wanted to move after we got out of the initial lockdown.” she added. “In large part, people found themselves stuck in their homes and thought, ‘I need someplace bigger, somewhere I truly love.’”
“Demand increased, and inventory did not increase along with it,” Foreman said. “That caused price increases and the frenzy that’s out there.”
Scordino offered a similar opinion. “The pandemic and shelter-in-place orders made people appreciate their home more,” he said. “It’s not only where they go to sleep at night. It became where they go to work, where they go to school, it became their playground.”
“We saw a lot of people this past year sell their smaller home and buy their larger ‘forever home’ and know they’re going to stay there.” he added.
And there’s another factor: buyers coming into the Valley from other parts of California and finding a relative bargain, both in home costs and the overall cost of living, compared to where they were living — particularly people in jobs that allowed them to work remotely, from home, no matter where they lived.
“Someone who was living in an 800-square-foot loft in San Francisco can get 3,000 square feet in Fresno,” Foreman said. “We’re seeing some more migration here into town” that’s adding to demand.”
The frenzy that Foreman described continued into March. A comparative market analysis report of properties listed and sold in the Fresno-Clovis area shows that some homes sold for more than the owners listed as their asking price – as much as 10% higher than the listed price.
But Foreman and Scordino said sellers cannot simply expect to list their home and expect to have a buyer immediately.
“It’s still a price-driven market,” Foreman said, suggesting that buyers aren’t inclined to overpay relative to the market. “But good homes in good areas, and that are priced well are going to move very fast.”
Scordino noted that almost one in five homes currently listed have been on the market for more than 30 days, underscoring the need for sellers to have realistic expectations. “That means they have to do it right,” he said. “They have to clean it up, they have to present the property well, and they have to price it right.”
In addition to existing single-family homes, developers and builders are back in earnest creating new housing projects across the Valley, Scordino said.
“Back in the early 2000s, builders were overbuilding because there was so much demand, because anybody could get a loan,” he said. When the housing market collapsed in 2007, however, “builders pretty much just stopped building, and a lot of them left the area.”
“We had almost no building for several years, and then they came back a little bit at a time,” Scordino added. “Hence we have the housing shortage. Builders have not been able to build enough in the last 15 years to keep up with the growing demand.
Another real estate bubble?
The rise in home prices raises questions about whether the market is sustainable, and there are worries that perhaps this is another housing bubble that could burst as it did in the late 2000s.
“Having been through three up/down cycles, when you see that the average price is about $450,000 (in the Fresno-Clovis market), that gets very scary,” said Cliff Floyd, an agent with London Properties in Fresno, referring to what he observed in the first week of March. “Considering the median family income is about $58,000 and affordability is about $330,000 or below.”
Like Foreman, Floyd also noted the shortage of housing inventory in the market, as well as near-historic low mortgage interest rates, as factors driving demand and, thus, prices. In early March, there were about 80 homes listed in what he described as relatively affordable $340,000-and-under range, adding that “there are literally thousands of buyers in that range.”
Mortgage rates for homes on March 31 were in the range of 3.25% for a 30-year fixed-rate loan, or 2.59% for a 15-year fixed-rate loan. And lower rates mean lower monthly mortgage payments for buyers, even when prices are escalating.
“I believe we need to be cautious about where we are even with low rates,” Floyd said. “People are buying (based on) payments and not price. That’s a dangerous scenario.”
Scordino and Foreman, however, said they believe the housing and banking environment behind today’s market is far different than the collapse that led to a nationwide recession 14 years ago.
“The major difference is that the lending world was very different in the early 2000s compared to what it is now,” Foreman said. “You didn’t even have to have a pulse to get a loan” as there were cases of lenders approving home mortgage loans for people who had died.
“Now the pendulum has swung the other way – they check everything for eligibility,” she added. “The economics now are very different from what they were then.”
Scordino also noted the more lenient lending patterns two decades ago. “Back then it was more of a mortgage crisis than a housing crisis,” he said.
“They had a loan called the NINJA loan, a no-income, no-job application,” he said. “All you had to have back then was a decent credit score, and with no down payment they’d give you an adjustable-rate mortgage with a balloon payment in three years.”
The rapid rise in prices in the mid-2000s also artificially inflated the amount of equity that home owners had in their property, and the ease with which people could get a home-equity loan – essentially treating their home like a piggy bank. That contributed to the mess when prices collapsed and owners found themselves owing more money than their house was worth.
“Now, a lender is not going to make a loan unless the borrower demonstrates the ability to repay,” Scordino added. “Those are the key words – ‘ability to repay’– that was not in the loan at that time.”
The improved qualifications of buyers, Scordino said, is why he believes prices are more sustainable now. “I don’t see very many similarities between today’s market and 15 years ago other than prices are rising,” he said.
This story was originally published April 4, 2021 at 7:00 AM.
