Does Fresno really have a ‘glut’ of single-family homes? Mayor’s housing report says so
The city of Fresno spent the last few decades permitting the wrong type of housing.
That’s one interesting takeaway from the “One Fresno Housing Strategy” commissioned by Mayor Jerry Dyer, although the report’s authors don’t state it as plainly as I just did.
Produced by members of Dyer’s administration with some outside input, the report aims to thoroughly assess Fresno’s housing crisis as well as provide a blueprint that moves the city closer to a solution. Its 140 pages (including 40 pages of “other references”) are filled with data points, charts and graphs collected from a variety of sources that at times makes for interesting, insightful reading and at others takes illogical leaps while giving the sense of being slap-dashed together.
Part beef, part baloney. The typical government sandwich.
The report does a thorough job illustrating the current crisis, essentially telling us what we already know but in richer statistical detail. Rents in Fresno have increased so rapidly that only one in three households can afford the median rent of $1,400 for a one-bedroom apartment.
We’re to the point where more than half of all Fresno County renters are considered “cost burdened” — meaning they spend more than 30% of their incomes on housing and utilities. Some (no exact number is cited) spend 50% or more. Which is frightening.
Skyrocketing rents impact Fresno harder than most places, since only 46.3% of the city’s dwelling units were owner-occupied as of 2019. That figure is well below the national (64.8%) and statewide (54.8%) averages.
Fresno used to be a place where someone who made a modest salary (below $50,000) could purchase a home. I can say that firsthand. In 2003, I cobbled together $10,000 in savings (which took 3½ years) and a $5,000 inheritance to come up with the 10% down payment and closing costs for a three-bedroom house near the Fig Garden Loop priced at $128,000. The mortgage payments were rough for a while, but at least I was building equity.
For today’s first-time homebuyer, that math no longer computes. Home values have soared, yet incomes haven’t nearly kept pace. The house I paid $128,000 for 19 years ago is worth $380,000 today, which means a down payment and closing costs in excess of $40,000. In a city where the median household earns less than $54,000 per year, the numbers don’t add up.
Dyer’s “One Fresno Housing Plan” also attempts to address the needs of more than 4,000 people living on the streets and in vacant lots. For them, the city must provide 2,500 additional emergency beds as well as 2,500 more “micro homes.”
Building boom of inexpensive homes
The mayor’s plan is audacious. In essence, it proposes to spend nearly $260 million in state and federal grants over the next three years and make 47 policy changes in order to spur a home construction and rehabilitation boom unlike anything in the city’s recent history. For salivating developers, there’s a catch: Those newly built homes (i.e. two- and three-bedroom “units”) must be affordable to the average Fresno renter, including a quarter set aside for those who can afford between $500 and $1,000 per month.
As thorough and earnest as the “One Fresno Housing Strategy” may be, there are parts that aren’t well thought out.
For example, one finding is that Fresno has “a glut” of 28,310 single-family homes above what residents need. Huh? If that were true, we wouldn’t be in a housing crunch.
The point the report’s authors are trying to make (I think) is that Fresno has too many detached single-family homes and not enough three- and four-bedroom multifamily dwellings. It’s part of their overall theme of a mismatched market. Well, gee, I wonder who allowed that to happen?
In a similar vein, “out of town investors” take the blame for purchasing homes in “an already competitive market” and renting them out to locals rather than locals getting the chance to become homeowners themselves.
‘Converting’ rentals to home ownership?
But as Dyer himself knows: It’s not just out-of-town investors who do this, it’s locals as well. For a few folks I know, rental properties are their primary retirement strategy. And why shouldn’t it be? California real estate is traditionally a great investment.
One remedy, the report states in bold lettering, would be to “convert” 8,000 single-family rental houses to home ownership for people of below-average incomes.
How do Dyer and his people expect to accomplish that? I listened to Wednesday’s five-hour Fresno City Council workshop in its entirety, and nary a word on the subject was uttered.
Rather, much of the public discourse centered on whether Fresno should join about two dozen other California cities in enacting a form of rent control stronger than existing state law. The “One Fresno Housing Strategy” would fund a voluntary rent stabilization program that falls well short of what housing activists are seeking.
That argument will be debated (and by appearances, loudly) in the coming months. For now, suffice to say this administration gave itself a three-year timeline to mend a broken housing market decades in the making.
Where rents and property values might climb to by 2025 if city leaders postpone taking action, I shudder to think.
