What’s on the horizon for Fresno real estate? ‘That’s a game changer’

Fresno real estate leaders are celebrating some industry wins in the county over the last year, including completed affordable housing projects and below-average vacancy rates in office and retail spaces.

But they acknowledge many challenges lie ahead for the real estate sector in 2024 as ambitious projects like the Southeast Development Area face a feasibility check, aging buildings send insurance costs for homebuyers and landlords through the roof, and the value of agricultural land drops.

Despite a mixed bag across different Fresno real estate sectors, Mayor Jerry Dyer said the city of Fresno’s counting on the industry.

“We need our real estate market in a bad way,” he said, citing a shortfall in sales tax revenue this year.

“When you have a year like we’ve had this year in our city, where we’re starting to see a slight decline in our sales tax, then, fortunately, property tax picks up.”

With projections that sales tax will be down again in the next fiscal year, he said he hopes property tax revenue “stays strong this coming year.”

Affordable housing in high demand for Fresno real estate

The city celebrated some achievements in the housing arena at the Fresno County Economic Development Corporation’s 19th annual Real Estate Forecast on April 18.

As for affordable housing, Terence Roderick Williams, CEO of the Fresno Housing Authority touted the Monarch housing project in Chinatown.

“We stand apart from … many of the other housing authorities in the country, in that we develop our own,” he said. “When we talk about the Monarch in Chinatown, that’s our development, and it compares with any other market rate development across the city.”

The Monarch, which offers studios, one-bedroom, and two-bedroom apartments, received over 3,000 applications last year for its 57 available units after it opened in 2022.

“The Monarch is proof that people want to live in Chinatown,” Williams said, “and proof of how deep the demand is for housing where people can pay 30% of their income and not be rent-burdened.”

In 2022, the city set the goal to complete an additional 6,100 affordable housing units over the next three years, as well as 4,100 at market rate in the mayor’s One Fresno Housing Strategy. 

But even that would only meet 26% of the overall housing demand in the city “because we’ve fallen behind so much over the last several years,” Dyer said Thursday.

Single-family home median prices went up

Despite the demand for affordable housing, Dyer also stressed that “affordable housing doesn’t pay the bills.”

“What pays the bills is market rate,” he said.

“We, as a city, have to take a very balanced approach, and make sure that we’re doing all of that.”

As for single-family homes, Fresno realtors said Thursday that “now is a great time” for some homebuyers.

“When interest rates go up, usually home prices come down to compensate,” said Annie Foreman of Guarantee Real Estate. “We have not experienced that at all.”

The median home price in Fresno was $390,000 as of February, up 6.3% from last year.

Foreman also shared the median home prices for specific neighborhoods in Fresno and how they compared last year:

• In downtown Fresno, the median home price is $249,000. There was no year-to-year comparison provided.
• In the Tower District, the median home price is $317,000, up almost 25%.
• In northwest Fresno, the median home price is $440,000, up 10%.
• In southeast Fresno, the median home price is $500,000 up 7.8%.
• In Harlan Ranch, the median home price is $540,000, down 1.6%.
• In Copper River, the median home price is $839,000, up 26%.

Though interest rates climbed and demand decreased, “it did not die,” Foreman said.

Because of that, the market isn’t as cutthroat.

“You don’t feel the same competition that we’ve experienced for years – you know, 40 offers on the table,” she said.

Foreman added that at the same time, insurance costs are creating challenges for homebuyers, stemming from aging roofs and properties located in high fire zones.

Insurance costs have put pressure on landlords renting out apartments and the Fresno Housing Authority as well, industry leaders shared Thursday.

‘Relatively healthy’ vacancy rates in office and retail spaces

Fresno real estate leaders were optimistic about the outlook for the office sector. 

While cities like San Francisco and San Diego see office vacancy rates pushing 30%, Fresno’s rate was estimated to just under 8%, according to Tony Cortopassi of Cushman & Wakefield.

Part of that has to do with the fact that Fresno just has a lower supply of office space than many major cities in northern and Southern California, Cortopassi said. 

So when the pandemic pushed many people out of offices and into remote work, Fresno didn’t take as big of a hit as other cities.

Cortopassi added that while other cities lost people to the suburbs in the wake of the pandemic, the Central Valley instead saw growth, helping to offset some of the increased office vacancy rates other cities saw. 

This demographic trend has also been cited to help explain why Fresno schools didn’t see as large of enrollment drops as other California K-12 districts.

Retail vacancy rates in Fresno are also “relatively healthy” at about 4.8% and on par with the national rate of just over 5%, according to Rachael Orlando of Retail California.

A grim outlook for agriculture 

On the agricultural front, industry leaders warned of hard times to come.

Prices for several of Fresno County’s biggest crops – including almonds, pistachios, and grapes – are expected to continue dropping. 

That’s hurting the value of agricultural land in the area, said Sullivan Grosz of Pearson Realty. 

“What a lot of people have probably seen from the media is bankruptcies, foreclosures and forced sales” of farming companies, he said. “Unfortunately, we’re probably going to see that more later this year, unless we see an increase in commodity prices.”

One of the largest stone fruit farming and packing companies, Prima Wawona, declared bankruptcy last October, taking down thousands of Central Valley farmworkers with it.

What’s on the horizon for Fresno real estate?

Fresno real estate leaders highlighted multiple projects coming down the pipeline in 2024 and beyond – but some of them are further along than others.

Dyer alluded to his administration’s contested plan to build a sprawling 45,000-home community in southeast Fresno called SEDA.

The city confirmed it’s putting the plan on hold amid questions about how it will cover its multi-billion-dollar price tag – but the mayor insisted Thursday that it’s not the end of SEDA as the city evaluates its options.

“It’s not dead, it’s just on pause,” he said.

He also highlighted the city’s plans to increase the residential population of the city’s downtown from 3,000 to 10,000 with the help of $300 million in funding from the state – though Fresno is still waiting for the rest of the funding.

Expanding housing downtown could help attract more retail down the road, said Orlando of Retail California.

“Retail follows population,” she said.

“So as the population increases downtown, we’re going to start to see tenants and retailers looking in that area.”

Orlando added that she’s heard “rumblings” about new grocery stores touring Fresno to consider opening new locations, though not specifically for downtown.

On the affordable housing front, Williams said he expects 2024 to be a “banner year” for the Fresno Housing Authority.

Currently, they’re working with the city to bring “mixed income, mixed use development” to the now-closed downtown CVS location.

“More details to come on that,” he said, “but that’s a game changer.”