The Fresno real estate market forecast for 2018 appears to finally be looking up. Fresno, California has faced a lot of difficulties over the last few years, in the wake of the 2008 recession. High unemployment and a declining economy forced home prices to drop for a time, but the Fresno real estate market is finally looking up again. Several consecutive years of positive appreciation together with increasing sales prices suggest growth just may be sustainable now. According to Zillow, positive trends should continue into next year, and the Fresno government has taken steps to relieve record high unemployment levels.
Relatively high unemployment: Fresno real estate forecast
Unfortunately, a weak economy has contributed to a relatively high unemployment rate, which has in turn put the Fresno real estate market in a less than stellar position. At the beginning of this year, Fresno held one of the highest levels of unemployment in the country. USA Today ranked it 9th on the list of cities with the highest unemployment. The unemployment rate in Fresno is 12.2%, which surpasses that of the local county (11.2%), the state of California (6.1%), and the entire country (5.4%)! The Fresno real estate forecast continues to be affected by current unemployment levels, but it’s worth noting that unemployment in Fresno is a result of the area’s dependency on the agricultural industry, which has been hindered by drought.
Low cost of living to increase housing demand
Regardless of high unemployment, low living costs have helped the Fresno real estate market get back on the right track. Experts believe the cost of living may be responsible for a 2.4% population increase over the course of the year. Increased population will only increase the demand for housing and push sales prices, volume and values up. This rise should also help the decreasing number of new housing permits issued in the last 12 months. After a 6-year high (1400 new housing permits were issued in 2013), just 42 were issued last year, but a growing population and a recovering economy should improve these numbers going forward.
Real estate forecast for Fresno in 2018: home values rising, affordability low
The median home value in Fresno is $225,900. Fresno home values have increased 10.3% over the past year and Zillow predicts they will rise 4.7% within the coming year. Meanwhile, the median listed price of homes in Fresno is $268,900, and the median price of homes sold is $242,400. Median rent is currently at $1295. There is good news here: the Fresno Home Price Index has increased for the last 22 consecutive quarters. The 2017 3rd Quarter index value was 6.51 points higher than the 2nd Quarter value of 217.14, resulting in a 3% rise for the Fresno real estate market.
Although the median home list price in Fresno is fairly reasonable by outsider standards, in the primarily agricultural community, many locals simply can’t afford to buy homes according to Fresno-based real estate broker Eleazar Gonzalez of Creative Real Estate. The farming community, located halfway between San Francisco and Los Angeles—about a three-hour drive to either city—is comprised of a lot of farmers, many of them migrant workers. “A lot of people are priced out of the market,” says Gonzalez.
Foreclosures and mortgage delinquency
Foreclosures will be a factor impacting home values in the next several years. In Fresno, 2.3 homes per 10,000 are foreclosed. This is greater than the Fresno Metro value of 2.2 and also greater than the national value of 1.6. Mortgage delinquency (when a homeowner fails to make a mortgage payment) is the first step in the foreclosure process, and Fresno is currently seeing a 1.4% rate of delinquent mortgages, which is slightly lower than the national value of 1.6%. As was the case with unemployment, the Fresno real estate market was one of the hardest hit by the foreclosure crisis.
According to Trulia, there are currently about 1040 homes in one or another state of foreclosure, meaning they are in default, or auction or bank-owned. This number is relatively high considering that there are presently about 1219 homes for sale in Fresno, and an additional 4199 that have recently sold. Fortunately, foreclosures are on the decline: since last month, they have dropped 9%, and are down 17% on the year. Of course, for those looking to invest in real estate in Fresno, the forecast is positive, as these relatively distressed numbers favor real estate investment opportunities for those who care to take the leap.