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Fresno Housing Market
Third Quarter, 2009
Larry Hawkins, Investment Broker
This is your opportunity to buy the home of your dreams - but it is becoming increasingly difficult.
The drastic drop in home prices combined with low interest rates and home buyer tax incentives have generated a huge number of buyers. The inventory of homes for sale in Fresno/Clovis has dropped from a high of 20 months supply in Sept of 2007 to a 2 month supply today.
We have seen the number of sales rise from 267 in Sept 07 — to 732 in April 2009. We now see multiple offers on homes that are well priced and in decent condition. About 80% of the homes sold are bank owned and 15% are short sales so the supply is driven by foreclosures. Prices are beginning to rise as a result of the lack of supply.
The current prices are also attracting a large number of investors into the Fresno housing market. This also pushes demand.
No one can predict how the fiscal crises of the State of California will eventually impact the future of the housing market in the long run. In the short term I predict that the foreclosures will continue to provide a majority of the supply for the next year.
Future prices will depend of the number of foreclosures and interest rates. If the number of foreclosures falls and interest rates remain stable - we will see a rise in home prices. If we see a rise in interest rates this will lessen demand and prices may remain stable.
Financing: My best source for direct funding loans has been Wells Fargo — Mayra Ruiz (559) 437-1177 or Chase — Lisa Dipple (408) 399-7658. For those preferring to work with mortgage brokers talk to Steve Heintz at (559) 432-2727 or Sue Sweda (559) 225-0500.
Fresno Area Rents Analysis
Third Quarter, 2009
By Larry Hawkins, Investment Broker
The single-family rental market has seen an increase in number of homes for rent. This is because many would be sellers are unable to sell their homes in the current market and instead of selling are forced to convert the property into a rental. Also investors are buying the bank owned homes in record numbers and creating more rentals.
This increase in available rental homes has kept rent incomes for houses at a flat rate for the past two years and those rental rates will continue flat for the next 24 months or so. Vacancy remains low due to population growth and foreclosures forcing previous home owners into becoming tenants.
The apartment market is a different story. Most multi family buildings in the Fresno market were built in the 1960-1970 era and rent on those units average $650 per month for a typical no frills two bedroom one bath.
Due to the cost of construction, newer units average $1200 plus per month. These units are larger and come with a list of amenities but because of the much higher rent are in a different market than the older units.
So we have a limited supply of older units available at the lower rents and a projected doubling of population over the next 30 years. This puts pressure on those lower rents for rent increases. Fresno has one of the highest concentrated poverty rates among the larger cities in the nation. This adds even more demand in this low-end limited supply market.
Fresno market has seen some rent increases but rents here are still well below other areas of California compared with other urban cities Fresno is a real bargain when it comes to apartment rents. The average rent in Orange County is $1,484 - in San Jose $1,359.
According to some analysts Fresno with an annual rent increase of 3.7% and occupancy of 94% to 95% Fresno is "poised" to be a market that is in" perfect balance". Investors are getting a return on their investment and they have a stable occupancy but enough vacancy for renters to have a choice.
My personal opinion is that the 95% occupancy rate is an Average but my personal observation is that the newer units with higher rents have a lower occupancy rate and the older lower rent buildings have a near 100% occupancy. Thus the "Balance" is here statistically but the real pressure for rent increases is in the lower rent buildings.
Put those figures together with the projected growth in population and you will see more and more pressure on these lower rents. This results in an out of Balance situation that I believe will be of tremendous benefit to investors as those market forces work to increase rents. I believer rent increases in these lower end units will be in the 8% range for years to come. Do the math on this and Fresno units look better and better.
October 28, 2007
Why Buy Fresno?
Simple – Growth will continue for years to come.
Larry Hawkins, Investment Broker
An excess of available properties has created a short term Buyers market in this great market. This is your opportunity to buy at bargain basement prices - hold for a few years and realize a great profit.
All sources predict that the Fresno area is going to double in population by 2030. This means about 30,000 new residents per year.
When it comes to residential housing, land USE is the primary issue. Federally mandated air quality standards are not being met in the greater Fresno area. This issue of air quality is a major factor in builders obtaining approvals for new subdivisions.
According to the Brookings Institute the Fresno - Madera markets will need 158,000 new housing units by 2030. The population of Fresno County is projected to be 1,658,280 by 2050, up 106% - twice the rate of growth as the rest of the state.
According to the California Association of Realtors, the median price of existing homes in Fresno in 1990 was $100,000 and the median price of a home in California was $230,000. By 2005 the median price for Fresno had soared to $260,340 (with a 28% affordability index) and for the state $485,700 (an 18% affordability index). Thus, even with the tremendous price increase in Fresno, the gap between Fresno and the rest of the state continues to be huge. Fresno remains the lease expensive market for single family homes in California, with the exception of the high desert area. Yes, the affordability index for Fresno is declining however it is still well above the rest of the state.
The Fresno residential investment market is a state-wide driven market, not just a local market. In 2006, 20% of newly built homes were purchased by people relocating from higher priced areas to Fresno.
This is a very interesting figure provided by the Office of Federal Housing Enterprise Oversight: they stated the average priced home nationwide is $223,400, the same report showed the average priced home in Fresno at the same time was $225,500. So investors, we are only at the national average. I will point out that the rest of the nation does not project population increases anywhere near that of Fresno.
This is my brilliant prediction for Fresno home prices based upon the following observations:
1) Increased demand for housing from exploding population through 2030.
2) Shortage of buildable land into the foreseeable future.
3) Fresno Prices are currently at the national average.
4) Fresno prices are 47% of the statewide median home price.
5) Fresno is a statewide market.
6) Interest rates continue to remain stable with slight signs of a slow and gradual increase in rates over many years.
My conclusion is based on simple growth. This will create a need for housing that can only be built at an increased cost do to the squeeze between air quality, water availability, and available land.
March 3, 2004
Fresno
takes top spot
in survey's national ranking
by Kelly Zito, SF Chronicle Staff Writer
Homes prices
in Santa Clara County grew at one of the slowest rates in
the nation during the fourth quarter of 2003, while seven
other metropolitan areas in California ranked among the top
10 with the highest year- over-year gains, according to a
new federal report.
Fresno had the highest housing
appreciation in the country, the study found. San Francisco
and Oakland
showed modest
single-digit rises.
Based on federal lending data, the
quarterly survey by the Office of Federal Housing Enterprise Oversight
reflects the
same general trends evidenced in other reports on the local
housing market. Unlike the monthly statistics compiled by
other real estate researchers, however, the federal study
does not include actual prices, only percentage changes in
sale prices.
Santa Clara (County home prices) are definitely
the weakest in the country, because it's the weakest economy
in the country," said Ken Rosen, chairman of UC Berkeley's
Fisher Center for Real Estate and Urban Economics.
Nevertheless,
the appreciation rate was still on the plus side. That suggests,
as have other housing reports, that
while the Bay Area's real estate market may have cooled from
the overheated dot-com days, it has not imploded - - as some
economists had predicted during the past several years.
According
to the study, prices for single-family homes in Santa Clara County rose an average
of 1.3 percent year-over-year
for the last three months of 2003, placing it 218th out of
220 metropolitan areas examined. The San Francisco metropolitan
area, which includes Marin, San Francisco and San Mateo counties,
ranked 138th, with a price increase of 4.9 percent. In Alameda
and Contra Costa counties, which comprise the Oakland metropolitan
area, prices rose an average 8 percent, placing it 83rd.
Fresno
and Riverside-San Bernardino ranked first and fifth with 20.6 percent and 18.2
percent, respectively. Home prices
throughout much of Central and Southern California have surged
in the last several years, buoyed by a stronger, more diverse
economy. Parts of Northern California -- such as Redding
(No. 3 on the list, at 18.6 percent) and Sacramento (No.
17, 14.3 percent) have seen higher jumps in part because
prices there did not rise as quickly during the high-tech
boom. Twelve California cities fell within the top 20 areas
with the highest appreciation rates. Nationwide, home prices
advanced an average of 8 percent. California prices rose
an average 13.8 percent, second to Rhode Island, where prices
increased 16.4 percent.
The national survey, released Monday,
differs from other house price studies in that it tracks sales and refinancings
of the same properties. The data are based on reviews of
repeat transactions on single-family homes whose mortgages
were either purchased or secured by Fannie Mae and Freddie
Mac, the government-sponsored home loan titans. In addition,
only conventional, conforming loans -- that is, mortgages
that are not government-backed for $322,700 or less -- are
included.
Other home price reports, such as DataQuick's
surveys, are based on filings with county recorders' offices and reflect
a different mix of homes sold each month. As a result, the
median price can be dragged higher when a larger percentage
of more expensive homes is sold, or lower, if more less-
expensive homes are sold. Though it does not include national
data for comparison, DataQuick's studies include the number
of new and existing condos and single-family units sold in
the nine counties.
Housing economists are split
on which figures more precisely represent changes in the residential real estate
market.
While both sets of data show the same general trend
lines, there are some differences. DataQuick's studies indicate
that after declining very slightly in late 2001 and early
2002 after the dot-com bust, home prices are again rising
substantially in most of the nine Bay Area counties. For
instance, Santa Clara County's median single-family home
price jumped by 8.3 percent year-over-year in December, according
to DataQuick. The median is the midpoint; half of sales in
a given period were below and half were above.
According to
the Office of Federal Housing Enterprise Oversight report, the Bay Area price
increases decelerated markedly
since 2000 (in Santa Clara County, prices dipped by as much
as 2.8 percent in early 2002), and are now rising more modestly.
But
DataQuick researcher John Karevoll says that because the federal researchers
use different methods, their report
often masks a market's peaks. What's more, their data lag
behind DataQuick's figures; Karevoll expects the government's
report on the current quarter to show a sharp rise in prices
for the Bay Area.
Still, some homeowners' experiences suggest
that prices may be stagnating, in line with the federal agency's results.
Financial adviser Dan Goldie purchased his Palo Alto home
for about $1.1 million in April 2002. Since then, he and
his wife, Karole, have refinanced three or four times.
"We were able to get the
house appraised at the purchase price, but no higher," said
Goldie, 40. "It definitely
hasn't increased in value."
At the same time, Goldie noted
that he doesn't plan on selling the house anytime soon -- until
his 8-month-old graduates
from college, in fact. In that case, short-term price stagnation
doesn't concern him.
"Only time will tell," Goldie
said. Prices "may
not always go up, but over a long, long period of time, I
think they will."
Seven California metropolitan areas ranked among the top 10
in year-over-year home price appreciation in the fourth quarter
of 2003. The Bay Area's three biggest cities were far down the
national survey of 220 cities, with San Jose finishing third
from the bottom.
Area Rank Year Quarter Five years
Fresno 1 20.64% 7.50% 62.23%
Redding 3 18.56 6.15 63.92
Chico-Paradise 4 18.28 7.06 76.67
Riverside-San Bernardino 5 18.22 7.51 71.23
Ventura 6 17.03 7.64 80.05
Bakersfield 7 16.81 6.27 44.11
Los Angeles-Long Beach 8 16.60 7.25 69.56
Oakland 83 8.04 4.51 81.54
San Francisco 138 4.88 2.80 67.90
San Jose 218 1.28 1.50 57.02.
Note: Rankings based on annual percentage change for all areas
containing at least 15,000 transactions during the past 10 years.
Source: Office of Federal Housing Enterprise Oversight.
©2004 The San Francisco Chronicle. All rights
reserved.
Market
Conditions Attract
Investors to Fresno, CA
LiLing Ooi - Realty Times
Prices in the Fresno real estate market continue to rise.
However, median housing prices are still
low enough to be affordable. The relatively low prices
and historic low interest rates have attracted many real
estate investors to Fresno. These investors
continue to purchase multifamily units at
a frenzied pace. 2 to 4 units are now priced approximately
$80-100K/unit. Average rent for a 1-bedroom
unit is approximately $500-$550;
2-bedroom is $600-$800, depending on size, location, amenities,
etc.
According to a report released on
September 02,2003 by the Office of Federal Housing
Enterprise Oversight(OFHEO) "In the beginning
of the five year period starting in quarter
2 of 1998, Fresno was growing substantially less rapidly
than the U.S. By the third quarter of 2001, however, Fresno surpassed
U.S. rates and has been essentially accelerating ever since.
Fresno
is ranked second for annual growth at 14.12% this quarter".
The median home price in
Fresno for July 2002 was $133K and in August 2003, it was
$167,000. Even with this increase, it is still below the
nationwide median of $177,500. The California
median home price for August 2003 was $404,870!
Location
Characteristics: Fresno is the 6th largest city in the state
of California with a population of over
420,000. Fresno is within a 1 1/2 hour drive
to 3 National Parks: Yosemite, Sequoia and Kings Canyon.
Fresno
rental market squeezed
Sanford Nax THE FRESNO BEE
Published Monday, November, 12, 2001
Ten years ago, homeowners
couldn't find buyers for their houses, turned them into rentals
and became reluctant landlords. Today, home sales are so strong
that most of those reluctant landlords have sold their properties,
and people looking for houses to rent often face a frustrating
search -- and rents that have climbed.
"I've had people call me
off 'for sale' signs to see if they [sellers] want to rent
them," said Gary Kittredge, a veteran real estate agent
who also owns eight rental homes.
Rentals are being sold so fast that property managers such
as Chris Frankian-White are seeing their inventories shrink.
"We lost 30 this year from people who sold," said
Frankian-White, who manages 300 properties. How significant
is that? Consider this: Frankian-White picked up 40 new rentals
to manage during one particularly brutal summer in the recession
of the early 1990s. Many of those were from people who became
landlords because they could not sell their homes.
The situation is reversed today.
Renters forced from their homes by owners wanting to sell
to owner occupants are scrambling to find new housing. One
landlord, Frankian-White said, was so eager to sell that he
gave his tenant $1,500 to move out before his lease was up.
"Starting a year ago, property managers would greet me
by saying, 'You guys are selling all our rental properties,'
" added Ken Maul, a Fresno real estate agent.
As a result, landlords are more
selective. More are not accepting pets or are requiring larger
pet deposits. And fewer owners are advertising their rentals
in newspapers and other publications because they don't have
to. Many inquiries come from prospective renters who drive
neighborhoods seeking 'for rent' signs, Kittredge said.
Many landlords find new tenants
within a few days. In a few cases, new tenants have moved
in only a few hours after the old ones departed, said Frankian-White.
"We have a waiting list"
of people wanting to rent homes, added Marc Wilson of San-Mar
Properties. He manages 126 single-family homes, in addition
to hundreds of apartments.
The lowest rent that Frankian-White has available is $1,195
per month. The highest is $2,495 on Avenue 12 near Madera.
It is for a 5,000-square-foot house with pool and lawn care.
But investors, reacting to the
opportunities, have begun to sniff out deals.
Thus, the reluctant landlord of yesterday is being replaced
by the professionals of today.
"Our market is changing to those who do it because they
want to," said Frankian-White.
"Now they are in it because it makes sense, instead of
being forced into it," said Wilson.
The strongest demand for rentals is in northeast and northwest
Fresno. Those are also two of the hottest real estate markets
in town. But other regions are active, too.
"A reasonably priced house
anywhere will go quickly," said Frankian-White.
Fresno
home values see 12.3% gain.
Sanford Nax THE FRESNO BEE
Published Monday, October, 29, 2001
WE APPRECIATE THAT: Home values
in Fresno and Clovis are climbing.
Between Jan. 1 and Aug. 31,
the average home value in Fresno and Clovis jumped 12.3%.
The increase in those eight months was not too far below the
16.4% gain recorded throughout the entire 1990s, according
to figures from the California Association of Realtors.
Why is that significant?
In 1990, the average home buyer
would have paid $89,497 for a midprice house. In December
2000, that house was worth $104,201. In August 2001, the value
would have been $116,984 -- a gain of $27,487 from 1990.
Meanwhile, low interest rates continue to fuel home sales,
said Scott Leonard, president of Guarantee Real Estate. "We
still consider it to be a seller's market; however, we have
seen a small increase in the number of homes available for
sale since last spring. Buyers currently have more inventory
to choose from," he said...
Starting
Up in the Southeast
Sanford Nax THE FRESNO BEE
Published on August 13, 2001
The pact between Fresno County
and its two biggest cities directing growth to the southeast
came at a crucial time, area builders say. The conceptual
agreement announced last week not only represents a fundamental
shift in growth patterns for Fresno and Clovis, but also it
keeps builders from running out of land, said Jeffrey Harris,
chief executive officer of the Building Industry Association
of the San Joaquin Valley. "Clovis was really reaching
the point where they were very soon going to run...
Fresno
apartments in demand
Sanford Nax THE FRESNO BEE
Published on August 12, 2001, Page F1
The demand by investors for
property in Fresno is so strong that a 315-unit apartment
complex on Kings Canyon Road was sold in just two days. A
single ad in the Los Angeles Times for the Crystal Springs
Apartments generated 80 telephone calls. An advertisement
on the Internet generated three offers within two days --
and led to the cash sale of the southeast Fresno apartment
complex to a San Diego-based investment group for around $9
million. "It goes to show you that things are moving
in Fresno.
Home
builders swarm Clovis
Sanford Nax THE FRESNO BEE
Published on August 5, 2001, Page F1
Faced with a shortage of land
in Fresno and lured by the extension of Freeway 168, builders
are flocking to construct homes in Clovis. The number of permits
for new homes more than doubled through the first half of
2001. Permits were issued for 552 homes through June, which
compares with 229 through the same period last year, city
officials said. While active, 2001 won't be a record year,
said Clovis Planning Director John Wright. The record years
were in the early 1990s, when the economy was strong...
Housing
boom leaps to Madera
Jim Steinberg THE FRESNO BEE
Published on July 29, 2001, Page F1
Like a tidal wave from the
Pacific, a surge of people looking for houses is flowing from
the San Francisco Bay Area all the way to Madera.Builders
say many customers fit the so-called equity refugee profile.
People sell their homes in the still-inflated markets in the
Bay Area and live in retirement off the difference between
their sales and the cost of building in Madera. There is also
a secondary wave. Bay Area employees who can't afford Silicon
Valley homes commute from Los Banos and other San...
Valley
homes rated affordable
Dennis Pollock THE FRESNO BEE
Published on July 22, 2001, Page F1
As a pilot for American Airlines,
Gregg Goodpaster said he could have chosen to live just about
anywhere. His choice: Clovis. Not only is it where he grew
up, he said, but there was that ever-nagging housing-affordability
matter. "This same house in the San Jose area would cost
$700,000," he said. Through London Properties he paid
$225,000 for the four-bedroom house just under 2,400 square
feet. In San Jose, the 1,000-square-foot duplex he leased
is now being rented at $1,500 a month. The fact that...
Home
builders look west of 99
Sanford Nax THE FRESNO BEE
Published on July 8, 2001, Page F1
The west side of Freeway 99
is once again attracting home builders as they search for
places to construct reasonably priced entry-level housing.
Cambridge Homes has returned west of the freeway, a region
that was popular in the late 1980s and early 1990s. The builder
bought 52 lots on the north side of Dakota Avenue at Polk
Avenue from another developer and started selling them last
week, said Steve Lutton, a principal with the Fresno company.
The west side of 99 was called the New West when...
Home
sales flourish in Valley
Sanford Nax THE FRESNO BEE
Published on June 24, 2001, Page F1
Home sales are falling in
many areas of the state -- but not in the central San Joaquin
Valley, where real estate agents and builders say transactions
remain robust. Even the senior economist for the California
Association of Realtors has taken notice. "We've noticed
that the Central Valley and Fresno, in particular, have been
quite a bit hotter than in California overall," said
Robert Kleindheim. In its 2001 forecast made in September,
the California Association of Realtors predicted sales statewide...
Enough,
already
Ron Orozco THE FRESNO BEE
Published on May 26, 2001, Page H1
Fresno real-estate agent Mel
Kilner chuckles just thinking about how greedy some clients
can be. He recalls a bidding war that pushed the sale of a
home $15,000 above the asking price. But when the buyer asked
that the seller repair a dripping bathtub faucet for about
$100, says Kilner, the seller refused. "Greed usually
comes from the seller," says Kilner, who works for London
Properties. "Once they get more, more and more for their
house, they become tighter, tighter and tighter. "People
wrestle...
Sellers
high on high-end homes
Sanford Nax THE FRESNO BEE
Published on May 20, 2001, Page F1
As a custom-home builder,
Gary Gomes knows better than most when sales of luxury homes
are strong. And these days, sales of high-end homes are robust.
"It's 200% better than it was five years ago," said
Gomes, who owns Elite Custom Homes. In 1996, Elite constructed
two homes worth more than $500,000; now, Gomes is building
eight homes a year valued at $500,000 or more. The luxury-home
market got back on track in the past year or two when sales
of existing homes finally started picking up after several...
Median
price for homes in Valley soars
THE FRESNO BEE
Published on May 12, 2001, Page C6
The Valley's first-quarter
median-home price increased 20%, as first-time homebuyers
and lower interest rates generated strong sales, according
to a California Association of Realtors report made public
Thursday.The Valley's median-home price -- meaning half the
homes sell for less, the other half for more -- improved to
$152,200 for the first three months of the year, compared
with $126,520 for first-quarter 2000. The area's home sales
improved 11.6%, the lone market in California with a double...
Housing
Demand Keeps On Building
Fresno-Area Builders Don't Have A Lot To Offer
Buyers As They Do Land-Office Business.
Sandy Nax THE FRESNO BEE
Published on March 25, 2001, Page F1
Sales of new homes are so
robust that builders are running out of inventory in some
parts of Fresno and north Clovis and could have a limited
supply of lots this summer. Builders attribute the strong
sales to an equally robust resale market, which enables people
to sell their existing homes and put down payments on a new
house; to low interest rates; and to a flood of buyers moving
in from outside the area. But builders are wondering how long
it will last. Nationally, dot.com companies are failing...
Whirlwind
Of Plans In New Clovis Research Park
And A Planned Community Are Two Projects.
Sanford Nax THE FRESNO BEE
Published on January 14, 2001, Page F1
Want to see the next growth
area in Clovis? Head east on Nees Avenue and stop at Temperance.
Bingo. You're in the center of it. Already, big things are
under way or planned for the region north of Herndon Avenue
and east of Armstrong. The city of Clovis is developing a
160-acre research and technology park near Temperance Avenue
and Highway 168.Granville Homes is in the first phase of an
ambitious 500-lot master-planned community at Shepherd and
Temperance avenues. Community Medical Centers is...
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