Real Estate

Are Valley housing markets vulnerable or recession-proof? Depends on who you ask.

A recent study of the national real estate market places most of the Central Valley in an at-risk category for market declines. 

But a local realtor with decades of experience in the industry does not see the same story.

The report, released by real estate data curator ATTOM, targets seven of the Valley’s eight counties – Fresno, Kings, Madera, Merced, San Joaquin, Tulare and Kern – as vulnerable for a market downturn.

The only Central Valley not on the list is Stanislaus County.

ATTOM’s report found that most of the Central Valley counties are close to the New York City and Chicago areas as being some of the most at-risk markets in the second quarter of 2022, based on home affordability, underwater mortgages, foreclosures and unemployment.

The report comes as inflation continues to be a burden on the nation and as mortgage rates have doubled since the beginning of the year. 

“The Federal Reserve has promised to be as aggressive as it needs to be in order to get inflation under control, even if its actions lead to a recession,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Given how little progress has been made reducing inflation so far, the Fed’s actions seem more and more likely to drive the economy into a recession, and some housing markets are going to be more vulnerable than others if that happens.”

Notably, though, ATTOM’s reasoning for placing Central Valley counties as such high-risk centered on the region’s unemployment rate.

The top four highest employment rates in the nation are found in the Central Valley: Tulare County, 11.7 percent; Merced County, 11.5 percent; Kern County, 11.3 percent; and Kings County, 10.9 percent.

Despite that, no Central Valley county ranked among the worst in other key markets related to major home ownership costs – which include mortgage payments, property taxes and insurance – underwater mortgages and foreclosures.

Fresno realtor Don Scordino, a longtime local realtor and the past president of the Fresno Association of Realtors, did not share the same concern as ATTOM, pointing to the fact that unemployment has not historically affected the Valley’s real estate market.

“Unemployment I wouldn’t think would hit the home ownership bracket as hard because they had to qualify for a mortgage,” Scordino said. “They had to have job stability and the ability to make those payments. I would think unemployment would hit the rental market harder than it would the home ownership market.”

Another major factor in the Valley’s unemployment statistics is that the region is heavily reliant on the ag sector, which has a much more fluid labor pool, Scordino said.

“The Central Valley has always had a higher unemployment rate than other areas because we’re agriculturally based, so some of our employment is seasonal. So I just don’t see where the Central Valley comes in right there with New York and Chicago.”

Even though the housing market has slowed down some from the last couple years, Scordinio said the local market is not showing any signs of a slump.

While foreclosures are higher in places like New York and Chicago, Scordino said the amount of foreclosures last month in Fresno County was in the single digits, not even amounting to one tenth of one percent.

“Prior to the mortgage meltdown of 2008, a three percent foreclosure rate was considered normal,” Scordino said.

Fresno County had 1,220 active listings Tuesday, while there were 1,001 pending that are in escrow. That’s close to a 1:1 ration, which Scordino called normal.

Pre-pandemic, in June, July and August 2019, 63 percent of listings sold in the first 30 days. The same time period for this year has 84 percent of homes selling within the first 30 days, slightly lower than the pandemic high of 91 percent in 2021. 

“I think the real story is that 2021 was such a hot market, that 2022 is more returning to normal,” Scordino said.

Daniel Gligich is a reporter for The San Joaquin Valley Sun, focusing on Fresno State Athletics and the southern San Joaquin Valley. Email him at daniel.gligich@sjvsun.com.