Despite the Federal Reserve’s moves to raise interest rates, Fresno’s housing market is not showing any signs of slowing down in the near future.
Instead, all signs point to the fast-paced marketplace of the last couple years continuing for at least the next several months.
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One such reason lies in the fact that the interest rates – which rose from closer to 3 percent in the beginning of the year to above 4.6 percent this week – are still historically low.
Fresno realtor Don Scordino, the former president of the Fresno Association of Realtors who has 45 years of experience in the local market, noted that the speed at which rates have risen to start 2022 has been unusual.
“Even though mortgage rates in the fours are still historically low, the rise in the last three months is about as quick as I’ve seen,” Scordino said.
In the first quarter of this year, 82 percent of listings sold inside of 30 days and averaged 102 percent of the asking price.
Those numbers are nearly identical to last year, in which 82 percent of listings were sold within 30 days and averaged 101 percent of the listing price.
“They are very much the same right now, but I would caution sellers to manage their expectations because it could change,” Scordino said. “So a seller who is expecting multiple offers and to go way over asking price, that may not happen. It’s still happening, but it could change.”
Scordino’s timeline for when the market could potentially slow down is not until at least several months passes.
While a possible slow down is still quite a ways off, according to his prediction, Scordino noted the ever-changing landscape of current events that has shifted his thinking.
“At the beginning of the year I would’ve told you that it’s going to keep on for the whole year,” Scordino said. “Now I’m shortening my prediction down to several months.”
Four factors are affecting the local market currently, according to the buyers and sellers that Scordino works with: the war in Ukraine, rising gas prices, inflation and rising mortgage rates.
On the other hand, the low market inventory that Fresno has experienced over the last two years has not been corrected, continuing the competitive purchasing trends.
As of Thursday, Fresno County had 486 active listings, which Scordino said is less than one month’s worth of inventory for the region. A normal market has three to six months of inventory.
“I don’t know what is going to give us more inventory short-term,” Scordino said. “Many sellers are comfortable in their home, so they don’t want to move. Many sellers have the fear of, ‘Well if I sell this, what am I going to buy?’ So there’s no immediate answer to the low inventory.”
One notable change in the market that Scordino noted is how appraisals are coming in.
Scordino said that he has seen more appraisals come in at the contract price in the last six months than the six months prior.
Why? Scordino pointed to appraisers being more comfortable using time-adjustments than they previously were to get prices more in line with the sale prices.
But buyers do not seem to care as much about how much the appraisal comes in at, compared to in the past.
“This is one of the biggest changes I’ve seen in my career I’ve seen in my career, is that buyers seem to care a little bit less right now about what the home appraised for than they used to,” Scordino said. “Twenty years ago, 30 years ago, it was, ‘The appraisal said this, so that has to be what it’s worth.’ Very few buyers have that feeling any more.”
While 2022 is shaping up to continue the seller’s market, Scordino pointed to the importance for buyers to make an investment in the face of rising inflation.
“It’s still a seller’s market,” Scordino said. “Buyers have to write their best offers to obtain a home, and with interest rates still low in the fours, it’s a good move. The best reason that it’s a good move to make is that that’s a 30-year fixed rate mortgage that they can get, and that is the best hedge against inflation.”
He noted the alternatives in the Fresno housing market are a bit more worrying.
“Think about it: in the year 2037 if you’ve got a 30-year fixed rate mortgage, you’re going to know what your payment is,” Scordino said.
“If you’re renting, you don’t.”
