The Copper River Ranch development in Northeast Fresno is seen in this satellite photo. Fresno was ranked No. 4 in the nation for markets seeing the biggest increase in interest in suburbs for homebuyers.
Written by Edward Smith
Home sales may be peaking in a way no one could have predicted.
Following stay-at-home orders, tastes have shifted from urban areas toward suburban markets as homebuyers need more out of their home than perhaps ever before. But a lack of inventory and difficulty building outward has made home buying more competitive, leaving out lower-income families.
Across the nation, new home sales jumped 13% in July, following big increases in May and June, according to the U.S. Commerce Department. Existing home sales climbed 23.4% year-over-year.
Leading the charge has been the renewed interest in suburbia.
Researchers at Realtor.com compiled data of where potential homebuyers were looking. Fresno ranked No. 4 in the nation for markets seeing the biggest increase in interest in the suburbs, growing 3.9% since the same time last year. McAllen, Texas topped the list at 5% growth. Fresno was the top city in the western United States for suburban areas
“While people wanted value, they also wanted more space,” said Javier Vivas, director of economic research with Realtor.com. “Urban areas were getting more affected by the virus and employment moved more toward working from home.”
Growth in viewings for suburban homes outpaced urban markets nearly twice as much since interest plummeted in March and April, Vivas said.
Those views correlate with sales activity, typically taking between three to six weeks before people browsing homes on the internet actually contact a Realtor.
Realtor Sylvia Lin with Guarantee Real Estate said she has been getting a lot of interest from out-of-town buyers.
“I’m seeing more and more referrals from out of town,” said Lin.
She has been getting referrals from out-of-town agents, largely Alameda, San Francisco and Los Angeles. She helped four people from Sacramento, all of whom were looking at Auberry.
“Space is a priority,” Lin said. “Moving from the Bay Area to Fresno brings them more bang for the buck.”
One million dollars in the Central Valley can get a multi-acre lot with a 3,000 square foot home, whereas in the Bay Area, buyers would “be lucky” to get a 1,500 square-foot home, she said.
“The recession has changed the way people look at housing,” said Vivas.
Suburban markets and small towns offer desired square footage. The final sale price may sometimes be higher, said Vivas, but the price-per-square foot is lower, and that is what buyers want.
For homeowners sheltering in place, they want more out of their homes. Buyers want home offices, gyms and space for gardening. Garages have also become more important, said Vivas.
With value on the mind, movement has also been more inland. Even before the pandemic, interest has been moving away from coastal areas. Coronavirus merely accelerated that movement.
Inventory has significantly kept prices afloat.
Two weeks ago, the number of sales surpassed inventory, said Lin, though this week, that has balanced out a bit.
People are making backup offers on a home in hopes that the first offers will fall through.
Homes especially below $300,000 are in high demand and have become hard to come by.
More competitive bids are edging out families with lower incomes, said Lin.
“They have to be ready to go the minute the property at their level becomes available,” said Lin.
The future of suburban growth, though, has been made difficult by legislation.
A new assessment — called vehicle miles traveled — on real estate developments came into effect in July. Under SB 743, local governments would assign development fees based on the amount of travel to and from those developments, with the goal being to discourage cities from continued sprawl, said Jerome Keene senior planner with QK, Inc. in a previous interview.
“Single family development, which is the long standing pattern with the Valley, could be potentially more impacted than other uses due to the patterns already established,” Keene wrote in an email.