The De Young Properties Contempo residence at Tesoro Viejo. Image contributed

While it’s no news that California has had a housing shortage for over half a century now, home builders in the Central Valley have been staying busy putting up houses.

This week’s list of Residential Building Permits in Fresno, Kings, Madera and Tulare counties for 2023 reflects an ebb and flow for the top local builders when compared to last year.

Lennar Homes of California, Inc. pulled the most permits in the Central Valley so far this year with 897, a 35% increase over 2021’s 664 figure.

At the end of November, Lennar announced a new series of affordable single-family homes at three communities in Shafter, Fresno and Clovis.

The pricing for these single-story, 3-4 bedroom homes with 2 bathrooms starts in the mid $300,000s.

Ranking second is Wilson Homes, Inc, which pulled 395 permits this year, representing a 66% increase over 2021’s 238 permits.

KB Home saw a dramatic 365% increase over 2021’s 57 permits, pulling 265 so far this year. R. Horton actually saw a slight decrease this year, pulling 205 permits, down from 224 in 2021.

The fifth local contractor with the most permits pulled in 2023 is Granville Homes, with 185, a 113% increase over 2021’s 87 permits.

Increased interest

Local contractors saw a more stable year, said John Bonadelle, president of Bonadelle Neighborhoods in Fresno, but the increase in interest rates earlier this year slowed some buyers.

He said the company had a good year, with a more robust market in the spring that gave way to “nice and stable” after the interest rate hikes.

“It’s really affecting the consumer because the consumer’s monthly payment has really gone up,” Bonadelle said.

People moving into the Central Valley, as well as local first-time home buyers, will keep the demand up, but higher interest rates will mean less buyers in 2024, creating a stable market.

The biggest hurdle for home building in the city and county of Fresno is that there is no Memorandum of Understanding for land annexation in unincorporated parts of the city, which are outside the larger cities in the county.

Bonadelle said for the last nine months, land has not been able to be annexed into the city, driving developers and builders to build in Clovis, Madera County, Kings County, Kern County, Merced County and all over the Valley, but the preference is to build in Fresno.

The City of Fresno and Fresno County are at odds over tax sharing. The last agreement expired in 2020 and the city is now asking for a 50-50 split on property taxes. Fresno County leaders seek to maintain their 62/38 split.

To make up the shortfall, the city uses special taxing districts on new housing construction, adding a cost to building ultimately paid by homebuyers and renters.

Developers and planners are also trying to figure out how to comply with SB 743, which establishes the “vehicle miles traveled” (VMT) metric when determining the environmental impact of new development. It accounts for the miles traveled by residents from their homes to work or shop.

Over the last 10 years, high-density developments have become more popular, with the benefits being passed down to the consumer, helping first-time home buyers.

About 15 years ago, homes built on a 6,000-10,000 square-foot lot were the norm, but now it would be considered unusually large compared to today’s more common 2,000 square-foot to 5,000 square foot lot.

Many people appreciate that current lots have smaller yards, leaving them with less grass and garden area to maintain, he said.

There is a constant challenge in finding skilled labor in construction, and every industry. That trend has been for around the last 15 years, he said.

Construction material costs spiked after 2020, but prices have stabilized in the last nine months Bonadelle said. But he hasn’t seen a significant drop.

Surge to stable

A limited supply of used homes and the use of mortgage rate buydowns also boosted demand for new homes, said Brandon De Young, executive vice president of De Young Properties.

The year brought strength to the new home industry, especially during the “homebuying season” in the first half of the year.

“We are optimistic about the market in 2024, foreseeing similarities to the positive trends observed in 2023, if not better. The Federal Reserve has scaled back the pace of rate increases, motivating buyers to enter the market now,” De Young said.

In the actual home design itself, the company is seeing a shift away from stark white and lighter grey colors, with more focus on warm neutrals and rich browns, especially with cabinetry.