Like the late Rodney Dangerfield, Fresno gets no respect. The name itself has been treated as a joke.
But Fresno is not a small place. It's larger than Sacramento and around 60% the size of San Francisco, and it has also become a major hotspot in California's housing crisis.
From the LA Times:
The sky-high rents in the Bay Area and Los Angeles garner most of the attention in debates about California’s housing affordability woes. But few places in the country have seen such dramatic growth in what it costs to rent an apartment as Fresno, the state’s fifth-largest city.
The monthly rent for an average apartment in Fresno has gone up nearly 60% since 2017 to $1,469. Fresno’s median home value has risen almost as much over the same time and is now $331,000.
This is not a recent development.
Remember Paul Krugman's theory (discussed here) about high income, high tech enclaves? You don't get much further from that than Fresno. The area is poor. The economic driver is agriculture.
It's not picking up spillover from a major metropolitan area. It's the biggest city for more than two hours in any direction.
Nor can you blame a population surge. The city's growth rate over the past decade is the lowest it has ever been since it was incorporated in 1885.
But here's the part that puzzles me most about Fresno and to a lesser degree, about most cities west of the Mississippi suffering through the housing crisis. Take a look at the city from a distance.
Now let's zoom in to the area just west of the city (though we could pretty much pick any direction except northeast).
Why doesn't Fresno sprawl? I'm not saying it should. That's a debate for another time. I'm asking why it doesn't.
Go a mile or two past the city and there's almost nothing but farm land. Yes, it's amazingly fertile and wonderfully suited for agriculture, but still worth a fraction of what the owners should be able to get from developers.
Fresno County covers just under 6,000 square miles. More than half the population lives on less than 2% of that land. Even when you take away the part covered by nation parks and forests, this still leaves a tremendous amount of space and a tremendous potential for profit. Just for fun, take one square mile, less than a tenth of a percent of the county and play around with the value of that many houses in the current market.
And it's not just the current market. Housing prices have been hot and getting hotter for almost a decade. Why have developers been leaving huge and growing piles of money on the table?
The evils of sprawl are frequently invoked in the housing debate. The mystery of the lack of sprawl, particularly in an age of remote work, goes virtually unmentioned, but it really is the dog that did not bark. In places like Austin, Texas, or London, Ontario, or Fresno, California, the conditions are right and the incentives are there, but it just isn't happening, and until you can explain that, you don't have a handle on what's going on.
I'd think Fresno's low growth rate would explain why there's no building boom. Prices could be rising due to a fixed population competing with itself, but any increase in stock would quickly run into a lack of new demand, and the market could crash. You seem to think that there's no reason for Fresno's population to grow. If that's correct, then building significant new housing wouldn't make sense. If Fresno is doing well economically for existing workers/businesses, but not creating new opportunities, there's no need for new housing. Rents go up because the owners think the renters can afford it. When the renters get tired of that, they look to buy, but since they've been being gouged on rent, they're willing to pay more. But if the rental unit owners have any say, they'd be uninterested in zoning new housing...
ReplyDelete(Ah. A fixed population. That sounds real nice. I lived 30 years in Boston and 35 in Tokyo. The growing pains continue unabated ad infinitum.)