Employment Growth in Fresno HMA Despite High Unemployment Rates
This analysis was completed before the COVID-19 outbreak in the United States and does not account for the economic and housing market impacts of the actions taken to limit the spread of the virus. Currently, the duration and depth of the economic disruption are unclear, as are the extent and effectiveness of government policies to counteract this disruption. HUD will continue to monitor market conditions in the area and will update this report as needed.
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide three-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Fresno Housing Market Area (Fresno HMA) in the central valley of California includes the cities of Fresno and Clovis in Fresno County. The area is known for its agriculture and is the largest producer of almonds and raisins in the nation. The Fresno HMA has an estimated population of 1.01 million. A recent Comprehensive Housing Market Analysis highlighted economic and housing conditions in the Fresno HMA.
High unemployment because of the large number of seasonal farmworkers
From 2012 to 2018, nonfarm payrolls in the Fresno HMA increased by 3.1 percent annually, exceeding the national rate of 1.8 percent during the same period. That trend continued in 2019, when nonfarm payrolls increased by 3.1 percent, or 10,300 jobs. By comparison, the national nonfarm payroll growth rate was 1.4 percent in 2019.
In 2019, the unemployment rate in the Fresno HMA was 7.2 percent. Although this figure is nearly double the national unemployment rate of 3.7 percent in 2019, it was the lowest unemployment rate the area has experienced since 1990. The high unemployment rate is attributable to the HMA’s large number of seasonal farmworkers. The report cites a workforce shift from agriculture to service sectors as another factor affecting the HMA’s unemployment rate.
The Fresno HMA is known for its significant agricultural output. Over the past two decades, agricultural production in the HMA has steadily increased by 6 percent annually from 2000 to 2010 and by 4 percent annually from 2010 to 2018. According to the Fresno Farm Bureau, the Fresno HMA produced $7.9 billion in agricultural goods in 2018. Despite the high production levels, the number of farm payroll jobs has declined steadily since 2000.
The education and health services sector, the largest employment sector in the Fresno HMA, added the most jobs in 2019, increasing by 6.8 percent for an additional 4,800 jobs. The largest employment gains by percentage were found in the transportation and utilities sector, which increased by 9.0 percent for an additional 1,300 jobs. The mining, logging, and construction sector grew by 6.3 percent for an additional 1,900 jobs.
Low homeownership rate attributed to lasting effects from the Great Recession
The homeownership rate in the Fresno HMA is 53.5 percent, which is lower than the national average of 63.9 percent. The current homeownership rate is lower than it was in 2000 (56.5 percent) and 2010 (54.8 percent). The report attributes the area’s low homeownership rate to lasting effects from the Great Recession. Home prices in the area have also outpaced income growth, which makes homeownership unaffordable for many in the HMA.
As of January 2020, the Fresno HMA sales housing market was balanced, with an estimated vacancy rate of 1.5 percent. The low levels of for-sale inventory have contributed to the decline in existing home sales and increase in sales prices. Existing home sales totaled 11,100 in 2019, an 8 percent decrease from the previous year. Meanwhile, average sales prices increased by 2 percent to $286,400 during the same period.
As of January 2020, the Fresno HMA rental market is slightly tight, with an estimated vacancy rate of 3.5 percent. The tight conditions are the result of growth in the number of renter households coupled with decreased rental construction. The apartment market, which makes up 52 percent of rental units in the area, is also slightly tight, with an estimated vacancy rate of 2.4 percent. Between the fourth quarter of 2018 and the fourth quarter of 2019, the average rent in the HMA increased by 7 percent.
For more detailed information on the Fresno HMA, please see the recent Comprehensive Housing Market Analysis on the area.