Whether it be housing or commercial real estate, economic slowdowns stifled growth in Fresno County in 2024. But after years of declines, experts expect a turnaround soon.

The Fresno County Economic Development Corporation brought out a panel of experts to discuss housing construction and sales, major commercial real estate purchases, and upcoming development for its 20th annual Real Estate Forecast last week.

The event included a question-and-answer segment between Fresno Mayor Jerry Dyer and PG&E CEO Patti Poppe discussing rate increases and hookup delays.

Real estate experts said uncertainty would prevent recovery in 2025, but some highlights could mean positivity for 2026 and 2027.

The number of real estate sales last year paints a picture of the slowdown, said John Kourafas, commercial investment adviser with the Visintainer Group.

Sales volume dropped 31%  in 2024, marking the third consecutive year of declines and the lowest since 2011, Kourafas said. Property values have lost 10% to 20% since 2022.

First quarter data showed a slight uptick but that came before the tumult caused by President Donald Trump’s tariff announcements. That uncertainty will likely prevent any recovery at least for the next six months, Kourafas said.

But after consecutive years of decline, the market appears near the bottom and primed for recovery.

“There’s a lot of optimism that ’26 and ’27 will be bounce-back years,” Kourafas said.

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Cost of Money, Market Uncertainty to Delay Recovery: Kourafas

Most real estate activity came from essential sectors, Kourafas said. Investors looked to multi-family properties, medical offices, and quick-service restaurants.

Fresno County’s biggest real estate sale — not including apartments — came from Starpoint Towers, which sold for $10.6 million.

That was the only deal that sold above $10 million last year, whereas Fresno County would normally have five or six above that amount, Kourafas said.

In addition to the drop in big transactions, the number of sales in Fresno County dropped 13%.

To him, that means a disconnect between what buyers want for a property and what sellers will pay.

“Values haven’t come down enough to get buyers to justify the cost to purchase,” Kourafas said.

Lending Will Increase This Year and Next: Renney

Experts expect commercial real estate lending to increase in 2025 and 2026, but with challenges, said Matt Renney, principal with California Realty Capital, Inc.

Roughly $950 billion of U.S. commercial real estate mortgages matured in 2024, said Renney.

Many lenders are kicking the can down the road, however, extending loans and pretending everything is fine, he said. About $30 billion in loans were extended to 2025 and beyond.

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The dollar amount of loans maturing will continue to rise through 2027, peaking at nearly $1.3 trillion before dropping slightly in 2028.

The cost of money is 2 percentage points higher than the ones that matured last year, Renney said.

Stubbornly high interest rates means builders and investors need to put up more equity or capital if they need loans to start construction, purchase a building, or refinance.

Rising property expenses and slower rent growth will make increase capitalization rates — what lenders look at to evaluate risk.

More and more, private credit is filling funding gaps in projects and sectors that traditional lenders, Renney said. But those lenders often want rates much higher, sometimes to the tune of 12%, adding 1% to 3% in fees.

“If interest rates can come down, real estate transactions can be more feasible,” Renney said.

Normalizing Rents, Vacancies Slowing Down Apartment Construction: Kane

The effects of a slowing economy can be seen in apartment construction, said Robin Kane, managing director for Northmarq.

From 2020 to 2023, builders added almost 3,300 units, driven in part by double-digit rent growth at that time. Rental growth has declined to 2% to 3% a year and vacancies around 4% to 5% — much more normal levels, said Kane.

But with those levels came a sharp decline in construction. Only 600 units came online in 2024.

“Now, all of a sudden what’s made sense makes no sense,” Kane said.

A Look at the Home Market

Home sales in 2025 started strong, but the buyer pool remains small, said Carmen Jimenez Phillips, president of the Fresno Association of Realtors. Available inventory increased in February, dropping slightly in March.

Despite sales declines, prices continue to rise. Median home price jumped from $427,000 in January to $442,000 in February.

In the world of new home construction, high interest rates coupled have kept many buyers on the sidelines, said Ryan De Young, president of De Young Properties.

But those same constraints affect the resale market. Limited inventory of existing homes will help drive new home sales growth to modest levels of around 3% to 5% in 2025.

Builders will have to use financing concessions to get potential deals to make financial sense for buyers. This comes as the California regulatory market already keeps margins low.

Whereas regulatory fees only make up .5% to 3% of the cost of the home, studies show California regulatory fees add 9% to new home costs, De Young said.

Some builders have begun dedicating entire neighborhoods to rentals. Investment companies will make deals with builders for rental properties. De Young said he began negotiations for a contract in Fresno. Build-to-rent neighborhoods still haven’t made significant headway in Fresno, but they’re becoming more popular.

But with limited land for development, it puts build-to-rent in direct competition with properties for home ownership.

Government Deficits Create Uncertainty in Affordable Housing: Williams

Fresno Housing has done a lot of construction in single-family workforce housing, said Tyrone Roderick Williams, CEO of Fresno Housing.

Heritage Estates will bring on 33 mixed-income homes, expected to come online in southwest Fresno in August. They also have five homes in Sanger available. The homes comes after Fresno Housing opened Avalon Commons in north Fresno, a 60-unit affordable housing apartment complex. They will soon demolish the former CVS in downtown Fresno to make way for the Fulton Forum — creating 300 to 400 mixed-income housing units.

Funding for affordable housing projects relies on federal, state, and local grants. 80% of Fresno Housing’s funding is federal. Rollbacks on federal sources cast uncertainty in many of those funds. State and local deficits have also put into question those funding sources.

Roderick Williams estimates it will require 15 years of construction at the current pace to meet the need for affordable housing.

“This is going to be a challenging year from a financial standpoint,” Roderick Williams said.

PG&E Bankruptcy Created Backlogs, Rate Increase Needed: Poppy

PG&E CEO Patti Poppe came to Fresno to discuss energy with Dyer. Taking an apologetic tone for issues around the utility giant, Poppe said many issues from the public stemmed from the company’s bankruptcy in 2019.

Dyer said he frequently received phone calls from business owners about long delays to hook businesses up to electricity and gas.

Poppe said inability to access capital created long wait times for service. She said coming out of bankruptcy, they’ve been addressing that backlog by doing 14,000 hookups.

“Post bankruptcy, we had sub-investment-grade ratings,” Poppe said. “We could not access the capital markets, and we ran out of cash and had to delay and created a backlog that we’ve been digging out of.”

Poppe was not available for follow-up questions from GV Wire.

Dyer asked about the utility’s $2.48 billion in profit in 2024 — a 9% increase from 2023 — despite a 56% increase in residential energy rates. The utility also requested a rate increase to pay investors.

Poppe said rates went down in 2025 and should go down in 2026. She also record profits followed the company’s bankruptcy, and it needs to look good to investors. She said the company pays the lowest dividends to investors.

“Let me tell you why it’s in your interest that PG&E is profitable,” Poppe said. “When we make that capital investment, we have to go to the capital markets, we have to attract capital to come to California. And if I am successful leading this company financially, then we can attract lower cost capital. We are still sub-investment grade as a company because of the bankruptcy. That means it costs more for us to borrow.”

Property Owners Face Potential Vacancy Tax, Commercial Rent Control

Talking commercial real estate with state legislators can be challenging, said Matthew Hargrove, president and CEO of the California Business Properties Association.

Most only want to talk housing, he said. Every year, the state creates between 400 and 500 bills that affect commercial property owners.

Senate Bill 758 would put a $5-per-square-foot tax on properties vacant longer than 180 days.

Assembly Bill 380 would limit price increases and commercial rent control during emergencies. It also affects multifamily properties.

Hargrove pointed out that California is currently under the type of emergency that would trigger the rent control rules.