Bakersfield’s home market has finally reached and surpassed the price spike it had before the 2006/07 property bankruptcy.
Last month, the median sales price of an existing single-family home in town hit a new record of $ 303,000, surpassing the $ 299,995 mark in June 2006 by 1 percent. This is due to the limited supply and booming demand for properties in the lower price range.
Most other cities regained their pre-bust peaks years ago. Bakersfield’s hot and cold comeback from the depths of April 2009, when the median selling price dropped to $ 115,000, reflects circumstances unique to the city’s market, as well as the profile in the eyes of investors.
What Bakersfield eventually exaggerated, said local appraiser Gary Crabtree, was the persistently low inventory of homes for sale and competition between locals and people from other markets who can suddenly work from home.
Affordability remains a major attraction: Bakersfield’s average retail price is 58 percent below the national average and 52 percent below Los Angeles.
Crabtree reported the recent sale of a 20 year old, 964 square meter, two bedroom, one bathroom house in southwest Bakersfield. He said 33 bids were submitted, with the best exceeding its estimated value by $ 5,000.
Unfortunately, the price on offer couldn’t be accepted and the home sold for $ 214,000, or 10 percent more than it was advertised, Crabtree said.
“The market up to (homes priced up to $ 300,000) is a lunatic asylum with lots of offerings,” he said.
Low inventory levels have led to higher prices recently. Of the approximately 130,000 homes in the Bakersfield area, fewer than 400 are for sale.
According to a housing report that Crabtree publishes monthly, the 385 was down nearly 47 percent year over year in January, Crabtree reported. Compared to this relatively limited supply, demand rose year-on-year by more than 57 percent to 546 completed sales in January.
The median sales price for that month was just over 20 percent of the median for January 2020, defined as the time when half the houses were sold for more and half for less.
This isn’t the first time prices have risen since the local home market collapsed in 2006. Bakersfield broker Jeanne Radsick noted that Bakersfield was experiencing a “tremendous rebound” that began around 2011 and lasted for about two years.
This mini-boom, which was largely triggered by investor money, led to a price increase of 24 percent or more over the previous year.
“Those numbers were unsustainable, just as the pre-bubble escalation was unsustainable,” Radsick said via email.
There was another price spike in the late 1980s and 1990s when people from Southern California began to see Bakersfield as an alternative to the even hotter home markets of Santa Clarita and the San Fernando Valley.
After the collapse in 2008, Radsick added, the prices of some homes that had been bought just two years earlier fell 50 percent. Short sales and bank-owned properties have consumed the market, she wrote, and government direct sales of property have resulted in many homes being let.
High-end properties recovered quickly, but not those of poorer people whose wages did not recover as quickly. But now the lower end of the market is hot, she said.
Crabtree attributed some of Bakersfield’s slow recoveries to his experience of fraud during the pre-2006 boom. Scammers not only used so-called “straw buyers” to raise hundreds of thousands of dollars in equity through proprietary transactions and inflated appraisals, but locals also falsified mortgage applications.
“I think we had most of the low-income families who saw their ‘American dream’ quickly fade away in panic, and looked for lenders to forge applications for them and then promised them they would help them refinance would help if rates fell, “wrote Crabtree.