A slight increase in the supply of existing single-family homes for sale in the Bakersfield area last month wasn't enough to meet demand from home buyers.
As a result, the median home price rose 3.7 percent, or $7,000, in June to $195,000. That's a 35 percent increase over June of 2012, according to the Preliminary Crabtree Report, a monthly gauge of the local housing market produced by Gary Crabtree of Affiliated Appraisers.
There were a total of 1,070 homes on the market in and around Bakersfield last month -- not counting new construction -- but that figure is misleading because it includes homes with pending offers.
Excluding those homes, there were just 633 houses available for purchase in June, even though that's up 22.9 percent from May and up 16.1 percent from a year earlier.
The tight supply is fueling bidding wars.
"I'm still having multiple offers on most properties," said Sheri Anthes, a broker and sales manager at Coldwell Banker Preferred. "The single offer is still pretty rare."
The median number of days on the market was nearly unchanged for the month at 13, but fewer than half the days it took a house to sell this time last year.
And the inventory of lender-owned homes and short sales is "almost negligible," Crabtree said in an interview Friday.
A short sale is an agreement between a homeowner and a lender to sell a home for less than the balance of the mortgage.
"I'm not indicating there's another bubble coming. I think there probably are enough safeguards to prevent that from happening again, but there are some interesting trends," Crabtree said. "It's ironic that prices are paralleling where they were in 2004."
Rising interest rates and new Federal Housing Authority rules mandating mutual mortgage insurance for the entire duration of a loan are contributing to higher prices, Crabtree said, and salaries have not kept pace with those increases.
Just as they did in the pre-bubble home price run up, lenders are starting to relax their loan-to-value ratios and accept lower down payments, Crabtree added.
A loan-to-value ratio is the ratio of the first mortgage loan as a percentage of the total appraised value of a property.
Investors taking advantage of deeply discounted prices during and after the recession had been a big driver of local demand, but their role in pushing up prices is diminishing.
It's been five years since 2008, when the foreclosure crisis began in earnest, and some of the people who lost their homes back then are able to buy again under certain federal programs even though traditionally you have to wait seven years to get a home loan after a foreclosure, Crabtree said.
As those people re-enter the housing market, demand for rental properties will fall along with average rent, which is making Bakersfield less appealing to investors. At some point, all those investor-owned income properties will cease to be profitable and be sold, Crabtree said.
Already, investors seem to be backing off. It depends on the price, said Jacob Marquez, a listing specialist with Mirimar International.
"There are at least three to four offers on properties, so demand is still overshadowing supply, but the investors are more interested in the lower-priced homes and there aren't as many of those left," he said.
Cash offers from buyers hoping to rent a home out or flip it remain, but "most of my clients are families who want to live in the homes," said Lorie Weinroth of Tholco Real Estate Group. "Real people are buying houses again."