2008: Housing market review and a look ahead
| Friday, Mar 06 2009 05:57 PM
Last Updated Friday, Mar 27 2009 12:59 PM
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| Sales zone | 2008 average | 2007 average | Percent change | 2008 sales volume |
| 10 | $138,433 | $228,973 | -40% | 212 |
| 21 | $90,134 | $157,558 | -43% | 150 |
| 22 | $154,209 | $218,956 | -30% | 227 |
| 23 | $231,390 | $176,250 | 31% | 5 |
| 31 | $123,421 | $215,230 | -43% | 203 |
| 32 | $154,310 | $250,851 | -38% | 405 |
| 33 | $186,131 | $270,622 | -31% | 135 |
| 34 | $316,738 | $451,349 | -30% | 60 |
| 41 | $95,393 | $184,582 | -48% | 102 |
| 42 | $124,519 | $240,476 | -48% | 150 |
| 43 | $112,434 | $357,667 | -69% | 20 |
| 51 | $120,488 | $205,071 | -41% | 730 |
| 52 | $190,301 | $257,180 | -26% | 1,356 |
| 53 | $295,828 | $398,019 | -26% | 727 |
| 54 | $285,036 | $316,500 | -10% | 11 |
| 61 | $248,799 | $337,466 | -26% | 164 |
| 62 | $267,230 | $352,203 | -24% | 1,066 |
| 63 | $338,448 | $513,130 | -34% | 339 |
| 64 | $374,663 | $413,445 | -9% | 16 |
| 92 | $349,017 | $333,500 | 5% | 9 |
| 93 | $168,902 | $196,643 | -14% | 18 |
| 94 | $182,392 | $314,825 | -42% | 13 |
| Shafter /Wasco |
$164,755 | $248,496 | -34% | 156 |
| Taft/ Ford City/ Maricopa |
$125,967 | $190,333 | -34% | 111 |
| Delano/ McFarland |
$149,725 | $237,549 | -37% | 156 |
* Not on map: figures represent a portion of total sales volume
Source: Bakersfield Association of Realtors
* Numbers rounded.
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Now that 2008’s dust has settled, it’s time for a closer look at how the local housing market fared and some thoughts about where it might go this year.
You already know the basics: prices dropped and sales volume shot up.
For the year, the median price stood at $181,000, the Bakersfield Association of Realtors reported.
That’s a 30 percent drop from 2007’s median of $260,000. It’s also a continued retreat from the market peak of almost $300,000 in summer 2006, a number likely to serve as the high-water mark for some time.
The association’s figures include new and resale homes, condos and mobile homes in the greater metro area. Median prices mark the point where half of homes sold for more and half for less.
For a detailed breakdown by area, see the accompanying chart below and match it to the map.
Linda Vernon, the association’s chief executive, said many real estate agents are “busier than ever” these days. Almost 6,800 homes were sold last year, an increase of 67 percent over 2007’s 4,050 units. Foreclosed and other distressed properties accounted for many sales.
Whether prices will continue to decline is anyone’s guess.
“We don’t know if we’ve seen a landing or not,” Vernon said. “Time will tell.”
Local appraiser Gary Crabtree, who compiles monthly market reports for Bakersfield, said preliminary results show the median price increased in February by about $5,000 to $130,000 after a record monthly drop in January.
Still, it’s too soon to say the market has bottomed or turned around, he said, adding there have been similar February spikes in recent years that fizzled.
Crabtree’s annual figures, which include only sales of existing single-family detached homes, pegged the 2008 median at $186,750, down 30 percent from 2007 and down 35 percent from the 2006 median of $289,000.
On the plus side, supply has dwindled as purchases have finally outpaced foreclosures. Investors — who are making up a bigger chunk of the market by turning foreclosures into rentals — are seeing immediate returns from rentals. State and federal tax incentives could spur sales of new homes.
On the down side, a second wave of foreclosures is hitting the market and more people are losing jobs.
Abbas Grammy, a Cal State Bakersfield economics professor who compiles local forecasts, said he thinks a further price decline of about 20 percent could be in store.
In 2001 and 2002, before the boom took off, the local housing market had an affordability rate of about 30-35 percent, he said. That meant about a third of Kern residents could afford a median-priced home. When that rate returns, the market will stabilize, he said.
Nationally, the drop in home prices erased $10 trillion in equity, Grammy said, or about as much as the country’s entire gross domestic product. He did not have an equivalent local figure.
For residents, the bubble’s burst is a mixed bag.
Buyers see lower prices and interest rates as a plus.
Folks who bought during the boom have watched home values erode like sandcastles at high tide.
Almost 43 percent of Kern mortgages were underwater at the end of 2008, according to a year-end report from First American CoreLogic, a market research firm based in Santa Ana, meaning borrowers owed more than their home was worth. Nationally, the figure was about 20 percent.
One homeowner, Bruce Peters, 52, says his concerns are probably much like those of many locals.
Peters, chief operating officer at Bakersfield Memorial Hospital, moved into his new-construction home in the northeast
Olympia tract in fall 2007. He made a hefty down payment so isn’t underwater.
But the builder, KB Home, abandoned the partially built tract last summer. Centex Homes ditched the tract next door.
And the owner of Olympia’s remaining lots recently sold them at a loss to another developer.
That leaves Peters and his neighbors living in an unexpectedly remote subdivision bothered by dust, tumbleweeds and vandalism.
“It’s a double-edged sword,” he said.
He likes the quiet and privacy but not the slow police response or the development’s uncertain future.
Peters doesn’t plan to move, but knows if he had to sell he’d lose money.
“I’m hoping to weather the storm,” he said, “until the price comes back to where it was.”
