The gradual improvement that has characterized Bakersfield single-family home sales in recent years is widely expected to carry on this year, or possibly accelerate, even as higher-price markets cool elsewhere in the state.
Observers say the biggest distinction is affordability: Only about one in four state residents can afford to buy a home, according to the California Association of Realtors, while in Bakersfield it's roughly one in two.
Anything can happen, of course, and predictions that local home prices will rise faster this year than last are based on expectations that Kern County's economy will remain strong.
Still, almost no one who has studied the situation is raising concerns that Bakersfield's home market is headed for anything like the crash that cut local housing prices in half between 2006 and 2009. For one thing, lending standards are much tighter now than they were then.
"I think it's going to be just steady as we go," said Scott Tobias, sales manager at Century 21 Jordan-Link & Co. in Bakersfield.
Prediction for 2019
Last year's median closing price for an existing, single-family home in Bakersfield increased 4.7 percent, according to Gary Crabtree, owner of Affiliated Appraisers in Bakersfield. He predicted the rate will increase this year 4 percent, or even 4.5 percent — better, in either case, than CAR's statewide forecast of 3.1 percent. (The median is the point at which half the properties sold for more and half went for less.)
The most bullish investors say positive recent indicators — Crabtree reports demand was up in March, supply was down and houses sold relatively quickly — suggest this year's price increases could be even greater.
Local real estate broker and investor Frank St. Clair said he'll be surprised if the city's median price doesn't rise at least 7 percent this year, "maybe 8 percent if things go the way they are. I don't know."
That's not to say all homes are rising in value at the same rate in Bakersfield. The trend in recent years has been that homes priced less than $300,000 sell significantly faster than homes priced higher than that.
"A lot of it is very price-sensitive," Tobias said.
This disparity speaks to the affordability issue. Personal income levels create a natural ceiling to Bakersfield home values, as Crabtree recently told a meeting of the Bakersfield Association of Realtors. In his analysis, the local economy will continue to keep prices in check.
Kern County family incomes declined 4.3 percent in 2017, he reported, and last year the county's gross domestic product, a bottom-line measure of economic input, increased 2.9 percent.
Other gauges of local economic health were also mixed, he noted: local sales tax revenues were up 3.5 percent last year, while overall employment grew 2.1 percent.
Outsiders see a lot of value in Bakersfield's home market. That could fuel local price increases, but it's also a double-edged sword.
Jordan Levine, deputy chief economist at the California Association of Realtors, said Bakersfield's market has a lot going for it these days, especially affordability.
"It's much more affordable in absolute terms," he said. CAR reports California's median sale price in February was $534,140. It pegged Kern's median that month at $240,000.
The problem with such a stark contrast, he said, is that people in Southern California who can't afford to buy there are increasingly tempted to purchase a home in Bakersfield and attempt a long commute.
"That relative affordability is an asset that's kind of attracting folks from other parts of the state," he said. "But that in and of itself is causing affordability (in Bakersfield) to deteriorate because, A, you've got more demand for the limited amount of housing that's out there. And B, those people coming in tend to have higher incomes than the local population base."
A good month
Some of the local optimism stems from a particularly encouraging summary Crabtree released about Bakersfield sales activity in March.
Current listings, a gauge of market supply, fell 14 percent year over year to 906 homes for sale, he reported. As compared with February, that figure was down only 5 percent.
Demand, measured in terms of closed sales, was up 36 percent month over month at 490 transactions. That represented a decline of 9.1 percent since March of 2018.
The median number of days homes spent on the market before selling came to 25 in March. That was 26.5 percent quicker than March's median, but 4.2 percent greater than a year before.
The proverbial bottom line was that Bakersfield's median home sale price last month was $250,000, which is the highest that figure has gone since October of 2007. However, it's important to note the market remains 17 percent below its 2006 peak.
Tobias acknowledged March was a good month for local home sales, in that homes sold much more quickly than they did in December and January. But he wasn't ready to say the market looks ready to take off.
"The market is really hard to figure out," he said. "It could be … a seasonal adjustment."