Bakersfield’s red-hot home market hit a new high in March, topping its previous record from January and setting a blazing annualized appreciation rate of almost 12 percent per year, roughly double that of recent years past.
The city’s median existing-home sales price as reported Thursday by local appraiser Gary Crabtree was up 5.4 percent from February at $310,800 — still far below the state median of $758,990, which the California Association of Realtors said was up 8.6 percent month over month.
Crabtree noted the inventory of previously owned homes listed for sale in Bakersfield has fallen 60 percent during the last year to hit 297. He pointed out that the median marketing times for such properties has dropped to just eight days, which was less than half the time he reported for March 2020.
He called the faster marketing times a sign of a "severe shortage of supply" in Bakersfield's home market.
At the same time, the number of sales of existing homes in Bakersfield — a primary indicator of demand — has skyrocketed. March's sales total of 616 was up close to 30 percent in a single month.
Local home-sales professionals say low interest rates, combined with relatively high affordability as compared with other areas around the state, are the primary forces driving up Bakersfield's home prices. They say another contributing factor is the trend of people moving out of California.
Recent price increases appear to be outpacing growth in local incomes. Writing in a commentary that accompanied Thursday's report, Crabtree noted Bakersfield's affordability index slipped in March to 45 percent from 49 percent in February. He expressed concern the city's home market may be overheating.
"In summary," he concluded, "it is my opinion that the Bakersfield market is moving toward an 'over-valued' market as evidenced by the rapidly increasing prices, the decreasing housing affordability index caused by the increasing prices and the declining median family incomes."
Bakersfield Realtor Jeanne Radsick downplayed any suggestion the local home market is comparable to the bubble that led prices higher prior to the bust of 2007.
Lending standards are higher now than they were then, she said by email, and buyers generally must step in with some of their own money, which wasn't always the case prior to the bust.
"That does not mean we will not ultimately see a correction or a slowdown as that is likely, but the economy overall appears to be pretty healthy and improving," she wrote. "If (interest) rates stay low it will continue to provide impetus for the buyers to make a purchase."
The state association asserted that fierce competition is what's causing California's home prices to escalate as they have.
It noted home sales volume statewide in March was up nearly 20 percent from a year before.
“While intense homebuying interest is the engine that continues to drive housing demand, a shortage of homes for sale is the rocket fuel pushing prices higher across the state," CAR President Dave Walsh said in a news release Friday.
"A lack of homes for sale is creating unprecedented market competition, leading to a record share of homes selling above asking price in March,” he wrote.
The association pointed out the state's sales price median in March, up nearly 24 percent from a year before, was a new record for California. It said last month's year-over-year increase was the highest since October 2013, and that March's increase was also the eighth consecutive month of double-digit gains.
“The market sentiment is drastically different today compared (with) a year ago at the onset of the pandemic,” CAR Vice President and Chief Economist Jordan Levine said in the release.
“With the U.S. economy positioned to grow at the fastest pace since the early 1980s and mortgage rates trending down again in the past week, consumer confidence will improve further," he continued. "So in the coming months, we should continue to see a solid bounce-back from last year as the market maintains its momentum.”