The primary gauge of Bakersfield’s home market turned negative last month, new data show, but its decline was not as sharp as some other places across the state experienced.
As last year’s interest rate hikes continue to play out amid relatively high inflation, the sales-price median for an existing home in the city slid to $359,950. That was 2.7 percent lower, month over month — slightly less than the statewide decline in January and more than twice the Central Valley’s overall dip but roughly half the Bay Area’s drop.
Bakersfield’s decline after a flat performance in December came as supply, as measured by January's 560 single-family home listings, was down 10.5 percent month over month and down 130 percent year over year, according to a monthly update by local appraiser Gary Crabtree.
Demand for existing homes in the city was down even more sharply: Sales plummeted almost 26 percent from December to 282 closings, which was about 36 percent fewer than a year before.
“Overall, the Bakersfield market is transitioning to declining with both an increase in supply and a dramatic decline in demand,” Crabtree said in a note accompanying his report. “The increase in interest rates and the decline of net spendable income continue to be the culprit.”
Newly built home sales told a different story, with a big decrease in sales volume (44 percent fewer than in December) nevertheless resulting in a 12.6 percent jump in the sales price median to $490,000. Crabtree attributed the increase to a “good number” of $1 million-plus properties selling in January.
He noted that although the interest rate on a 30-year fixed mortgage declined by 39 basis points in January to hit a little more than 6 percent, the rate remained 202 basis points more than it was in January 2022.
Bakersfield Realtor Laurie McCarty at Coldwell Banker said she has seen sales activity pick up since about a week after Christmas as inventory continues to fall short, “especially in the affordable price range.”
“I’m experiencing multiple offers in many of many properties,” she said. “I’m even selling properties above my list price right now.”
McCarty added that she sees Bakersfield home sales as having returned to a more normal sellers market after an unsustainable stretch during 2021 and 2022, with the city’s overall home appreciation rate still significantly above the historical average.
“I don’t think it is doom and gloom,” she said.
Statewide, according to the California Association of Realtors, the volume of existing homes sold in January ended almost a half of 1 percent greater than in December — and about 46 percent lower year over year.
The state median declined 3 percent month over month to hit $751,330 (off 45.7 percent year over year). CAR reported the Bay Area’s median was down 7 percent from December (-14.6 percent year over year) and the Central Valley’s median was off just 1.2 percent (-6.6 percent compared with January 2022).
CAR’s Bay Area President Jennifer Branchini said in a news release the market is moving in the right direction and more gradual improvements may be coming.
“Thanks to slightly waning interest rates and tempering home prices, California’s housing market kicked off the new year with another step up and continued to improve in January as buyers gained more confidence in purchasing a home and the affordability outlook improving slightly,” Branchini stated.
The state association’s chief economist, Vice President Jordan Levine, blamed job layoffs, especially in the tech industry, for January’s decline in sales volume and prices. He remained bearish.
“With home prices expected to remain soft and the mix of sales continuing to shift toward less expensive housing units throughout the rest of 2023,” Levine stated in CAR’s release, “the market will see more downward price adjustments in the next few months.”