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Kern's housing development pace falls far behind job growth

A recent uptick in homebuilding helps but Kern continues to suffer from a housing stock failing to keep up with demand.

A new study ranks the county's housing growth middle-of-the-pack nationwide, with total homes and apartment units up almost 7 percent compared with 24 percent more jobs during about the past decade.

The imbalance has led recently to a frantic shortage evident in speedy home sales, record-low apartment vacancies and skyrocketing prices on both.

People in the business point to myriad causes, from rising construction costs and a shortage of lots ready to build on to so-called artificial barriers such as zoning restrictions and regulatory requirements.

One thing Kern has going for it is its relatively welcoming attitude toward new construction, said Stephen Pelz, executive director of the Housing Authority of the County of Kern.

STUDY RESULTS

"We're a pro-development community, clearly, which is not the case for a lot of California," he said.

The problem is hardly unique across the state or the nation. Online rental marketplace Apartmentlist.com's new study found U.S. housing stock expanded by 7 percent between 2010 and 2020. Federal data show the country's seasonally adjusted employment total grew 14 percent during the same period.

The study concluded few of the country's 100 biggest metropolitan areas kept up with job creation during the longest economic expansion on record. Data show the mountain West and the Sun Belt experienced the greatest housing expansion while coastal markets fell the furthest behind, and suburban counties tended to see the highest home construction rates.

Based on U.S. Census Bureau data, Apartment List said Kern ranked 48th-slowest, or 52nd fastest, among the nation's top-100 metros by housing growth.

It found Kern's population increased 6.6 percent to reach 303,109 between 2010 and 2020. The county's job total climbed 24 percent to settle at 331,711 in 2019, the most recent year for which localized figures are available.

MARKET CONDITIONS

The imbalance plays out daily in the local single-family home market, where properties that might have taken three weeks to a month to sell in recent years now get snapped up in less than a week on average after receiving multiple offers, including all-cash bids by investors.

The California Association of Realtors says a shortage of homes for sale is boosting prices statewide. It reported Kern's median home-sale price rose a little more than half a percent last month to reach $317,000, a jump of more than 17 percent year over year.

Apartment rents, and the prices investors pay for local rental properties, have also jumped during the last few years as vacancies in Bakersfield have dropped to the previously unheard-of 1 percent.

Although the local home and apartment markets were tight before the pandemic, they have constricted further since March of 2020 as people from bigger cities flocked to the area's relatively high affordability within California.

Local housing tracker Gary Crabtree, a Bakersfield-based home appraiser, sees two main factors limiting new supply: a lack of completed lots ready to build on and rising costs, both market-related and regulatory.

During the housing bust about 15 years ago, he said, home developers halted work on large properties they had planned to outfit with utilities and other infrastructure. Since then, lots that were ready to go have been mostly built out.

Materials and labor costs, meanwhile, have continued to rise, putting added pressure on home prices.

"It's breaking the builders' back," Crabtree said. "At one point they're going to reach a point of diminishing returns where the homebuyers aren't going to be able to afford them."

DEVELOPER VIEW

Local community builder Jeremy Willer said he has close to 150 homes under construction around Bakersfield but that, in the big picture, it's not enough.

"They're selling very well," he said. "As we release homes, pretty much everything is sold in a week or so."

It's been hard lately, because of manufacturing and other disruptions during the pandemic to get things like dishwashers and countertops, and that prices on wiring have more than tripled.

Labor, too, has been harder to find because, he said, young people are less attracted to the building trades, including electrician and plumber. Eventually things will even out, especially if prices stay high enough to support continued building, but it's going to take a while, he said.

"I don't know that you can correct the inventory levels given the timeframe it takes to do the development work and build homes," he said.

None of this is unique to the local market, said Pelz at the county housing authority. He noted it's been well-documented that California and much of the nation has failed since the housing bust to keep up with the need for more homes.

"When the real estate collapse happened in the late 2000s and 2007-08, the market never fully recovered, and you had people that left the industry, firms closed, workers that were working construction moved on to different types of vocations," he said. "That's true for Kern County as well."

HEADWINDS

There seems to be enough interest within the sector to expand the area's housing stock, he said, "but there's also headwinds that we're all facing."

Certainly materials costs have gone up but so have regulatory costs, he said. However well-intentioned, state requirements that new units have fire control systems, energy efficiency and solar panels have hit everyone's bottom line, he said, such that moderately priced homes and apartments don't necessarily pencil out and instead developers build higher-end inventory.

Then there are the artificial barriers of zoning inflexibility and impact fees. Developers would have an easier time meeting demand if they were more easily able to convert vacant commercial properties into new homes, Pelz said.

He added that local incentives for urban in-fill development of rental and for-sale homes would probably go a long way to quickening the pace of new construction.

"We've got to reform our laws to allow the market to be more nimble," Pelz said. While neighbors will probably continue to oppose some projects, he said, "I think we're at a point where people are more open to change, because they see that what's happening is not working."

He said the good news is that there's been recent progress on development of government-subsidized housing for the poor. There are 384 such units under construction or approved for financing, which is up from 118 last year and zero in 2016.

"That's the silver lining," he said.