Skip to main content
You have permission to edit this article.
Edit

Local apartment market cools amid historically tight conditions

20210216-bc-duplexes

On the waiting list for more than 10 months, Shairay McDaniel moves her clothing into her new apartment in this file photo from February 2021. The 88-unit duplex development on East Panama Lane is just the sort of project market observers say is necessary to address a local and state housing shortage, and exactly the kind of investment builders have hesitated to undertake because of high costs.

A new report says Bakersfield’s apartment market loosened somewhat in the last three months of 2021 as the citywide occupancy rate increased for a second consecutive quarter and rent prices rose at their slowest pace since early in the year.

The results tabulated by Bakersfield broker Marc Thurston may suggest the local rental market is cooling some, possibly attributable to inflation, even as the multifamily residential segment remains at historically tight levels.

Thurston, senior vice president at ASU Commercial, this week released a market summary he described as mixed: Some parts of the city saw more vacancies, while some saw fewer available units during the last three months of the year. He noted four buildings in his quarterly survey actually posted lower asking rents during the fourth quarter.

Whether the slowdown is the start of a lasting trend remains to be seen. Thurston noted fourth-quarter results have tended to be the weakest of the year since 2018. Plus, there's talk of a bigger influence whose staying power has been a source of speculation nationwide.

"Based on my conversation with several (apartment building) owners, it appears that inflation might be slowing the leasing activity from the highs the market experienced mid-year," he said by email late Monday.

Bakersfield apartment vacancies sank to less than 1 percent during the second quarter. That unheard-of low coincided with record-setting results in the city's single-family home market, which during about the same period finally surpassed the local median sales price peak from before the 2006-07 housing bust.

Observers have interpreted the extraordinary performance of the local rental and for-sale housing markets as resulting from an inadequate supply of units, together with strong demand from people from other parts of the state who are newly empowered to work from home and attracted to Kern County's relatively high affordability.

It's worth noting that while the supply of homes listed for sale in Bakersfield dropped by nearly a quarter in November alone, demand for homes as reflected in transactions closed slipped by less than 2 percent, according to a summary released by local appraiser Gary Crabtree.

In a sign of continuing strength in the for-sale market, Crabtree reported the city's median sales price for an existing home slid less than 1 percent in November to hit $338,950, which was about 17 percent higher than the median reported one year prior.

Crabtree, as he has before, attributed strength in the local home market to Bakersfield's low prices as compared with elsewhere in California.

"The Bakersfield median price is 57 percent below the state's median price and the latest data indicates the Bakersfield market has the third (strongest) affordability in the state," Crabtree wrote in a published note earlier this month.

In the city's apartment market, Thurston reported, vacancies rose to 1.76 percent, up from 1.28 percent in the third quarter. The most recent rate was virtually the same as it was a year prior.

Areas where vacancies generally increased include the eastern portion of southwest Bakersfield, the northwest and the central part of the city.

In northern and northeastern Bakersfield, vacancies mostly decreased, meaning finding an apartment there got harder. Other areas were either mixed or mostly unchanged.

Across all areas and product types, Bakersfield apartment rentals increased in price by just less than 15 percent during 2021, which Thurston noted happened at different speeds during the year, with the fourth quarter experiencing the slowest rate of growth since the first quarter.

There was a substantial difference in how different kinds of apartments fared in 2021, according to Thurston's report. Studio rents were up an average of 10.33 percent, which was the slowest rate of increase reported locally in 2021. One-bedroom apartments shot up the fastest at 18 percent.