Unlike California’s competitive coastal markets, Bakersfield real estate is steadier and usually less prone to wild fluctuation. Here, prices are 5% higher than a year earlier as of May 2016, while the state average annual increase is 6%-11%.
Early in the spring selling season, Bakersfield home sales volume was up 4% from a year previous in March 2016, according to appraiser Gary Crabtree, reported by Bakersfield.com.
716 homes closed escrow in Bakersfield during April 2016. At $212,250, the median sale’s price was 1.2% lower than last year, according to CoreLogic.
Zillow reports the number of homes for sale in Bakersfield is lower this spring than last year, with for-sale turnover at 6.3% in April 2016, down from 6.5% a year earlier. Turnover was highest in 2006 when it was over 12%. It has remained below 7% since 2014.
Further, the year-over-year sales volume pace slowed in May 2016, with roughly the same number of homes closing escrow as a year earlier. Even as sales volume momentum slowed, the annual increase in median home prices rose, 5% higher than a year earlier according to Crabtree.
While Bakersfield’s housing market moves more smoothly than nearby areas, i.e., the more consistently volatile coastal cities, the direction of home sales in the coming months will likely be the same.
In California, the trend in year-over-year sales volume has been declining since mid-2015, when sales volume was 18% higher than the same time a year earlier. After trending down for a year, in April 2016 the year-over-year change finally reversed direction, showing a 2% year-over-year decrease.
Bakersfield home sales volume also appears to be losing momentum. This is evidenced by the decline in turnover and sales volume. But, like the rest of the state, prices continue to rise (though the rise is more slight here in Bakersfield than the majority of the state).
When sales volume continues to decline for a consistent period of time, prices will eventually follow. Historically, it typically takes 9-12 months for prices to sympathetically fall in response to declining sales volume. Therefore, expect prices to dip in early 2017.
Further, mortgage rates are expected to rise later this year, or possibly in 2017 depending on national and global economic performance. This will decrease the mortgage amount homebuyers are able to borrow with the same income, called buyer purchasing power, causing prices to suffer.
The good news is Bakersfield’s job market is in good shape, so the housing market’s decline will likely be fairly shallow and brief. Homebuyers will need a few months to a year to adjust to higher mortgage rates before they will be able to once more support increases in sales volume and prices.