Southeast Bakersfield

Home prices still going up in Bakersfield, but how much longer?

Home prices still going up in Bakersfield, but how much longer?
BAKERSFIELD, Calif. (KBAK/KBFX) — The local real estate market is making a comeback, but local experts don't think it's headed for another so-called bubble. Long-time appraiser Gary Crabtree says home prices in Bakersfield have gone up 36 percent in the last 12 months, but he predicts a "more normal" market is ahead.

"Housing prices are rapidly escalating right now," Crabtree told Eyewitness News on Tuesday. "As of today, for the month of May, our median price is $188,000." He compares that to data showing the local median home price at $175,000 in May of 2004 at the high point in the bubble, to the near the low point in May 2009 of $125,000.

And while prices are back up, Crabtree does not think we're headed for problems, like the time from 2004 through '06. "Loan under-writing is much, much more stringent today than it was in 2004," he stresses.

The current upsurge in local prices is being led by people who were foreclosed on during the rough times, and now qualify again to buy, Crabtree says. Plus a lot of investors who snapped up lower-priced homes with the goal of renting them out.

"The city has kind of turned form one of home-ownership, to one of home "rentership," he says. But, that could take a twist if more people want to buy homes, and don't want to rent.

"If that vacancy factor goes up and it becomes more competitive in the rental market, rental prices are not keeping pace with price increases," Crabtree says. "And therefore, there's going to be a point of diminishing returns where the investor is going to have to make a business decision whether to keep that rental property or to place it on the market for sale."

But, he doubts that would lead to another steep dip. "At this point in time what everyone is forecasting is that we're going to see this rapid increase, but it's going to start to wane, and we'll probably settle into more of a normal market," he says.

Crabtree says the local market isn't quite normal right now. "We have little, if any job creation, the unemployment still remains high, so consequently we don't have the underlying economy to support a continuing price increase," he said.

But for now, houses are selling at ever-better prices, and they're selling fast. Crabtree says his latest numbers show only 510 houses on the market, and they're being snapped up in an average of 14 days. He calls it definitely a "seller's market."

And this year, the prices are heading up. "We've seen a $50,000 increase in median prices in the last 12 months," Crabtree says. He also likes to track what he calls the "12 month running average," and that's showing an increase of 20 percent. "Twenty percent is significant," he says.