Home sales are typically slow everywhere in December but some markets in the Central Valley showed signs of life at the end of 2011. According to Affiliated Appraisers, the median sale price for existing single family homes in the Bakersfield area was $132,000 in December 2011, up 9.6% over December 2010. The supply of active listings of homes for sale dropped 9.3%. Foreclosures continue to significantly weigh on the market as bank-owned property accounted for roughly a third of the homes sold in 2011.
Investors for single family homes, who buy property to rent to tenants, are returning to the Central Valley, and made up roughly a third of home sales in 2011. Some successful investors were able to “flip” property for a profit. Affiliated Appraisers reported that 23 homes were “flipped” in the Bakersfield area since April 23 of 2011.
Home prices have fallen a whopping 56% from the peak in June 2006 (current median home price is $131,500). As long as banks do not flood the market with distressed product, home prices should remain somewhat stable in the coming months.
As a consequence to uncertainty in traditional financial investments like stocks and bonds, Central Valley investors have now turned to existing multi-family buildings. As banks continue to work through their single family detached REO inventory, this seems like a logical place to deploy capital. Occupancy rates are hovering around 90% for even for C and D level properties. The Bakersfield area market had over 160 multi-family residential sales transactions in 2011. However, it still makes little sense to develop new multi-family land at this point, as direct costs and fees are prohibitive.
Source: Jason Hepp, Senior Marketing Consultant, (661) 702-9080 ext. 14