Mixed signals are making it quite difficult to predict where the Kern County residential real estate market is headed in the months to come. Recent headlines from The Bakersfield Californian include:
- “Bakersfield home prices dip inexplicably”
- “As rate of home ownership falls, some worry”
- “Bakersfield apartments filling up fast”
Then on the flip-side, there’s “Region leads nation in construction job growth.” Hmmm…
New home sales continue to make up a small part of total sales throughout Kern County and beyond at roughly 6%, according to Hanley Wood. However, it is clear that well located projects with excess finished lot inventory are now appealing to both local and national builders up and down the 99 Corridor (CA SR 99).
The main issue at hand still remains… Although new home sales appear to be picking up, foreclosures and REO’s still make up over 50% of sales, and in many cases, homes are selling for just over $100/Sq. Ft. (Hanley Wood). Many “broken” projects were purchased by investors during the downturn, yet residential lots are still trading at or below replacement cost.
As a consequence, some investors are forced to sell their investments at a loss, or wait until home prices raise so residual lot values eventually increase.
As with every storm, there is a silver lining. Construction jobs in Bakersfield have recently increased dramatically. The Bakersfield Metro area added a higher percentage of new construction jobs over the past year than any other market in the United States according to an Arlington, VA trade group. Federal funding from the Thomas Roads Improvement Program and the American Recovery and Reinvestment Act, along with various Health Care industry expansions and upgrade projects are the main contributors to this growth.
In addition, according to Richard Chapman of the Kern County Economic Development Corp., local growth in the manufacturing, warehouse, and distribution sectors has also spurred along recent construction. Growth and improvement in these areas are so critical as Bakersfield continues its quest to becoming a more dynamic and diverse economy.
Hanley Wood recently ranked Fresno County (#4) and Kern County (#6) in its list of Top Ten California Counties with the highest new home sale projections for 2012. Land Advisors is asking, “Is this a sustainable positive upward move or just another head-fake?”
Source: Jason Hepp, Senior Marketing Consultant, (661) 702-9080