So, where is the Bakersfield real estate market headed? That's a difficult question to answer because of the many variables that affect this market. Food and gas prices are increasing. We're headed into an election. Foreclosures are skyrocketing. We've probably seen the last of fed rate cuts.
All other factors aside, the biggest affects on the local market right now is foreclosures and short sales which make up over 50% of the listings and sales right now. Lenders are getting more aggressive with pricing which is forcing everyone to lower prices to compete.
Sale volume has been strong: there were 850 sales in Q1 2008 which is about the same as Q1 2007. Marketing times also remained similar: typically 2-4 months for competitively priced properties.
Prices are a differenct story. The average sale price in Q1 2007 was $319,371 and the median was $280,000, and in Q1 2008 the average was $247,180 with a median of $228,950. The total dollar loss in Q1 2008 versus Q1 2007 is over $70 million. The average per square foot price in Bakersfield has dropped from $196 to $135, over a 31% decline in 1 year.
The supply of homes for sale is down from the peak which was near 4,500 last year. Since October, the supply has declined from 14 months to just over 11 months. As the supply of available homes decreases, the decline in prices should slow, provided sale volume remains at least the same. If the flood of foreclosures and short sales decreases then we should start seeing prices stabilize and supply decrease, but if we continue at the current rate of defaults, values will continue to decline.
Regardless of what happens with foreclosures, one fact remains: prices have declined enough that they are affordable again. That means buyers are entering the market again which will eventually put an end to the housing crisis.
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