Oct. 2—Apartment vacancies in Bakersfield rose this summer to their highest level in more than two years, even as rent prices increased along with them, according to a new quarterly update citing mixed messages in the city's multifamily housing market.
This week's report by ASU Commercial noted rents jumped an average of 3.15 percent in the third quarter, bringing the year-to-date increase to 9.28 percent. The consensus view was that owners of buildings that had fallen behind the market were taking the opportunity to "catch up" now that the state has allowed rates to increase 10 percent starting Aug. 1, author Marc Thurston wrote.
Vacancies went from 1.38 percent in the second quarter to 1.78 percent in the third, still historically low but higher than they had been since the first quarter of 2020.
Seventy apartment buildings across the city saw rents rise and 15 experienced reductions, primarily in complexes in northwest and southwest Bakersfield that had been among the highest-priced multifamily properties in the city, Thurston reported. He suggested people paying some of the steepest rates in the city may have experienced a "change in attitude."
"The combination of inflation and incomes in Bakersfield has probably reached a tipping point where the residents felt they could no longer sustain those rent levels," Thurston stated in an email accompanying the report released Thursday.
One-bedroom apartments posted the slowest rate of rent increases at 3.99 percent, the report stated, while the next-size down — lofts and studios — rose the steepest at 15.41 percent.
Thurston pointed out that the number of apartment units in the development pipeline during the third quarter, 3,965, was at its highest since 1994. He predicted they would all be absorbed into the market with vacancies experiencing only a moderate spike lasting no more than three years.
"Unfortunately," he wrote, "the bump in vacancy will have a ripple effect through the rental market as all but the lowest priced rental units will feel their impact."
Apartment complex owner Frank St. Clair said Friday vacancies recently increased at only one of the rental properties his family owns. That one went from 1 percent vacant to 2 percent, while the other buildings were "pretty much holding steady," he said.
Rents will probably go up between 8 percent and 10 percent during the next 12 months "just because of inflation alone," he said, adding that his own company faces higher costs from vendors, materials and insurance costs for employees.
Vacancies will likely increase as well, St. Clair said, but probably no higher than 3 percent.
"I don't think it's going to go higher than that, just because of the amount of demand out there," he said.
Co-owner Anna Smith at downtown apartment-community developer Sage Equities said by email Saturday that demand for its high-quality rentals remains strong, and the company has not suffered a significant increase in its vacancy rate.
The well-off professionals Sage leases to have not been heavily impacted by higher rents, she added, and that as expected, increasing rates during the past two years are starting to level out.
As Sage raises money for its fourth rental property in the Eastchester neighborhood, Smith said Bakersfield remains underserved in upper-end apartments.
"Due to the fact that we are providing housing solutions that are drastically undersupplied in our market, and we have a high-income tenant base," she wrote, "we remain confident in the future of luxury urban multifamily."