Home prices dip -- then rise -- amid 'craziest market I've ever seen'
Mar. 18—Bakersfield's home market may have kicked into crazy mode.
The primary gauge of local housing prices — the existing-home sales median, at which point half the houses sold for more money and half went for less — stood still in December before sliding 2.7 percent in January.
Then what did it do in February? Jump 5.3 percent to hit $379,000, which was 3.6 percent more than the median a year before.
The best description Gary Crabtree could come up with in his monthly market update was "instability."
"As one local long-time broker put it, 'This is the craziest market I've ever seen,'" Crabtree observed.
How crazy? Two homes sharing the same floor plan in the same neighborhood recently sold one month apart. Crabtree said one sold for $380,000, the other for $450,000.
What's more, last month's leap came as the statewide median actually dipped 2.1 percent to settle at $735,480, according to the California Association of Realtors.
Investor Frank St. Clair offered his own explanation Friday. Homes entering escrow amid tough conditions in October, November and December closed out in January, just as the market was picking up steam, he said. On paper, that could have made the market look weaker than it really was — just before prices hit the gas.
"It was like night and day," St. Clair said. In early January, he added, "A light switch went on."
A lot of that probably had to do with mortgage rates that rose in early May, chasing away buyers and leading to a glut of sellers, he said. This was before interest rates on a 30-year fixed mortgage dropped more than half a point in early January.
The result has been odd at a minimum, St. Clair said: "It is actually a little funny."
Looking at it from a supply-and-demand perspective, listings of existing homes were up 5.4 percent in February at 590, which was 108.5 percent more than a year before.
Home sales volume, meanwhile, was up 4.6 percent last month at 298, or about a third lower year over year.
Newly built home sales in Bakersfield were a different story. As sales volume slowed by 7.8 percent, their median price in February declined 2.9 percent, hitting $475,900. That was 7.2 percent more than their median in February 2022.
Mortgage interest rates on a 30-year fixed loan were 285 basis points higher in February as compared with a year before, and at 6.6 percent, they were 12 basis points higher than in January, Crabtree reported.
All told, with February's abrupt change in the existing-home price median, he theorized homebuyers were looking to jump in before conditions turn south.
"One reason might be that with the interest rates relaxing and supply tight," he wrote, "buyers are capitalizing on the conditions expecting the rates to start increasing again and shutting them out of a purchase in the near future."
The state group, CAR, agreed buyers seem to be seizing on relatively favorable interest rates. Still, President Jennifer Branchini sees prices softening as lower-price homes become more attractive.
"However," she added in a news release, "with the availability of homes remaining extremely tight and housing supply conditions not expected to improve any time soon, prices should find bottom later this year as interest rates stabilize."
Or not. CAR followed Branchini's prediction with some a little less optimistic, stating, "With home prices expected to remain soft throughout the rest of 2023, the market will see larger price drops moving through the spring homebuying season."