Too late to buy a house in this market? Not necessarily | Bakersfield life
Say what you will about Bakersfield’s home market performance during the pandemic, it helped some people more than others.
Months after stay-at-home orders went into effect, an influx of buyers from other cities has strained an already tight inventory of Bakersfield homes on the market, pushing median sale prices to what record remains.
Local homeowners took advantage if they moved to places with lower-cost housing outside of California — and many did. Newcomers, meanwhile, found Bakersfield to be a bargain compared to other areas like the Los Angeles Basin and the Bay Area.
But at the same time, Bakersfield’s vaunted affordability has eroded over the months.
So where does all of this leave local residents currently looking to enter the market?
Bakersfield real estate professionals say times have changed, and not for the easy. It’s not necessarily too late to buy a home in the city, but they point out that success will favor buyers prepared for current market realities.
“It’s crazy out there,” said real estate agent Sheeza Gordon, “so we’re continuing with that.”
The problem, she says, is an “extreme shortage of inventory,” with multiple offers, especially on resale properties priced between $400,000 and $500,000.
The hottest homes don’t stay on the market long, Gordon said, and homebuilders “can’t build them fast enough.”
Already, the brakes are being tapped from above, and if there is any consolation, it may not be long before demand starts to cool.
Interest rates on a 30-year fixed-rate mortgage rose 31 basis points in February alone, and by the end of that the rate had risen 95 basis points a year on the other, reports Gary Crabtree, real estate appraiser and longtime observer of Bakersfield’s home market.
He said by email that the rate adjustment, combined with declining affordability relative to local incomes, means the pool of people able to buy a home will gradually shrink.
“The market needs to begin a correction as fewer buyers will qualify for loans,” Crabtree wrote. He noted that the median sale price in February was 25% higher than a year earlier at $370,000, about $50,000 less than the median that month for a new construction home.
But rest assured: Gordon and his son in the business, William Gordon, say there are ways potential buyers can improve their chances of being able to buy a home in today’s market.
A key tip from William Gordon is to be equipped not only with a loan pre-qualification letter, but also with money. He said the money was not intended to make a cash offer, but to cover the potential difference between the offer to buy and the amount at which the house is valued.
This type of cash-on-valuation arrangement is a way around what he said was a limitation in the market. Lenders will not provide a loan for the purchase of a home unless the appraised price supports the offer, hence the point of sweetening the deal with cash.
More generally, his view is that anyone looking to buy a home in the current market should forget to “time the market” to home prices, but based on expectations, interest rates will continue to rise. to augment.
He said too often people think they’ve missed the boat because prices have gone up so much. “They really didn’t,” he said.
Sheeza Gordon offered her own list of tips for buyers for resale and new homes.
Definitely pre-qualify for a loan, she said, and if the goal is a newly built home, get on the builder’s list of potential buyers. Additionally, she advised anyone considering buying new construction to consider the costs associated with moving to a home no one has lived in before, such as blinds and ceiling fans.
Also, use a buyer’s agent instead of assuming the seller’s agent will adequately represent the buying party’s interests, she said.
It’s also important to have a good loan officer, someone who Gordon says should focus on getting the deal done despite possible headwinds. Finding someone locally to do so often makes the most sense, in part because the person’s reputation is at stake, she added.
“It makes a difference who they are, what they drop,” she said.