BAKERSFIELD, Calif. (KBAK/KBFX) — Is another housing bubble being built for a potential burst? Bakersfield homes sales are rebounding at the speed of light, but what does that mean for our economy and first-time buyers?
With interest rates at an all-time low, it may seem like a great time to purchase a home. But, imagine trying to buy your first house and constantly being out-bid by big business. That’s what one family says is happening to them, and it’s a small symptom gnawing away at housing markets in some American cities.
The Reed family is living in a tiny two-bedroom apartment but is looking to find a house. They’ve secured a loan, but they can’t seem to get their hands on a home.
“We thought with the economy the way it is and with all the empty homes, we were going to have our pick of the litter, and it’s just not working out like that at all,” Misti Reed said.
Like bidding on eBay, Reed and her husband say they’ve put bids on three different houses and have been out-bid every time.
“We were informed that someone, an investor, had come in ($30,000) to $40,000 higher than we came in. It was devastating,” complained Reed.
The reason for the increased competition is basic supply and demand, said local real estate appraiser Gary Crabtree.
“Whenever we see supply decline, and we see demand increase or stay stable, it’s bound to bring prices up, and that’s exactly what’s happening,” explained Crabtree.
The mess left behind by the housing bubble burst of 2006 has created a feeding frenzy among investors, who are scrambling to buy cheap homes, driving up prices.
“If the investors have the highest price, then they are going to get the property,” said Crabtree.
According to his research, home prices have jumped 20 percent in the past few months. Crabtree said the median home price has increased from $120,000 in February to $145,000 in April. The increase is building fear that this rapid rebound might lead to whiplash with the growth of a second housing bubble.
Right now, there are 585 homes for sale in the metro Bakersfield area. It may sound like a lot, but it’s not enough, said the Reed family.
“I think that it’s out there, I just think we have to be patient and we have to really wait and see what happens,” Reed said.
Crabtree also said large inventories of foreclosed homes are not being released by banks. If they were, the supply could grow to meet the demand of homes for investors and first-time buyers.