The median price for an existing single-family home in the Bakersfield area was $175,000 in August, excluding distressed transactions that artificially lower sale prices. That’s up 6 percent since July and up 9.4 percent year-over-year, according to the Preliminary Crabtree Report, a monthly guage of the region’s real estate market produced by Affiliated Appraisers.
The cumulative median sale price for market rate sales and distressed sales combined was $155,000, up 9.1 percent for the month and 15.7 percent for the year.
A distressed sale is a short sale or a so-called real estate-owned property, commonly referred to as an REO. A short sale is an agreement between a lender and a seller to put a home on the market for less than the balance on the mortgage. An REO is a property owned by a lender who is selling after foreclosing on the previous owner.
Crabtree said the market has been held back by appraisals coming in low because some appraisers use distressed sales as comps to determine a home’s appropriate sale price.
That inhibits buyers who are borrowers because banks won’t lend for more than a home’s appraised value.
“It’s frustrating, yes, that is our challenge,” said Young Trieu, an agent with Re/Max Golden Empire in Bakersfield who routinely sees appraisals for as much as 20 percent less than winning bids. “A lot of times the appraisal is lower than the accepted offer because you have to be aggressive to win.”
Based on price per square foot, Crabtree estimated there was a discount of 24.2 percent in August between prices for distressed properties and those going for market rate.
The biggest discounts were at the upper and lower ends of the market.
“At the lower end it’s because what properties are left are basically trashed, and at the upper end it’s because we don’t have enough buyers who can afford the nicer homes,” Crabtree said. “We have homes in Grand Island where sales should be in the mid- to high-400s, and they’re selling in the high threes to low fours.”
It’s hard to say how much longer that will go on, but it can’t continue indefinitely.
REOs are declining in the Bakersfield area as the region works through its massive inventory of foreclosures. They accounted for 17.9 percent of total sales in August, down by more than half from a year ago and the lowest since the housing bubble burst.
With or without distressed sales, things are looking up. Some of it is timing, Crabtree said.
The waiting period to buy a house after a foreclosure generally is five to seven years, but some lenders will finance again after just three years if the default was caused by circumstances beyond a borrower’s control, such as a death in the family or job layoff.
“For some people who went through foreclosure early on, it’s been three years and they are able to get back in the market again,” Crabtree said.
Unfortunately, those buyers are finding a tough market. There were only 626 active listings in the Bakersfield area in August, excluding homes with contingent offers. That’s led to bidding wars that are hard to win when families with loans are competing with investors paying cash.
“It’s a struggle, but we have been finding homes,” said Terri Collins, a broker associate with Watson Realty in Bakersfield. “It just takes some patience. You just have to buckle down and keep at it.”
The good news is supply is creeping up again. It rose 4.6 percent from July to August. That’s in spite of a 40.5 percent fall in foreclosures since last year.
Closed sales, a measure of demand, rose 12.5 percent for the month to 568, but dropped 19.5 percent for the year.