Forecasting What the Future May Look Like for Investors
Bakersfield, CA is often overshadowed by its hotter neighbors like Fresno, San Diego, and San Francisco despite being the ninth largest city in California and located halfway between Los Angeles and Fresno. Around 400,000 people call Bakersfield home, with nearly 900,000 people residing in the greater metro area.
The population isn’t the only thing growing in Bakersfield; the city’s housing market has seen continued growth as well. Homes in Bakersfield are selling fast – selling about 14 days after being listed. Quick sales can be attributed to a reasonably affordable real estate market.
In July 2022, the median sale price for a home in Bakersfield was $370,000. Bakersfield’s housing market is very competitive, with 45% of homes being sold for more than the listing price.
So, what does Bakersfield’s market mean for real estate investors?
California investment property has been a hot commodity in 2022 – especially in the state’s more affordable cities. Despite steadily increasing interest rates, median home prices dipped slightly in July but remained 9% higher than median home prices in 2021—indicating that Bakersfield will maintain home values even if growth stalls.
A Glimpse into Bakersfield’s Real Estate Investment Market
When it comes to California real estate investing, it’s important to remember that it can be expensive. Even a city like Bakersfield, which is largely affordable, can find itself on a list of at-risk real estate markets because of the state of the housing market.
The great thing about Bakersfield, though, is the guarantee of a large rental population. Prevailing wage puts home ownership in Bakersfield, CA just out of reach. Plus, seasonal agricultural work creates a critical mass of migrant workers who choose to rent rather than own. On top of that, a number of colleges and universities in the Bakersfield area provide an annual influx of student renters.
To put Bakersfield’s rental market into perspective, the gross median rent is $1,078—just above the national median of $1,023. In contrast, California’s median rent is $1,429.
In addition to a large rental population, Bakersfield also offers several real estate investment strategies. Buy and hold is one great long-term investment property strategy to generate income to purchase additional properties and thus, grow a real estate investment portfolio. Investors will also find great investment opportunities for BRRRR investments, short-term rentals, fix and flip properties, and new construction properties.
Building Homes in Bakersfield, California
Bakersfield has a relatively strong new construction market, which is great news for investors looking to capitalize on the growing trend of building rental properties. By the end of July 2022, the City of Bakersfield had issued 878 building permits – an increase of 164 permits YOY.
Additionally, the planning commission recently approved a developer’s plans to build 364 housing units, including 176 apartments, 76 single-family homes, and 112 duplex units in northwest Bakersfield.
What Investors Can Expect in Bakersfield
As the build to rent strategy boom continues to grow, it’s important to remember that not all new construction loans are created equally. It’s important to work with a lender that has a national footprint and knows how to handle your investment property loan from start to finish.
When you think about the best construction loans in California or are in search of a hard money lender in California, Lima One Capital should be the first private lender that comes to mind. Our new construction program is what other lenders wish they had. From start to finish, your loan is handled by our in-house construction management team.
Lima One is the premier lender for real estate investors in California and across the country. As experienced lenders in the private lending space, we’re able to help you find the loans that fit your investment strategy, while providing you with best-in-class customer service.