Bakersfield... Is it time to sell?

[Andrew Jones]

Any Bakersfield investors have an opinion on wether it is a good time to sell? My original plan was to hold forever, but prices have appreciated greatly. I believe I already missed the peak. Now prices seem to be stagnant and potentially on a decline with the oil prices down. Inventory is still very very low. Multi family units btw. So what do my bako people think? 

[Max Gradowitz]

People keep talking about the oil industry causing a negative turn in property values and more foreclosures and all that jazz.  It's not that I completely disagree, I just don't buy the hype surrounding it.  Have there been layoffs?  Of course!  I have lots of friends, family, and real estate clients in that industry.  Half of them have kept their jobs, so it's made no impact to them.  The other half have moved on to other industries that are still running strong.  For example, a client of mine lost his oilfield job, so what did he do? He cashed out his 401k, bought a smaller house for all cash (didn't need a big 5 bedroom home anymore now that all of his kids were grown up and moved out), and rented out his older larger home for a profit.  He lived off the rest of the 401k proceeds and rental profit for a month or two until he got a new job as a truck driver.  That's what I've noticed in general, people just moving on to new, more reliable, industries.

As far as property values, last month the average sales price of a multi-unit in Bakersfield (2 to 4 units) was $225k. Compare that to last year, where multi-units averaged only $185k in the same exact month (mid-summer when the market is always at it's yearly peak).  Single family homes have only appreciated a tiny bit from last summer to this summer in terms of average sales price (we are talking like a couple thousand dollars - barely noticeable).  So, yes I agree with you when you say that multi-units in Bakersfield have seen a huge increase in appreciation recently.  I'd say it's a pretty good time to sell if you have a good amount of equity built up in your multi-unit property.  Single homes are still on the slow rise and there doesn't seem to be any type of "bubble" peak indicating that this is going to slow down.  However, with multi-units, the appreciation was so extreme from this year to last year that it leads me to believe that its at or near it's peak and therefore if you have thought about selling it is probably that time.  Appreciation that much (from last year to this year) is very unlikely to happen in my opinion (but I've seen some crazy **** before, so take that as you will!).

I have plenty of clients still buying multi-units in Bakersfield though.  Despite the appreciation, the slow and steady cash flow is still there.  But if I owned a multi-unit (which I do, but not in Bakersfield) here in town, I'd highly consider selling it right now, assuming enough equity was there to justify it.