Current Market Condition and Outlook Bakersfield 2016

[Roger Leonard]

So, I am located in the LA/OC area and thinking of investing in a SF home or two in the North or Southwest area of Bakersfield. The market seems to have recovered within 20%-25% of the 2006 peaks according to what I can tell (just my guess), while LA and OC have fully recovered in most areas to that 2006 peak (another guess from what I see). I am very interested to hear what you local investors think of the current BF market currently and moving forward. Also, any things you have noticed or believe I should consider. Last, what is your take on the slowdown/loss of the oil jobs and how that has affected the market. Your thoughts and opinions on anything to do with the BF market are greatly appreciated.  

[Gene Hacker]

I work in the Bakersfield market several times a week and I always ask both agents and buyers about their take on the local market conditions.  The job losses in the oil sector have been substantial. And it has created an overtone of uncertainty around town.  But right now it looks like the spring buyer season may be overpowering this uncertainty.  I suspect that this buying season will be weaker than last year because of the oil crash.

Oil is recovering pretty strongly from its lows but it has a long way to go before the industry will start to recover.  I have read that new projects in Kern are profitable over $70/bbl, so going from $28 to $43 is mildly helpful it is nowhere close to enough for companies to invest in new projects. When oil crashed last time in 2009, it was back up over 100/bbl in around 2 years. Obviously, not all cycles are the same, but oil could recover in a meaningful way.

The Sierra Nevada had a good snow pack this year so local ag will have surface water for the first time in years.  This is a positive sign for Bakersfield.  There is no way to know what next winter will do but this year will bring at least temporary relief to that sector.

Logistics is growing and expanding in Bakersfield and Kern county.  And will likely continue to do so as other areas of Ca get more expensive.  This is just one sector that is helping Bakersfield diversify as opposed to being focused on Ag and Oil.  

IF oil and Ag both recover in a meaningful way, then Bakersfield could be the growth story of the west.  But those are very big "IFs".