Bakersfield Multifamily Market Overview: Navigating Current Conditions and Predicting Future Trends

Marc A. Thurston
September 1, 2023
min read

Bakersfield, often overshadowed by its cosmopolitan neighbors like Los Angeles and San Francisco, has steadily built a reputation as a strategic real estate hub, particularly in the multifamily sector. For those who have keenly observed the shifts in market dynamics, it’s evident that Bakersfield presents unique opportunities. Let’s dive into the current market conditions, touch on recent sales data, and cast a discerning eye on forecasts.

Current Market Dynamics

Bakersfield has a relatively young and growing population, which spells good news for multifamily investors. A younger demographic generally means a higher likelihood of renters, as many may not yet be in a position to purchase homes. Additionally, the city's diversifying economy is attracting a larger workforce, which naturally leads to an increased demand for housing.

As of late, rent growth in Bakersfield has been steadily rising. This is a boon for investors as it hints at a strong rental market with potential for increased ROI in the coming years. Coupled with a high occupancy rate, it paints a promising picture of the Bakersfield multifamily landscape.

Sales Data Snapshot

After 11 years of consistent appreciation, price per unit growth has recently slowed down due to fewer transactions and higher interest rates. In the past two years despite a strong demand from buyers, the number of sales has declined.  Existing landlords have been so happy with their investments they are reluctant to sell because replacing the cash flow would be difficult.

Rent Growth and Occupancy

Rent growth is perhaps one of the most crucial metrics for any real estate investor. For Bakersfield, the trajectory has been upwards. This growth isn't just a byproduct of national trends; it's also influenced by local factors like economic diversification, job growth, and increasing population.

Equally important is the occupancy rate. High occupancy rates in Bakersfield ensure that investors have a consistent income stream. Historically, Bakersfield’s multifamily occupancy rates have hovered above the national average, offering reassurance to potential investors.

Why Bakersfield?

Several reasons make Bakersfield an appealing market for multifamily investment:

  1. Economic Diversification: While traditionally an oil and agriculture town, Bakersfield is branching out. With industries like healthcare, education, and retail growing, there's a broader base of job seekers and professionals moving to the city.
  2. Affordability: Compared to other Californian cities, Bakersfield offers a more affordable cost of living. This attracts a diverse range of residents, from young professionals to families, all looking for reasonably priced rental options.
  3. Strategic Location: Positioned at the southern end of the Central Valley, Bakersfield serves as a bridge between the northern and southern parts of the state. Its accessibility can attract a transient workforce seeking temporary or longer-term housing.

Forecasting the Future

While the current indicators are positive, what does the future hold for Bakersfield's multifamily market? Most analysts believe that Bakersfield will continue to see steady growth. As the city diversifies its economy and invests in infrastructure and public amenities, the demand for housing, especially rentals, will rise. The city's commitment to fostering business growth also ensures a steady influx of professionals.

However, with every investment comes risks. Investors should be mindful of broader economic trends, local regulatory changes, and potential shifts in demand. It’s also crucial to note that while multifamily properties are a hot commodity now, diversifying your investment portfolio is always a prudent strategy.

In Conclusion

Bakersfield's multifamily market is buzzing with potential. The current conditions, combined with a positive outlook, make it an enticing destination for investors. While its charm may be subtle compared to some of California's more celebrated cities, in the world of real estate investment, Bakersfield is rapidly carving out a niche for itself.

Whether you're a seasoned investor or just starting, Bakersfield's multifamily scene deserves a closer look. With careful planning, due diligence, and a keen understanding of the market, you can find your next big investment opportunity right here.

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