Investor · Cypress, CA · Member since 2016 · 20 posts · 7 votes
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.
Flipper/Rehabber · Lake Isabella, CA · Member since 2011 · 969 posts · 488 votes
10y
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".
Flipper/Rehabber · Lake Isabella, CA · Member since 2011 · 969 posts · 488 votes
10y
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".
Investor · Cypress, CA · Member since 2016 · 20 posts · 7 votes
10y
@Gene HackerThanks so much for the info Gene, very interesting and informative! So, has the Oil/Ag situation created a buying opportunity or have other groups of buyers/investors stepped in and absorbed that inventory? Or, do you see seller's impacted by oil/AG more in a "holding pattern" right now waiting to see what develops?
Flipper/Rehabber · Lake Isabella, CA · Member since 2011 · 969 posts · 488 votes
10y
It has created a bit of a holding pattern for many would-be buyers which would like to wait to see what will happen next. Much of Ca is back up to peak prices, where Bakersfield is much below so I think it is a buying opportunity for someone with long term goals. That said oil may stay low for a while so there may be more fallout to come, but when you consider that production costs of a large portion of the worlds oil is 2x the current price, it is pretty obvious that the low prices are not sustainable for very long.
The good thing about Bakersfield is that the jobs are all location dependent. Oil, Ag, and material handling (logistics and warehousing) all require labor in that location. These types of jobs cannot be outsourced to India or the Philipines. These sectors are all at the mercy of commodity prices and outside factors. But at the end of the day, oil is going to be a big part of our energy picture into the foreseeable future, people are going to need to eat, and as more is manufactured overseas, logistical hubs on the west coast will be needed.
Investor · Cypress, CA · Member since 2016 · 20 posts · 7 votes
10y
@Gene Hacker, Yes, I agree it's not a matter of "if" for "oil", more of "when". I would be doing a buy and hold ( at least 5 years), most likely in the Northwest. I kind of like to buy when there is uncertainty and I can find a very good value.