Apartments filling up but rent prices slow
New data shows Bakersfield apartment vacancies dropped again during the second quarter of this year, signaling the local rental market may be gaining steam as rising interest rates make it more expensive to take out a home loan.
The citywide vacancy rate declined to 1.38 percent, from 1.57 percent during the first quarter and 1.76 percent in the fourth quarter, according to a report this month from Bakersfield multifamily housing specialist Marc Thurston at ASU Commercial.
But in a possible sign that there may be a limit to how much local landlords can raise their rents, Thurston’s report noted that rent growth across the city actually declined from the first quarter by 5 basis points to reach 3.04 percent in the second quarter.
Thurston, addressing the irony of slowing rent growth at a time of shrinking vacancies, theorized that blue-collar workers might not be able to afford the higher monthly payments landlords would otherwise charge.
“At some point, this segment is going to push back and look for alternative housing,” he said by email Tuesday. “That could be in the form of lower rent, consolidating households (roommates), or moving back home with their parents. While the housing market is tight, renters do have some choices.”
Local rental property owner and operator Frank St. Clair had a similar take. He has noticed receiving fewer apartment rental applications from qualified renters during about the last 18 months.
“There may be people looking, but they’re seeing the prices and saying, ‘Maybe we can’t afford this,’” St. Clair said.
Landlords are nevertheless
being bold in other ways, Thurston’s report showed. Fewer building managers lowered their rent in the second quarter than in the first — six marked down prices as compared with 17 in the first quarter — while more properties began charging tenants for costs like utilities.
The second-quarter report showed differences among types and locations of properties. Northwest Bakersfield led the city by rent prices, followed by the southwest. And while one-bedroom rents increased at a significantly faster pace than in the first quarter, rent growth for studios and lofts slowed dramatically during the second quarter.
According to the second-quarter report, rents for a one-bedroom apartments in north Bakersfield went for between $525 and $1,200 per month, while in the city’s northwest, they ranged from $1,300 per month to $1,995.
For a two-bedroom place, rents ranged between $695 and $1,295 in central Bakersfield, the report stated. By contrast, in the western portion of southwest Bakersfield, it rented for as little as $1,195 or as much as $2,294.
Thurston pointed to good news on the way for renters: New apartment buildings are in the works, and they should hit the market within the next six to 24 months.
Less hopeful was his view of the recent expiration of pandemic-era eviction protections. Thurston said tenants who have fallen behind on their rent and haven’t pursued government help may be in for a hard landing.
“While landlords are sympathetic to good residents who fall behind and work to catch up on their rents,” Thurston wrote, “those who fail to take any steps to pay what they owe will have a difficult time finding a landlord who wants to rent to them as they have shown they have no commitment to their financial obligations.”