The California real estate market is one of the largest and most well-known in the US. Many investors yearn for the high rental income that is generated in The Golden State’s most renowned markets, such as Los Angeles and San Francisco. The problem, however, with these two cities, and many others, is their affordability crises. Largely due to being very expensive, both cities are not projected to be among the best Californian markets in 2019.
Instead, Bakersfield, the ninth most populous city in the state, holds this title. Not only that, but Trulia named the Bakersfield housing market as the fourth best market to watch for in 2019. Why is the Bakersfield housing market the hottest city in California real estate? Where should you invest in the Bakersfield real estate market?
Related: People Are Leaving the California Real Estate Market for 2 Cities
Bakersfield Housing Market 2019: City-Level Data
Before we answer these two questions, let’s take a look at the Bakersfield housing market city-level data. This will help us understand why the city is among the best to watch in the US. Here is Bakersfield’s data according to Mashvisor’s rental property calculator, which you can learn more about by clicking here.
- Median Property Price: $317,573
- Price Per Square Foot: $178
Traditional
- Rental Income: $1,477
- Cap Rate / Cash on Cash Return: 2%
Airbnb
- Rental Income: $2,043
- Cap Rate / Cash on Cash Return: 4%
- Occupancy Rate: 55%
As you can see, the Bakersfield real estate market in 2019 is both profitable and affordable. A traditional or Airbnb Bakersfield real estate investment yields high averages for rental income and return on investment. Of the two strategies, however, Airbnb is the more lucrative one on average.
The Main Reasons to Invest in the Bakersfield Housing Market
There are two central reasons why an investor should be interested in the Bakersfield housing market. The first is its unique affordability among the California real estate market. The second, again by its mere association with the California real estate market, is its profitability.
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Affordability
Affordable real estate is always a priority for investors. This is especially true for California real estate investors because the state is home to some of the most expensive real estate in America. Los Angeles and San Francisco, for instance, consistently fall under such lists.
This leads to the most important of the Bakersfield real estate market trends: its affordability. Bakersfield’s inexpensive real estate and cost of living cannot be understated. According to NerdWallet, Bakersfield’s cost of living is 28% and 45% lower than that of Los Angeles and San Francisco, respectively. Bakersfield investment property costs are a whopping 63% lower than LA’s and 76% lower than San Francisco’s. According to Mashvisor’s rental property calculator, the median Bakersfield investment property price is $317,573. Not only is this lower than the $938,000 and $1.5 million median property price tags in LA and San Fran, respectively, it is also lower than the national average.
The affordability of the Bakersfield housing market is a godsend for California real estate investors. This is why the city is among the top answers when asking where to invest in real estate in 2019.
Related: The Most Affordable Neighborhoods to Buy Property in the Most Expensive Cities
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Profitability
Being a part of the California real estate market does bring some good to many investors, however. This is mainly in the form of high rental income and return on investment. As you’ve seen from the Mashvisor data, a Bakersfield real estate investment benefits from this trend. Not only is a Bakersfield investment property affordable, but it is also very profitable. In a way, these Bakersfield real estate market trends have the best of both worlds.
Best Neighborhoods in Bakersfield: Traditional
Traditional real estate investing may not be the most money-making strategy in the Bakersfield housing market, but it is still a profitable strategy. A generally suburban area, Bakersfield has a relatively large tenant pool, with roughly 44 percent of its residents renting out investment properties. Though not part of the robust Silicon Valley, the Bakersfield economy is still strong, serving as part of the most productive oil-producing county in the US and as a major agricultural hub.
The best neighborhoods in Bakersfield for traditional investing include Kern City, Stockdale Estates, and Stone Meadows.
Kern City
- Median Property Price: $358,680
- Price Per Square Foot: $173
Traditional
- Rental Income: $1,271
- Cap Rate / Cash on Cash Return: 3%
Stockdale Estates
- Median Property Price: $396,598
- Price Per Square Foot: $143
Traditional
- Rental Income: $2,315
- Cap Rate / Cash on Cash Return: 3%
Stone Meadows
- Median Property Price: $316,145
- Price Per Square Foot: $194
Traditional
- Rental Income: $1,583
- Cap Rate / Cash on Cash Return: 2%
Best Neighborhoods in Bakersfield: Airbnb
Airbnb is the most lucrative rental strategy in the Bakersfield housing market. While there are no official Airbnb regulations for investment properties in Bakersfield, investors generally do not face significant restrictions while renting out on Airbnb.
Bakersfield is an under-the-radar destination for Airbnb guests. The city is home to many yearly events, such as horse racing and music festivals.
According to Mashvisor’s rental property calculator, the best neighborhoods in Bakersfield for Airbnb investment properties are Oleander Sunset, Park Stockdale, and Amberton.
Related: What Will 2019 Look Like for Airbnb Real Estate Investing?
Oleander Sunset
- Median Property Price: $182,466
- Price Per Square Foot: $139
Airbnb
- Rental Income: $1,700
- Cap Rate / Cash on Cash Return: 4%
- Occupancy Rate: 52%
Park Stockdale
- Median Property Price: $159,470
- Price Per Square Foot: $145
Airbnb
- Rental Income: $2,390
- Cap Rate / Cash on Cash Return: 9%
- Occupancy Rate: 55%
Amberton
- Median Property Price: $195,000
- Price Per Square Foot: $90
Airbnb
- Rental Income: $2,745
- Cap Rate / Cash on Cash Return: 7%
- Occupancy Rate: 54%
All in all, the Bakersfield housing market is a hidden gem in the California real estate market 2019. With its low property prices, affordable cost of living, and high profitability, Bakersfield is a clear choice for the hottest city in California for the upcoming year.
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