Rising mortgage rates and stagnation on the listing front are significant problems for California home values, especially in large neighborhoods. This has shifted the gears for many homeowners throughout the area. Though Oakland did see the tailwinds from San Francisco, it might not be enough.

In fact, San Francisco is the hottest market in the nation right now, and Oakland sits close to the Golden Gate City, which has increased the potential for local investors and residents. If nothing else, this activity makes the Bay area one of the most expensive in the world and the US. This means the Oakland real estate market is seeing more interest.

Overall, investors who can navigate the marketplace are sure to do very well compared to last year.

Oakland Housing Market Trends

In 2023, it seems that Oakland is a seller's market; more people want to buy, and there aren't enough properties available. This can mean a good investment for investors if they know how to work the market.

Oakland has enjoyed a prosperous decade. Though the Great Recession tanked the housing market in 2012, Oakland real estate has appreciated for over nine years. Today, those local home values test new highs, making people wonder if it's the best choice.

Real estate investors who have participated in the market from 2012 onward will tell you that the local market has been lucrative currently. Prices have appreciated in what is now being referred to as the foreclosure crisis, and rehabbers enjoyed it. However, the market is likely to shift.

Prices continued to rise through the pandemic, but less inventory is driving those prices higher.

Investors who like to buy a house, rehab it, and flip it will still have an opportunity to run lucrative businesses in the local market. Likewise, emerging and new indicators will make long-term strategies appealing. Overall, historically high home values leave little room for a profit margin on flips. Therefore, investors are considering long-term rentals over the past year.

Here are the top three real estate market trends in Oakland:

Historically Low Interest Rates for Traditional Loans

In October 2022, the average interest rate for a 30-year fixed loan was 3.07 percent, according to Freddie Mac. While up, today's interest rates are historically low and quite attractive to those in the Bay area. Lower borrowing costs bring down the acquisition costs for people wanting to add passive income to their portfolios.

At the current setting, mortgage rates should save buyers thousands of dollars. Therefore, real estate investors could pad the bottom line with multiple years of rent checks.

Cash Flow for Higher Acquisition Costs

While lower borrowing costs absorb the higher prices today, the cash flow potential is even more attractive. Investors want to consider owning rental properties because of the excellent neighborhoods.

With the median home prices high but the rent prices being about $2,703, it's possible to rent the investment property and have someone else pay down that mortgage. Investors can easily build equity in the physical asset while collecting monthly cash flow.

Increased Rental Demand Because of Inventory Shortages

Even more importantly, the city of Oakland will likely be the beneficiary of a flood of renters from other neighborhoods: San Jose and San Francisco. These are two of the most expensive cities to dwell in, and more people are traveling to the East Bay to find lower prices while still enjoying the Bay Area lifestyle.

Overall, the exodus of decent neighborhoods with a lower rental price could be a good thing for real estate investors. The San Jose and San Francisco neighborhoods can't keep up, and Oakland is taking the extra. Therefore, investors could be the true winners here.

Factors Affecting the Oakland Housing Market

According to Zillow, the typical home value in Oakland is $813,124, and the value change for one year is down 11.8 percent. These numbers scare people initially, making them think the market is dropping. However, this just means that it was harder to get a sale.

Savvy investors in Oakland could scoop up properties in these neighborhoods for a steal, generating passive income for themselves.

1. Foreclosures

According to ATTOM Data Solutions, lenders began foreclosing on 25,209 US properties in 2021, which is up 67 percent from last year. This is the first double-digit increase since 2014.

Increases correlate with government assistance ending after the pandemic. For about two years, forbearance programs stopped lenders from foreclosing, but that help is stopping.

The moratorium prevented foreclosure for many people. However, mortgage servicers are starting the actions on abandoned and vacant properties, which will help communities and neighborhoods. In fact, the foreclosures are likely causing the uptick in price and buyers.

Likewise, the California real estate market saw more foreclosures in 2021 than in the rest of the country. In that quarter, 3,434 houses had been filed against. Though Los Angeles was the largest contributor, the Oakland market saw a few increases, too.

Though Trulia is only counting 10, each website indicates different ones for the city of Oakland. If you're savvy enough to know where to look, you could find a rental property for sale cheap in one of the best neighborhoods in the country.

2. Median Home Prices

According to Zillow, the median home value in Oakland is $952,381. At that current price point, that's up about 197.6 percent from 2012, when the Great Recession was its worst. Now, you're seeing appreciation for nine full years.

Though they've been slowly increasing for about a decade, the price for a house rose fastest in 2022 and 2021. Supply and demand problems hurt the entire country, and people flocked from other neighborhoods into Oakland. Therefore, local values increased by about 18.2 percent in one year.

The biggest tailwind that raised the price of homes is how close Oakland is to popular neighborhoods like San Jose and San Francisco. The other neighborhoods are overpriced and the most expensive cities within the whole country. Therefore, people were forced to choose Oakland over them. Plus, real estate is preferred from those three cities.

The problem here is that the price is often high, and investors don't want to spend that much to be in one of the top neighborhoods. It's a numbers game, though. If you can get a sale on a house, you can recoup that money quickly.

Since the other neighborhoods are pushing the price up for renting, Oakland can see the same benefit. However, you need the cash or the good enough credit to get a mortgage loan. Once you have that, you can set the rental price high, allowing the passive income to pay the bills.

3. School Systems

Most people don't think about it, but the schools in specific neighborhoods could raise the price of homes in the area. Oakland has 188 schools that are rated good or higher by GreatSchools. Likewise, there are 74 charter and private schools.

Many homeowners in Oakland want to sell because they're either done raising children or have none. Therefore, it's beneficial for landlords and investors. You could easily rent a house in Oakland for a few thousand dollars while pointing out that the school systems are excellent. This is a selling point for families, and it brings in more income for you.

Will the Housing Market Crash in Oakland?

All signs point to no; the housing marketing won't crash in Oakland, at least not in the next few years. However, it's crucial to take inventory of what options are available for sale.

The San Francisco Chronicle claims that July saw the biggest increase in homes sitting on the market without being sold for over a month, which is up significantly from last year. New data indicates this rise in stale inventory.

Stale inventory means a house that was listed for 30+ days without going under contract. In fact, this number has increased by about 61 percent from 2021 to 2022, and it's still pretty high in 2023, though the numbers aren't in yet.

The market hasn't gone cold, though. In fact, even with that large jump, Oakland is the third-lowest for stale inventory among the largest metro cities. This shows you how supercharged the market became after the pandemic when the homes were getting snatched up as soon as they got listed. It's possible to get what you want if you know where to look.

Oakland Housing Market Statistics

Here are a few statistics to consider:

  • Median List Price - $858,688 (a 6.1 percent jump over last year)
  • Median Home Value - $952,381
  • New Listings - 695.6
  • Homes Sold - 688.8
  • Active Listings - 3,359
  • Median Days on the Market - 12
  • Unemployment Rate - 5.4 percent
  • Median Rent - $2,703/month
  • Median Household Income - $73,692

Housing Market Predictions

Throughout the nation, predictions for the housing market seem to be good. Though some worry about a crash, there hasn't been a significant drop in price (20 to 30 percent) or a decline in home sales. Though there are more waiting to be sold than usual, it's not a large amount.

Lower Home Prices

Overall, median home prices are likely to fall about 8.1 percent throughout 2023. This will lower the price to $755,600 in the Oakland area. However, this takes into account San Francisco and San Jose, so it's hard to say for sure.

Oakland Housing Market Predictions

Overall, Oakland is doing well, and that shouldn't change much. However, there are a few things to note. For one, home values should decrease between 2023 and 2024, going down 2.7 percent. However, that's not a significant price drop.

Final Verdict

The Oakland real estate market hasn't been hit hard because of the last recession. In fact, it's thrived where others have failed. However, it's close to larger cities, which makes it a great choice for investors. Overall, activity and price points will pull back a little, but local demand is still too strong. Therefore, everyone should get what they want, including sellers, buyers, and investors.


Will the Housing Market in Oakland Crash?

No, it's unlikely that the Oakland real estate market will crash. Though more foreclosures and homes are sitting vacant, this can be a great thing for investors who want passive income through rentals.

Are Prices Dropping in Oakland?

House prices are dropping slightly in Oakland and should continue for the next year. However, that's not a huge concern. Large neighborhoods are still excessively high, so people will flock to Oakland instead.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!

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