Oakland, CA Real Estate Market Trends & Analysis [Updated 2020]

Jump To Another Year In The Oakland Real Estate Market:

The Oakland real estate market in California has come a long way in a relatively short period of time. It is worth noting, however, that real estate in Oakland has been the primary beneficiary of significant tailwinds originating from its neighbor across the bay: San Francisco. As one of the hottest markets in the country, its close proximity to the Golden Gate City has certainly increased its potential to both residents and local investors. If for nothing else, the activity responsible for making San Francisco the poster child of the latest market recovery has also made it one of the most expensive places to live in not only the United States, but also the world. As a result, the Oakland housing market has seen an influx in interest, not the least of which has worked out very well for local investors with the ability to navigate today’s new marketplace.

Oakland Real Estate Market 2020 Overview

  • Median Home Value: $801,072

  • 1-Year Appreciation Rate: +5.7%

  • Median Home Value (1-Year Forecast): -1.1%

  • Median Rent Price: $3,000

  • Price-To-Rent Ratio: 22.25

  • Oakland-Fremont-Hayward Unemployment Rate: 13.4% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 433,031 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $68,442 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 10.93%

  • Foreclosure Rate: 1 in every 6,718 (1.4%)

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View of San Francisco with Oakland in the front

2020 Oakland Real Estate Investing

Not unlike every other real estate market across the country, Oakland has enjoyed a rather prosperous decade. Since the Great Recession tanked the U.S. housing market around the first quarter of 2012, in fact, real estate in Oakland has appreciated for more than eight consecutive years. Home values reached a peak in the first quarter of 2020, which begs the question: Is Oakland real estate a good investment?

Real estate investors who were participating in the market in 2012 will certainly tell you their local market has been particularly lucrative. With prices appreciating in the wake of what was a foreclosure crisis, rehabbers had a field day. To this day, in fact, rehabbers have found the Oakland real estate market to be a great place to invest. It is worth noting, however, that the market is shifting. Not only did prices reach a new peak in the first part of 2020, but the introduction of “shelter-in-place” orders in the wake of the Coronavirus brought about the first real obstacle for the housing sector in nearly a decade.

While rehabbers still have the opportunity to run a lucrative business in the local real estate market, new and emerging indicators are making long-term exit strategies more appealing. Three Oakland real estate market trends, in particular, look as if they will cater more to rental property owners than rehabbers for the foreseeable future:

  • Interest rates on traditional loans are historically low

  • Years of cash flow can easily justify today’s higher acquisition costs

  • Inventory shortages will increase rental demand

As of June, the average rate on a 30-year fixed-rate loan was 3.16%, according to Freddie Mac. June also represented one of the lowest average mortgage rates ever, and the Fed announced its intentions to keep rates low for the foreseeable future. As a result, lower borrowing costs have brought down acquisition costs for those looking to add to their passive income portfolio. At their current rate, mortgage rates will save today’s buyers thousands of dollars, and real estate investors will be able to pad their bottomline.

Lower borrowing costs will help absorb today’s high prices, but it’s the cash flow potential of real estate assets which makes the prospect of owning a rental property even more attractive. With a median rent price of $3,000, it is possible to simultaneously rent out an investment property while having someone else pay down the mortgage. That way, investors could potentially build equity in a physical asset and collect cash flow each month with the right long-term investment.

Perhaps even more importantly, the city looks to be the beneficiary of an exodus of renters from its neighbors: San Francisco and San Jose. As some of the most expensive cities to live in, San Jose and San Francisco are seeing more people travel to the East Bay in search of slightly lower prices without giving up the Bay Area lifestyle. The exodus has actually brought about a drop in rental rates for San Jose and San Francisco, making real estate investors the true winners.

According to Zillow, via CBS, “rent prices are down across much of the Bay Area. In San Francisco, Zillow says rent prices declined 3.2 percent compared to the same time last year. In San Jose, prices fell 1.4 percent.”

The CBS Bay Area affiliate was quick to point out “Oakland’s rental market was the only to buck the trend, basically holding steady with a modest 0.6 percent increase in June.”

While its neighbors actually saw a year-over-year drop in rental prices, the city realized an increase, which bodes well for long-term investors with rental properties. The increase may be explained by the influx of new renters. Those escaping the high prices of San Jose and San Francisco are creating more demand and competition, which has allowed landlords to increase rents and cashflow.

Investors are lucky to have a number of viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

2020 Foreclosure Statistics In Oakland

Oakland’s foreclosure rate is relatively high, at least when compared to the national average. At 1.4%, one in every 6,718 homes in the “bright side of the Bay” are distressed default, auction or bank owned). While the local foreclosure rate may not seem too high at first, however, it’s more than double that of the national average. The country as a whole, on the other hand, currently boasts a foreclosure rate of 0.6%

Despite being higher than the national average, this city’s foreclosure rate has made significant improvements in just one year’s time. As recently as June, in fact, “the number of properties that received a foreclosure filing in Oakland, CA was 85% lower than the previous month and 78% lower than the same time last year,” according to RealtyTrac. For some added context, the U.S. foreclosure rate dropped 81% over the same period of time, beating Oakland’s improvement by a most 3%. It should be noted, however, that the presence of the Coronavirus has already started to increase foreclosures across the country. On a national level, foreclosures increased 5% from May to June. While the East Bay city has yet to see an increase in foreclosures, an influx is all but certain. The financial hardships onset by the pandemic and a government shutdown will most likely prove too much for many homeowners.

As of August, pre-foreclosures currently make up about half of the city’s distressed inventory. As their names suggest, pre-foreclosures haven’t officially been foreclosed on, but are instead at risk of being foreclosed on; their owners have neglected to keep up with mortgage obligations and are on the brink of filing for foreclosure. Nonetheless, these homeowners are more likely motivated to sell, as they would rather not have to file for bankruptcy, too. That’s where real estate investors come in.

Local investors have the opportunity to help financially strapped homeowners avoid bankruptcy and acquire a deal with potentially attractive profit margins. Therefore, in marketing to homeowners who are currently behind on their mortgage payments (the information is made public at local courthouses), Oakland real estate investors can increase their odds of locating their next deal.

To narrow the search down even further, here’s a list of the neighborhoods with the highest distribution of foreclosures:

  • 94621: 1 in every 5,172 homes is currently distressed

  • 94607: 1 in every 6,148 homes is currently distressed

  • 94618: 1 in every 7,464 homes is currently distressed

  • 94609: 1 in every 10,208 homes is currently distressed

2020 Median Home Prices In Oakland

Oakland’s median home value is $801,072, according to Zillow. At its current price point, the median home value is up approximately 145.7% from the first quarter of 2012 (when the Great Recession was at its worst). Today’s median home value is, therefore, the result of more than eight consecutive years of appreciation, 5.7% of which happened over the last 12 months (June 2019 to July 2020). For all intents and purposes, the Oakland real estate market has enjoyed a historic run.

To put things into perspective, the median home value in the United States is $248,857, according to Zillow. In the first quarter of 2012, the median home value in the U.S. bottomed out around $161,000. The difference suggests the median home value across the entire country appreciated 54.5% in a little over eight years, or a little more than one-third of the Oakland housing market.

One of the largest tailwinds boosting home values is the city’s close proximity to San Francisco and San Jose. The overpriced valuations of its two neighbors, which are some of the most expensive cities in the country, have forced many people to consider the East Bay home. As a result, real estate has been desired by homeowners from three cities for quite some time. Demand slowly gave way to fierce competition, and the lack of available housing inevitably granted homeowners all of the power. If for nothing else, there simply aren’t enough homes to satiate demand in the Bay Area, and Oakland home values came out on top.

Due to supply and demand discrepancies, these neighborhoods have become the most expensive in Oakland (according to NeighborhoodScout):

  • Estates Dr / Pershing Dr

  • Broadway / Taft Ave

  • College Ave / Lawton Ave

  • Chabot Rd / Claremont Ave

  • Leimert Blvd / Monterey Blvd

  • Lakeshore Ave / Mandana Blvd

  • Telegraph Ave / Alcatraz Ave

  • California College of the Arts / Maxwelton Rd

  • Shattuck Ave / Alcatraz Ave

  • Grizzly Peak Blvd / Claremont Ave

Despite the drastic run up in real estate prices, the city saw improvements in affordability in the first quarter of 2012. According to Attom Data Solutions, in fact, Oakland saw some of the biggest affordability improvements in the last year

According to Attom Data Solutions’ first-quarter 2020 U.S. Home Affordability Report, “Counties with at least 1 million people that saw the biggest annual improvement in their affordability indexes include New York County (Manhattan), NY (index up 23 percent); Bronx County, NY (up 19 percent); King County (Seattle), WA (up 14 percent); Alameda County (Oakland), CA (up 13 percent) and Contra Costa County, CA (in the San Francisco metro area) (up 12 percent).”

Oakland Housing Market: 2018 Summary

  • Median Home Value: $750,800

  • 1-Year Appreciation Rate: 9.2%

  • Median Home Value (1-Year Forecast): 7.8%

  • Median Rent Price: $3,150

  • Number Of Foreclosures: 489

  • Homes For Sale: 209

  • Recently Sold: 2,100

  • Median Days On Market: 40

Oakland Real Estate Investing 2018

The Oakland real estate market was one of the hottest real estate markets in a state that had already demonstrated a propensity for increased real estate activity in 2018. Due, in large part, to its close proximity to San Francisco, local real estate was placed on a pedestal, according to Oakland real estate news at the time. Even more importantly, however, demand remained intact, despite the exponential increases in prices. Oakland real estate trends spelled great news for investors at the time.

Not unlike just about every other market in California at the time, the East Bay saw home values increase at an exponential rate. At the end of 2011 (just seven years prior), median home values had barely eclipsed the $300,000 mark. However, thanks to the recovery and a distinct lack of inventory, local home prices shot up. In one year’s time (2017 to 2018), the median home value increased 9.2%. Of all the Oakland real estate market trends, this one remained the most steadfast.

The local real estate market was fortunate enough to piggyback off of the success of San Francisco. As one of the hottest housing markets in 2018 (till this day), San Francisco helped each of its neighbors thrive. As a result, the East Bay real estate market was allowed to take off. So much so, in fact, the local market had more of an inventory shortage than most of its national counterparts. Inventory levels, or lack thereof, simultaneously hampered access and drove prices up. Fortunately, demand never faltered, and still remains strong to this day.

Oakland Housing Market: 2015 Summary

  • Current Median Home Price: $520,000

  • 1-Year Appreciation Rate: 13.4%

  • Unemployment Rate: 5.9%

  • Population: 406,253

  • Median Household Income: $51,683

Oakland housing market statistics.

Oakland Real Estate Investing 2015

The local economy managed to keep pace with the entire state of California, according to Oakland real estate trends at the time. That said, the East Bay trailed its neighbor to the East: San Francisco. That is not to condemn Oakland’s economic standing, but rather to identify the strength of San Francisco in 2015. Oakland made up a lot of ground since the Great Recession. Due largely, in part, to the area’s technology industry, the Oakland housing market became the beneficiary of massive construction efforts. New construction projects were actually the city’s primary source of economic growth at the time, which made the city’s outlook more positive than it had been in years.

An FHFA (Federal Housing Finance Agency) report identified Oakland as the metro where home prices rose the most in the United States at the time. At 13.4%, the housing market had the highest spike in home values over the first quarter of 2015. According to Zillow, home prices were even expected to jump another 7.1% in the next year.

Distressed properties sold for much less than those of a non-distressed nature in 2015. The average non-distressed home sold for approximately $444,000. On the other hand, foreclosures had an average sales price of $363,175, or 18.0% lower than non-distressed home sales at the time; that was a savings of more than $80,000 per home.

Oakland County Map:

Map of Oakland neighborhoods

Oakland Real Estate Market Summary

The Oakland real estate market has enjoyed a great run since the end of the last recession. On its own merits, the local housing sector not only recovered, but also thrived. However, the city’s close proximity to San Francisco took an already good situation for investors and made it a great one. In the midst of a pandemic, prices and activity will pull back slightly, but local fundamentals and demand are too strong to keep the city down for any lengthy period of time. As a result, the obstacles created by the Coronavirus should be viewed as an opportunity for everyone looking to participate in the market: buyers, sellers and investors.

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.
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