Oakland, CA Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Mon, Apr 19 2021

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. However, it is worth noting 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 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 the United States and 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 2021 Overview

  • Median Home Value: $866,886

  • 1-Year Appreciation Rate: +8.9%

  • Median Home Value (1-Year Forecast): N/A

  • Median Rent Price: $3,000

  • Price-To-Rent Ratio: 24.08

  • Oakland-Fremont-Hayward Unemployment Rate: 6.9% (latest estimate by the Bureau Of Labor Statistics)

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

  • Median Household Income: $73,692 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 10.93%

  • Foreclosure Rate: 1 in every 5,894 (1.6%)

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View of San Francisco with Oakland in the front

2021 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, real estate in Oakland has appreciated for more than nine consecutive years. Today, local home values continue to test new highs, which begs the question: Is Oakland real estate a good investment?

Real estate investors 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. It is worth noting, however, that the market is shifting. Not only did prices continue to appreciate over the course of the pandemic, a distinct lack of inventory continues to drive prices higher.

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. In particular, historically high home values have left little room for profit margins on flips. In response, investors have turned to alternative exit strategies: long-term rental properties.

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 March, the average rate on a 30-year fixed-rate loan was 3.08%, according to Freddie Mac. March 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 bottom line.

Lower borrowing costs will help absorb today’s high prices, but it’s the cash flow potential of real estate assets that 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 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 see 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.

Investors are lucky to have several viable exit strategies at their disposal. Still, 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.

2021 Foreclosure Statistics In Oakland

Oakland’s foreclosure rate is relatively high, at least when compared to the national average. At 1.6%, one in every 5,894 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 double that of the national average. The country as a whole, on the other hand, currently boasts a foreclosure rate of 0.8%

The presence of the Coronavirus has already started to increase foreclosures across the country. As of April, pre-foreclosures made up more than 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:

  • 94603: 1 in every 2,572 homes is currently distressed

  • 94607: 1 in every 4,099 homes is currently distressed

  • 94605: 1 in every 4,167 homes is currently distressed

  • 94611: 1 in every 4,420 homes is currently distressed

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

2021 Median Home Prices In Oakland

Oakland’s median home value is $866,886, according to Zillow. At its current price point, the median home value is up approximately 165.9% from the first quarter of 2012 (when the Great Recession was at its worst). Therefore, today’s median home value is the result of more than nine consecutive years of appreciation, 8.9% of which happened over the last 12 months (February 2020 to February 2021). For all intents and purposes, the Oakland real estate market has enjoyed a historic run few markets could compete with.

To put things into perspective, the median home value in the United States is $272,446, 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 that the median home value across the entire country appreciated 69.2% in a little over nine years, or less than half the appreciation rate in the Oakland housing market.

One of the largest tailwinds boosting home values is the city’s 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 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

Oakland Housing Market: 2020 Summary

  • 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%)

Oakland Real Estate Investing 2020

The thesis behind Oakland real estate investing was radically changed once the impact of COVID-19 on the real estate market officially took hold. In 2020, Oakland real estate investors operated like everywhere else: rehabs were the most prominent exit strategy exercised by real estate entrepreneurs. Once the pandemic was officially declared by the end of the first quarter, it looked as if a pullback in prices would continue the trend of rehabs. However, the pullback was short-lived, as the government quickly dropped interest rates to inspire buyers to get back into the market. Dropping well below three percent, interest rates served as a catalyst, and more people started actively participating in the market than anyone could have imagined.

Increased activity led to more demand for the little housing available in the Oakland real estate market. In a matter of weeks, demand turned into heavy competition, which allowed homeowners to increase asking prices. From when the pandemic was declared to the end of 2020, real estate in Oakland appreciated by an average of 8.4%. The rise, on the heels of nearly a decade’s worth of price increases, drastically reduced profit margins for rehabbers. The Oakland real estate market was too expansive for most investors to realize worthwhile profits through flips.

As a result, most investors in Oakland turned to long-term exit strategies. In particular, market fundamentals appeared to favor building a rental property portfolio in 2020. Lower profit margins on flips, combined with historically low interest rates, meant rentals had more upside at the time. That’s not to say there weren’t flipping opportunities (there were), but rather that market indicators leaned heavily in favor of rentals. Low borrowing costs simultaneously justified high home values and increased cash flow every month.

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 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 (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 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 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.

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