Why Are Home Prices Plummeting By 40% In Oakland, California? – Yahoo Finance

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Why Are Home Prices Plummeting By 40% In Oakland, California?

Why Are Home Prices Plummeting By 40% In Oakland, California?

After years of languishing in San Francisco’s shadow, Oakland, California, experienced a real estate boom that saw prices surge immediately after the pandemic. Today, many Oakland homeowners are making dramatic price reductions to sell their homes, and some Oakland-area ZIP codes are looking at price drops of over 15%. What’s wrong with Oakland real estate?  Is this a blip on the radar or the beginning of a market correction?

The Numbers Paint An Ugly Picture

From the outside looking in, Oakland has everything a city needs to be a real estate powerhouse. It’s by the San Francisco Bay, and the hills above Oakland offer sweeping views of the area skyline. Yet a perfect storm of neglect, civic dysfunction and a decline in shipping through the port of Oakland combined to leave its property values lagging behind those of the city’s wealthier neighbors.


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The average home price in Oakland in 2012 was $196,000 before it surged to a peak of $499,00 in the second quarter of 2022. Today, the average price for Oakland and the surrounding area is $479,000. The $20,000 drop reflects a roughly 5% decline, but a deeper look at the numbers reveals an ugly picture for some Oakland homesellers.

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An example of the decline is an Oakland home that sold for $4.1 million in 2022 and has now been relisted on Redfin for $2.5 million. That’s a 40% price drop for a property that was originally listed at $2.9 million 60 days ago before the sellers reduced the price further. Bay Area Realtor Matt Castillo summed it up best on X in one word: Oof.

Big Price Drops In Other Oakland ZIP Codes

The 40% drop Castillo referenced in his post is an extreme example, but other Oakland ZIP codes are experiencing steep price declines. Zillow shows the average home price in Oakland’s Piedmont section (ZIP code 94610) is down 26.8% from a year ago. The average price in Piedmont is still $2.6 million, but if you’re a Piedmont homeowner, you lost nearly $1 million worth of equity in just 12 months.

Would-be sellers in the Piedmont-adjacent Montclair section of Oakland (94611) are also suffering a decline in real estate values. Prices in Montclair are down 25.6% from 2023. Home values in neighboring ZIP code 94618 are down 22% over the last year. That means anyone who bought a home in any of these ZIP codes in the last 12 months is likely underwater in terms of the home’s current value versus the mortgage pay-off.

Sports Franchises And Major Chains Heading For The Exit

Declining real estate values are only one of the problems facing Oakland. Just 10 years ago, Oakland had three major sports teams, the NFL’s Oakland Raiders, the MLB’s Oakland Athletics, and the NBA’s Golden State Warriors. The Warriors moved into a shiny new building across the bay in San Francisco. The Raiders moved to Las Vegas and the A’s have a deal in place to follow them.

The A’s wanted out of town so badly that they agreed to play this year in a 14,000-seat stadium in Sacramento instead of the Alameda County Coliseum, which seats 60,000. The Coliseum is a crumbling multipurpose stadium with flooding toilets, leaking bleachers and none of the ancillary revenue generators (restaurants and bars) that modern sports franchises need to be successful.

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Oakland’s core neighborhoods are so plagued by crime that nationally recognized hamburger chain In-N-Out Burger announced it would close its Oakland location. It is the first time in the chain’s 75-year history that it has had to close a location, and the company’s Chief Operating Officer cited “ongoing issues with crime” as a motivating factor.

Could Oakland’s Troubles Spread To The Rest Of California?

The last 12 to 24 months have been difficult for Oakland, and that’s especially true for Oakland real estate. The larger question facing real estate investors is whether Oakland’s troubles are a blip on the radar or an ominous precursor of a larger market correction coming to California. It’s always difficult to predict the future but the reality is that even during its boom a few years ago, Oakland had deep-seated challenges.

The issues of street crime and homelessness plague both Los Angeles and San Francisco, but to date, they have not suffered the kind of drastic drops in property value that are taking place in Oakland. “Trust the good book and California real estate” is an old saying among West Coast real estate agents. Overall, that probably still stands, but for now, Oakland has lost its status as a “can’t-miss” real estate market.

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