Oakland home values drop more than 11% over past year, marking one of steepest declines in nation

OAKLAND, Calif. (KGO) -- Home prices in Oakland have dropped over the past year, according to new data, prompting concerns about the strength of the local housing market even as real estate agents and experts say the numbers do not tell the full story.

In the latest data from real estate company Zillow, the typical home value in Oakland fell 11.4% in the past year to about $716,000, adjusted for inflation. The decline has led some to label the city one of the toughest housing markets in the country.

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For homeowners preparing to sell, the sharp drop can be unsettling. In Oakland's Adams Point neighborhood, Red Oak Realty Realtor Lindsay Ferlin is getting a two-bedroom, one-bathroom condo ready for the market. The owners are investing in upgrades she believes will pay off.

"Changing the countertops, changing the floors, painting the cabinets," Ferlin said. "With the changes we're gonna make, it is an investment, it's about a $40,000 investment."

Ferlin expects the investment to yield strong returns, and she disputes broader characterizations of the market.

"It's very misleading, and it is not the whole story," she said.

Housing experts say Oakland's market is more complex than a single set of numbers suggests. Sarah Kurlansky, director of research and policy at UC Berkeley's Terner Center for Housing Innovation, said the Bay Area does not move as one unified housing market.

"The Bay Area is a bunch of micro markets," Kurlansky said.

She said conditions can vary significantly by neighborhood, with demand shifting based on factors such as location and buyer sentiment.

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"Perceptions of crime also play into this. I would say longstanding issues related to racism also play into this in terms of where prospective homebuyers are seeking to purchase homes," Kurlansky said.

Ferlin also pointed to differences between housing types as a factor in the data. She said combining condo and single-family home prices can skew overall figures. In addition to higher mortgage rates, she cited stricter inspection requirements following the deadly 2015 East Bay balcony collapse as a challenge for condo buyers.

"That is a barrier, and that is reducing the buyer pool for condos, which is reducing the prices," Ferlin said.

While Oakland prices have declined, nearby San Francisco has seen modest gains, with home values increasing about 2% over the past year, according to Zillow data, partly driven by the artificial intelligence sector.

Kurlansky said rising demand in San Francisco could eventually influence surrounding communities.

"Whether that carries over to Oakland will be just another question. And see, I think it's pretty likely that tends to be the way that things, these things go," she said.

Ferlin said she is already seeing signs of that trend.

"What happens in San Francisco eventually makes its way into the East Bay," she said.

For now, agents say sellers may take a wait-and-see approach, while buyers could find opportunities as prices adjust.

Realty site Redfin says there are roughly 630,000 more sellers than buyers nationally.