It's a new year, and it brings a whole new set of questions from Bay…
The housing market forecast for Oakland, California can be summed up with a single sentence. Strong demand and very tight supply will continue to put upward pressure on home prices through 2020 and into 2021, despite the COVID-19 situation.
A recent forecast from Zillow predicted that home prices in Oakland could dip slightly over the next year. But that’s not a foregone conclusion. In fact, “spillover” demand from the pricier San Francisco and San Jose real estate markets could help Oakland avoid any major price drops in 2020.
Oakland Housing Forecast Into 2021
A recent forecast for the Oakland, California housing market predicted that home prices could level off — or even dip slightly — over the next year or so.
In June of 2020, the research team at Zillow stated:
“Oakland home values have gone up 5.7% over the past year and Zillow predicts they will fall -1.1% within the next year.”
But that’s just one forecast, and it might not be taking the whole picture into account. A recent real estate industry report showed that a lot of home buyers who currently live in San Francisco and San Jose are eyeing Oakland as a more affordable alternative. And that could boost demand in the future.
Work-from-Home Culture Steers Buyers Into Oakland
The rise in remote working — driven in part by the ongoing coronavirus pandemic — is changing the way people think about work and life.
A lot of folks who work for companies based in Silicon Valley and San Francisco are now able to work remotely. This gives them the freedom to expand their housing searches to more affordable suburban areas.
In May, the national real estate brokerage Redfin published a press release that focused on this trend. Here are some highlights from that report:
- The housing market in Oakland and suburban parts of the Bay Area is “recovering at a faster rate than in San Francisco or San Jose,” the report stated.
- Home sales have started to increase throughout the Bay Area, following a slowdown that occurred back in April. But demand from home buyers appears to be strongest in Oakland.
- Compared to places like San Francisco and San Jose, homes for sale within the Oakland housing market tend to be bigger and more affordable. They also have more outdoor space, in many cases. That’s a powerful lure in times like these.
- All of these factors could drive more home sales in the Oakland area during the second half of 2020.
This increase in demand could help the local real estate market avoid price erosion through this year and into 2021.
According to Taylor Marr, Redfin’s lead economist:
“The trend toward the suburbs will grow stronger and stronger as the pandemic continues and work-from-home culture becomes more entrenched. Places like Oakland are capturing people who are leaving San Francisco and San Jose because if employees are able to work remotely three or four days a week, a longer commute is well worth the trade for more space.”
According to the U.S. Census Bureau, the population of Oakland rose by nearly 11% from 2010 to 2019. That was quite a bit higher than the national growth rate of 6.3% during that same nine-year period.
This is a key factor influencing housing market forecasts and conditions for Oakland, California. Population growth brings more home buyers into the market, at a time when supply is limited. It also helps to sustain house values during times of economic weakness.
Inventory Remains Well Below Average
We’ve covered the demand side of the equation above. Affordability and the recent rise in remote working are sending more home buyers into the Oakland housing market.
There’s another important trend happening on the supply side. In short, there aren’t enough homes listed for sale in Oakland to satisfy the increasing demand from buyers. This imbalance could help the local real estate market survive the economic downturn of 2020.
According to the Redfin report cited earlier, new property listings in Oakland were down 39% in the first half of May 2020, compared to a year earlier. This metro area had about a 1.8-month supply of homes for sale as of April 2020. That’s well below what is considered to be a balanced housing market.
That 1.8-month figure is also significantly lower than the national average for the same timeframe. So we’re talking about a constrained housing market with limited inventory, which is driving competition among buyers.
Homes Selling Quickly, Despite the Pandemic
You might think the a public health crisis would bring the real estate market to a grinding halt. And back in April, we seemed to be heading in that direction. But home sales have increase in many parts of the country, in recent weeks.
This is an area where the Oakland housing market is outperforming many other metro areas in the U.S. Homes are selling quickly in the area, due to the supply-and-demand imbalance mentioned earlier.
According to Oakland real estate agent Katy Polvorosa:
“Move-in ready houses in Oakland are selling in five to 10 days with multiple offers. There are fewer homes on the market, but almost as many people searching as there were pre-pandemic … Nowadays, buyers want offices where they can work from home … they want space, and they want yards where the kids can play.”
All in all, the forecast for the Oakland real estate market appears to be relatively favorable, considering the circumstances. And as California continues its multi-stage economic reopening plan, this market could heat up even more.
Disclaimer: This article contains forecasts and predictions relating to the Oakland housing market in 2020. Some of those statements were provided by third parties not associated with our company. Real estate and economic predictions are the equivalent of an educated guess.