In regions of California, homeowners are significantly reducing property prices, some by up to 40%, departing from the meteoric home appreciation witnessed during the pandemic era.
For instance, a five-bedroom residence in Oakland, California, initially listed for $4.1 million in March 2022, has resurfaced on real estate platform Redfin for $2,550,000 following a price cut exceeding 40%.
Realtor Matt Castillo expressed surprise upon spotting the listing, commenting on X (previously Twitter), “This house was sold in Oakland in March 2022 for 4.1M. Now it has been on the market [for] over 60 days and just had a price cut from 3M to 2.55M.”
Castillo speculated on the circumstances, suggesting the buyer may have been swayed by the fervent market (before interest rate hikes), paying $1.1 million over the asking price. He noted, “Now Oakland is having a moment and interest rates are high.”
Oakland is grappling with a challenging period, witnessing the closure of numerous major retailers and grappling with increased incidents of retail theft and other crimes, posing threats to the safety of both customers and staff.
Property tax for the aforementioned home surged drastically over the past couple of years, escalating by 125.3% between 2022 and 2023, escalating from $26,319 to $59,307.
This reduction in home prices is not an isolated incident but indicative of the broader area’s trend. Journalist Lance Lambert reported on X that home prices in Oakland’s 94610 ZIP code have dropped by 16.7% from their 2022 peak.
Despite Southern California’s resurgence in prices, most of Northern California, including San Francisco and Oakland, is still struggling due to the tech sector’s recent challenges, particularly in adapting to advancements in artificial intelligence (AI).
Several ZIP codes experienced significant price drops between February 2023 and 2024, including 96041, Hayfork (-16.1%); 95526, Bridgeville (-18.7%); 95528, Carlotta (-15.6%); 95542, Redway (-16.1%); 95428, Covelo (-15.1%); 95454, Laytonville (-15.5%); 92347, Hinkley (-20.4%); 92242, Earp (-20.9%).
Despite recent adjustments, California’s home prices, including those in Oakland, remain historically elevated. As of February 29, the average home value in California stood at $765,197, a 5.4% increase over the past year, significantly higher than the national average of $347,716.
Even though there was a modest decline during the correction in late summer 2022 and spring 2023, California’s home prices are nearly as high as they were at their peak in July 2022, averaging $769,345.
The resurgence in home prices is primarily attributed to California’s enduring historic supply shortage, exacerbated by stringent regulations hindering new property construction, as explained by Moody’s Analytics housing economist Matthew Walsh.
Despite the recent price reduction, the five-bedroom Oakland home remains priced at 45.7% above its November 2020 sale price of $1.75 million.
