The California housing market is one of the hottest in the country. The Bay Area, in particular, has witnessed unprecedented growth over the past few years. The region’s tech industry and the immense population explosion have been two major contributing factors to this growth. A city like Oakland is a perfect example of this dynamic. But how will the Oakland real estate market behave in 2020? Will it be a buyer’s market or a seller’s market? And is investing in Oakland real estate a smart move? This article will answer these questions in detail and provide you with an overview of the trends that will shape the Oakland housing market in 2020.
Related: Oakland Real Estate Market: To Invest or Not to Invest?
Oakland Real Estate Trends for 2020
Let’s take a look at some of the trends that are likely to dominate the Oakland housing market 2020.
1- The Oakland real estate market will continue to be ideal for rental property investments
Demand for rental property in Oakland is at an all-time high. In fact, over half of all properties in the city are occupied by renters. This trend is not slowing down anytime soon as Oakland will continue to be a rental-driven housing market due to high property prices. Moreover, the higher rental rates of neighboring San Francisco will play a significant role in driving more potential renters to Oakland. For Oakland real estate investors, buying investment property in the city is a great way to capitalize on this trend and generate high rental income and a good occupancy rate.
2- Home prices will see a slight increase
The Bay Area market has relatively cooled off in 2019. Home prices have actually plateaued compared to 2018. However, Oakland house prices will pick up again in 2020 as prices will rise by 1.6%. Investing in the Oakland housing market right now might allow you to profit from a strong market rebound over the next few months.
3- The tech sector will continue its rapid expansion in the city, driving demand
Oakland is already home to a number of tech companies. Some major tech names include the likes of Uber, Marqeta, and Hound Labs. As space becomes even scarcer in the San Francisco real estate market, more companies will be looking to establish offices east of the Bay Bridge. An increasing number of developers are starting to incentivize big tech companies by committing to large-scale projects that are tailored to the industry’s needs. For example, TMG Partners has begun developing an 875,000 square foot office tower that will be operational by 2021. As this expansion continues, the Oakland housing market will remain a prime target for real estate investors and renters alike.
4- Interest rates are expected to drop, making Oakland property more affordable
One of our most encouraging Oakland housing market predictions is the slight drop in mortgage rates. This trend is unfolding throughout the country as the Fed seeks to stay ahead of a potential economic downturn by cutting interest rates. In the case of Oakland CA real estate, interest will drop from around 4% to 3.7%. Financing an Oakland investment property will, therefore, be cheaper than it has been in the past few years.
Related: What the Fed Interest Rate Cut Means for Investors
5- Supply in the Oakland housing market will slowly increase as baby boomers move away
A long-term trend that will grow stronger in the future is the mass exodus of baby boomers. In fact, older residents have already begun downsizing and moving away to more affordable areas. Naturally, this will increase housing supply over the next few years, which would be beneficial to buyers in the next decade. But for 2020, this real estate market trend offers investors the chance to snap up prime real estate at decent prices.
6. The Oakland real estate market will be a seller’s market in 2020
Despite a relative cool off in the past few months, the Bay Area market is still a seller’s market. In fact, this trend will continue in the foreseeable future as demand will continue to outpace supply.
7. Airbnb Oakland investments will continue to face legal issues in 2020
Before making an Oakland real estate investment, it is imperative that you familiarize yourself with the rules that regulate short-term rental properties in the city. Oakland has a fairly complex regulatory framework for short-term rentals. There is a wide range of limits on how landlords can rent out their income property as well as several zone restrictions. Needless to say, navigating these Airbnb regulations is paramount when investing in Oakland short-term rentals.
Here is a brief overview of the main Oakland Airbnb laws that you need to know about before considering non-owner occupied rentals in Oakland:
- Landlords are not allowed to rent out a single-family home, duplex, apartment/condo, work unit, or room for less than seven consecutive nights.
- The rental of a secondary unit is limited to 30 days or longer.
- Transient Habitation for less than 7 days is permitted in certain zones subject to a conditional use permit.
As far as the forecast for 2020, it does not seem that Airbnb regulations will loosen up any time soon.
Related: 20 Cities with No Airbnb Legal Issues in 2020
Oakland Housing Market: City-Wide Data
Data is a critical step in investment property analysis. Before investing in the Oakland housing market, you need to be aware of some of the essential metrics that pertain to the city’s investment properties. Fortunately, you don’t need to look very far to get this data. Mashvisor’s rental property calculator is a great tool that provides you with all the necessary data that you need when searching for real estate investments.
Note that we have included Airbnb Oakland data as well for comparison and to provide a general overview of the real estate market. However, keep in mind that short-term rentals are banned in most areas in Oakland.
- Median Property Price: $776,817
- Price per Square Foot: $527
- Price-to-Rent Ratio: 23
- Traditional Rental Income: $2,878
- Airbnb Rental Income: $3,773
- Traditional Cash on Cash Return: 1.1%
- Airbnb Cash on Cash Return: 1.8%
- Airbnb Occupancy Rate: 66.5%
Data for the Best Neighborhoods in Oakland
Webster
- Median Property Price: $433,250
- Price per Square Foot: $449
- Price-to-Rent Ratio: 13
- Traditional Rental Income: $2,900
- Airbnb Rental Income: $3,655
- Traditional Cash on Cash Return: 4.1%
- Airbnb Cash on Cash Return: 4.8%
- Airbnb Occupancy Rate: 67.3%
Toler Heights
- Median Property Price: $459,000
- Price per Square Foot: $512
- Price-to-Rent Ratio: 13
- Traditional Rental Income: $2,900
- Airbnb Rental Income: $3,683
- Traditional Cash on Cash Return: 3.6%
- Airbnb Cash on Cash Return: 4.4%
- Airbnb Occupancy Rate: 63.8%
Hegenberger
- Median Property Price: $431,500
- Price per Square Foot: $351
- Price-to-Rent Ratio: 13
- Traditional Rental Income: $2,696
- Airbnb Rental Income: $3,461
- Traditional Cash on Cash Return: 3.0%
- Airbnb Cash on Cash Return: 4.0%
- Airbnb Occupancy Rate: 65.0%
Castlemont
- Median Property Price: $499,950
- Price per Square Foot: $406
- Price-to-Rent Ratio: 14
- Traditional Rental Income: $2,900
- Airbnb Rental Income: $3,464
- Traditional Cash on Cash Return: 3.3%
- Airbnb Cash on Cash Return: 3.5%
- Airbnb Occupancy Rate: 65.3%
Bella Vista
- Median Property Price: $997,000
- Price per Square Foot: $403
- Price-to-Rent Ratio: 23
- Traditional Rental Income: $3,560
- Airbnb Rental Income: $6,281
- Traditional Cash on Cash Return: 1.1%
- Airbnb Cash on Cash Return: 3.2%
- Airbnb Occupancy Rate: 64.8%
Durant Manor
- Median Property Price: $599,194
- Price per Square Foot: $460
- Price-to-Rent Ratio: 18
- Traditional Rental Income: $2,830
- Airbnb Rental Income: $3,432
- Traditional Cash on Cash Return: 2.1%
- Airbnb Cash on Cash Return: 3.2%
- Airbnb Occupancy Rate: 65.6%
Meadow Brook
- Median Property Price: $440,000
- Price per Square Foot: $451
- Price-to-Rent Ratio: 15
- Traditional Rental Income: $2,489
- Airbnb Rental Income: $3,083
- Traditional Cash on Cash Return: 2.5%
- Airbnb Cash on Cash Return: 3.0%
- Airbnb Occupancy Rate: 63.8%
Upper Peralta Creek
- Median Property Price: $545,000
- Price per Square Foot: $389
- Price-to-Rent Ratio: 16
- Traditional Rental Income: $2,900
- Airbnb Rental Income: $3,701
- Traditional Cash on Cash Return: 2.4%
- Airbnb Cash on Cash Return: 3.2%
- Airbnb Occupancy Rate: 65.0%
Invest in the Oakland Housing Market in 2020
The Oakland housing market offers a lot of opportunities to real estate investors. Regardless of which investment strategy you prefer, your ROI will be excellent. If you are ready to invest in Oakland real estate, use the Mashvisor property finder to start looking for Oakland houses for sale right now!
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