With home prices in San Francisco beyond the reach of all but the elitest of the elites, it appears the "just well off" are migrating to Oakland in search of affordable properties. Despite being the second most dangerous city in America, Bloomberg reports that Oakland’s housing market is still soaring even as growth cools in San Francisco as the East Bay city had California’s highest annual appreciation of home values and the biggest rent growth of the 50 largest U.S. cities.
Despite persistently high crime rates and political turmoil, Oakland is attracting residents for its relative affordability, vibrant cultural scene, diverse population and urban environment within commuting distance to San Francisco.
As Bloomberg details, companies such as Uber Technologies Inc. are moving in -- helping to fuel a 43 percent jump in office rents in two years -- while big investors including Blackstone Group LP and Boston Properties Inc. are putting money into residential projects in the city.
“Oakland is the hottest residential real estate market in the Bay Area,” said Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. “It’s still expensive, but it’s more affordable” than San Francisco.
“Something we had to wrap our head around really quickly was the fact that we were automatically going to bid at least 30 percent over asking,” said Smith, a 50-year-old strategy consultant who moved from San Francisco in search of more space for her family’s three kids.
“It’s the new normal."
Oakland home values soared 16 percent in June from a year earlier to a median $616,300, the biggest gain of California’s major cities, according to Zillow. The median monthly rent jumped 15 percent, the most in the U.S., to $2,846 in the same period. That was almost triple the 5.5 percent growth in San Francisco, and more than five times the nationwide increase.
Houses are selling fast -- and far above list prices. The average home in Oakland sold for 17 percent more than asking in the second quarter, according to data from Paragon Real Estate Group measuring properties that didn’t go through a price reduction first.
The median home price in Oakland has soared 178 percent since 2011, almost double the gain in San Francisco, Paragon data show.
As a reminder, Oakland is still struggling with a reputation for social and political unrest.
Its police department is operating without a chief after three departed, one after another, in the span of about a week in June amid a sex scandal involving officers and a teenage prostitute.
It’s also an epicenter of social protests, including those connected to the Black Lives Matter and Occupy Wall Street movements.
The troubles aren’t deterring newcomers, city officials say.
Finally, while there are certainly parts of the Oakland area that are beautiful places to live, the proximity to the real Oakland means - quite simply, that Oakland is not San Franciscos' "Brooklyn."