Your home is still increasing in value, but Zillow expects the pace of appreciation to slow.
The value of your Oakland house is going up, but the real estate analysis firm Zillow is forecasting that it will appreciate significantly less this year than it did last year.
Seattle-based Zillow is predicting that Oakland home values will increase by an average of 5.6 percent in 2015, down from a whopping 12.1 percent jump in 2014, suggesting that the recent real estate feeding frenzy may be winding down. The median price of homes listed in Oakland at the end of January was $389,950 with a median sales price of $438,900.
The predicted slowdown in local value increases is part of a nationwide trend, according to Senior Director of Economic Research Svenja Gudell.
Gudell said more homes are starting to come onto the market and demand is slowing, especially from investors, as prices have risen. She called that a good thing, “since home value appreciation at the level we’ve been seeing isn’t sustainable. High-end neighborhoods are slowing down, just like lower-end neighborhoods.”
According to Zillow’s breakdown of 73 Oakland neighborhoods, the strongest leveling off in prices seems to be coming in neighborhoods such as Glenview, which were once attractive for first-time buyers but now are entering the lower end of the move-up market. Home values in Glenview, directly east of Park Boulevard and north of Interstate 580, have declined 0.4 percent in the past year and are expected to rise a paltry 0.9 percent in 2015. The median home value in Glenview has risen to $726,600, putting it out of reach of most first-time buyers.
Appreciation in nearby Trestle Glen, at the higher end of the market, has been dramatic, with values up 11.2 percent from a year ago. But Zillow is predicting a marked slowdown in 2015, with values rising by 4.4 percent in 2015. The median value of a home in Trestle Glen, situated between Lakeshore Boulevard and Park Boulevard east of I-580, is $1.02 million.
Many homes in the lower end of the market that are accessible to first-time buyers have seen values rising the most on a percentage basis, but are also due for a leveling off, according to Zillow.
For example, values in Upper Peralta Creek, immediately south of I-580 and east of Coolidge Avenue, went up a striking 16.3 percent in 2014, but are expected to rise at a far more moderate 5.2 percent this year. Median home values in the neighborhood are $409,800, according to Zillow.
The market will remain hot in neighboring Allendale, where Zillow is predicting value increases of 7.3 percent in 2015 compared with 14.3 percent over the past year. The median home value in Allendale is $344,300, making it an affordable area for many first-time buyers.
Values in Oakland have a very wide range depending on neighborhood, from a median of $1.26 million in Upper Rockridge to $225,000 in the Coliseum district directly across San Leandro Street from O.co Coliseum.
On another front, Zillow is reporting that foreclosures will continue to put more downward pressures on home price appreciation in Oakland than in some other parts of the Bay Area. The percentage of Oakland homeowners who are underwater with their mortgages, meaning that their homes are worth less than they owe, is 10.6 percent compared with 7.3 percent in the San Francisco Metro region as a whole. That region includes San Francisco, the North Bay, and most of the Peninsula and East Bay. In the past year, Home values have increased less on a percentage basis in San Francisco than in Oakland and are expected to rise more slowly percentage-wise this year, although median values are about twice as high at $984,500. San Francisco home values rose 8.9 percent over the past year, and Zillow is predicting they will rise 2.8 percent in 2015.
The percent of San Francisco homeowners underwater on their mortgages is a rock-bottom 3.8 percent, compared, again, with 7.3 percent in the San Francisco Metro region as a whole, meaning that the underpinnings of values appear to be very solid.
At the same time, Zillow’s Market Health Index rates the San Francisco market as “very hot” compared with “warm” in Oakland. Gudell said that Zillow looks at 10 different variables, including home values, year-over-year and month-after-month appreciation, time on market and percent of homes selling for gain in computing the index. “Oakland could have been less hot than San Francisco in any one of those variables,” she said.