Homeowners in parts of California are slashing the price of their properties by as much as 40 percent as they leave behind the explosive home appreciation that characterized the pandemic years.
A five-bedroom home in Oakland, California, that was listed for sale for $4.1 million in March 2022 is now once again available on real-estate marketplace Redfin for $2,550,000 after experiencing a price cut of more than 40 percent.
"Oof," wrote San Francisco Bay Area realtor Matt Castillo, who first spotted the listing, on X, formerly known as 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."
— Matt Castillo (@BayAreaREMatt) April 3, 2024Oof 😬
This house was sold in Oakland in March 2022 for 4.1M
Now it has been on the market over 60 days and just had a price cut from 3M to 2.55M
See AlsoWill 2024 be a better year for homebuyers? Here's what experts thinkIs It Worth Buying A House In California (UPDATED Analysis)Price Drop Alert: These 4 Expenses Should Get Cheaper in 2024Will mortgage rates go down in 2024?😬😬😬
Link in comments pic.twitter.com/ueCVlKefQD
The property's listing says the Oakland home had been listed in February 2022 for $2,995,000 before being sold for more than $4 million, less than a month later. Castillo thinks the buyer "got caught up in the hype of the red hot market (pre-interest rate hike) and paid 1.1 million over asking [price]," he wrote on X. "Now Oakland is having a moment and interest rates are high."
The "moment" that Oakland is living through is a difficult one. The city has seen several major retailers shutting down their stores in the city. They mentioned a rise in retail theft and other crime, which they said threatens the safety of both their customers and staff members.
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The Redfin listing also shows that the property tax on the home has skyrocketed in the past couple of years, rising by 125.3 percent between 2022 and 2023, and going from $26,319 to $59,307.
The price reduction on the five-bedroom home is not an isolated case, but it is representative of the whole area the property is located in. Journalist Lance Lambert wrote on X that home prices in Oakland's 94610 ZIP code are down 16.7 percent from their 2022 peak. Newsweek contacted Lambert for comment by email on Thursday morning.
Most of Northern California, according to a map based on Zillow data shared by Lambert on ResiClub, still have homes for sale for a price below their 2022 peak, even as the rest of the state—and especially Southern California—has seen prices climb back in the past year. Lambert says these local markets—including San Francisco and Oakland—are still suffering the impact of the recent tech sector's troubles, including trying to adjust to the rise of artificial intelligence (AI).
The following ZIP codes saw prices plunge by 15 percent and lower between February 2023 and 2024: 96041, Hayfork (-16.1 percent); 95526, Bridgeville (-18.7 percent); 95528, Carlotta (-15.6 percent); 95542, Redway (-16.1 percent); 95428, Covelo (-15.1 percent); 95454, Laytonville (-15.5 percent); 92347, Hinkley (-20.4 percent); 92242, Earp (-20.9 percent).
However, despite recent price cuts, home prices in California—including Oakland—remain historically high.
As of February 29, the average California home value was $765,197, according to Zillow, up 5.4 percent over the past year. Prices in the Golden State were more than twice as high as prices at the national level, where the average home value was $347,716, up 3.6 percent year-over-year.
Despite a modest fall during the so-called correction of late summer 2022 and spring 2023, home prices in California are now almost as high as they were during their peak in July 2022, when they reached an average of $769,345.
The bouncing back of home prices is mainly due to the fact that the state is still suffering from a historic supply shortage that is impacting the entire country. However, it is felt particularly strongly in California, where strict regulation presents an obstacle to the construction of new properties.
Read more: First-Time Homebuyer Guide
"By our estimate, there were approximately 217,000 total housing units started in Texas over 2023, 26,000 started in New York, and 106,000 started in California," Matthew Walsh, Moody's Analytics housing economist, previously told Newsweek.
The five-bedroom home in Oakland, even with the latest price reduction, was still priced 45.7 percent above its November 2020 sale price of $1.75 million.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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