The trajectory reversed as mortgage rates climbed following those pandemic-era highs
The US housing market has been sorting itself sharply into winners and losers in 2026, and nowhere is that divide more vivid than in Oakland, California, and Cape Coral, Florida.
The two cities have emerged from Zillow's latest analysis of 894 housing markets as the nation's joint worst performers. Each recorded an inflation-adjusted year-over-year price decline of 11.4% among all US cities with populations above 100,000.
The average home value in Oakland currently stands at approximately $716,000, down roughly 8.5% compared to last year in nominal terms, according to the most recent Zillow data from March.
Adjusting for inflation sharpens the picture considerably: the year-over-year decline represents a drop of more than $90,000, or about 11.4%.
The retreat in Oakland is not a short-term blip. Home values in the California city have dropped by 28% since March 2019, and prices have not been this low since 2015. That's a stark contrast from the market's peak, when the typical home value topped $1 million.
The trajectory reversed as mortgage rates climbed following those pandemic-era highs, and unlike neighboring San Francisco, which has benefited from a partial tech-sector recovery, Oakland has not seen the same economic tailwinds.
Read more: US home price growth turns negative for first time since 2012
Across the country in Southwest Florida, Cape Coral is mirroring Oakland's pain through a different economic lens. The city's average home price sits at approximately $338,000. The figure is actually 9.7% above its 2019 level, but has fallen 11.4% from this time last year.
That apparent paradox reflects just how dramatically Cape Coral inflated during the pandemic migration wave, when Northeasterners relocated en masse to Sun Belt markets in search of space and lower taxes.
Meanwhile, Veros Real Estate Solutions’ latest VeroFORECAST revealed that “several Sun Belt markets that saw rapid growth during the pandemic [were] now facing headwinds.” Cape Coral–Fort Myers, Fla. (‑2.7%) were among the weakest markets.
The Federal Housing Finance Agency's own data reinforce the geographic bifurcation. FHFA data showed house prices rose in 66 of the 100 largest metropolitan areas over the past four quarters, while Cape Coral-Fort Myers recorded a 9.1% decline.
NAR chief economist Lawrence Yun noted that markets experiencing home price declines were "concentrated primarily in Florida and Texas."
That regional concentration matters for mortgage professionals. Brokers working in Florida and California should be paying close attention to how rapidly shifting housing affordability and price trends are reshaping borrower conversations, and not just in the distressed markets.
Spillover anxiety from Cape Coral has already begun to temper sentiment across broader Southwest Florida, including markets such as North Port-Sarasota-Bradenton, where Zillow and Florida Realtors project additional price softening by mid-year.
The interest rate environment is a persistent accelerant of these pressures. After the 30-year fixed mortgage rate briefly dipped below 6% in late February, fresh energy-price shocks pushed it back to roughly 6.4% by late March, removing what had been a brief window of improved buying conditions.
In Oakland, the math remains prohibitive for first-time buyers even with the city's falling prices: Zillow estimates that a monthly mortgage payment on the average Oakland home, with a 20% down payment, would run approximately $3,680, exceeding what most renters currently pay.
For brokers, the practical implication is a negotiating environment that heavily favors buyers who are prepared to move.
Read more: UWM’s Ishbia: Despite current headwinds, rates will drop this year, and brokers will dominate
Samantha Shelton, mortgage broker and president at Align Lending, previously told Mortgage Professional America that she expected the market to shift toward "more inventory as rate-locked sellers regain confidence" and "steadier and more predictable buyer demand" by this point in 2026.
In markets such as Oakland and Cape Coral, that inventory has arrived, but the predicted demand stability has been far slower to materialize.
Bruce Gehrke, senior director of wealth and lending intelligence at JD Power, told Mortgage Professional America that the current environment makes the broker's local advantage more valuable than ever.
"I think brokers need to continue to focus on where their competitive advantage has always been," Gehrke said.
"That's more local, that's more personal, face-to-face with the borrower. I think that's still an advantage that they have."
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