Rents in Oakland have fallen faster than anywhere else in the US for a simple reason: The city built more housing

• Oakland, California is proving the laws of supply and demand are alive and well in the housing market.
• Rent prices in Oakland have fallen by 7.2% over the last year.

Oakland, California is proving the laws of supply and demand are alive and well in the housing market.

Rent prices for apartments in Oakland — the Bay Area city of about 430,000 people — dropped 7.2% over the last year, according to data from Apartment List. That marks the largest drop in rent prices in any of the US's 100 largest cities. Median monthly rent for a one-bedroom apartment in the city hit $1,430 — its lowest level since 2017.

The decline is in large part due to a bunch of new housing hitting the market. The city built about 8,000 new homes over the last 10 years, helping ease its housing shortage. The city has also lost residents, after years of population growth. Over the last few years, Oakland had the fifth-highest rate of housing construction and the seventh-largest drop in population among California's 73 largest cities. But even has the number of residents in Oakland has fallen, the number of occupied homes has increased, with fewer people occupying the average home.

In one example of the city's building boom, it's in the process of constructing 13 buildings — four of which will be affordable for lower-income and formerly unhoused people — on a spit of formerly industrial waterfront property known as the Brooklyn Basin. The megaproject will ultimately add 3,700 new homes, several hundred of which are already occupied. The project is more than 20 years in the making, as the land was first purchased by its developer in 2001.

The decline in rents is a turnaround for the city, which has faced a serious housing affordability crisis in recent years as new residents flooded the city and housing construction didn't keep pace. Rents rose by about 25% between 2015 and 2018 as home prices surged about 40%.

California has among the most severe housing shortages and affordability crises in the country, despite losing residents over the last several years. San Francisco, Oakland's neighbor across the bay, is notorious for being the poster child of this particular crisis. The city has long restricted all kinds of residential construction, despite being the birthplace of the "Yes In Our Backyard" pro-housing movement.

Over the next decade, Oakland is planning to increase its housing stock by 25%, building another 36,000 units of housing. The city's building boom is in part motivated by a slew of state-wide laws in California requiring localities to build sufficient housing, and removing some of the barriers to construction. Under California's Regional Housing Needs Allocation — a state determination of how much housing must be built in a given area — Oakland is required to build at least 26,000 new homes, more than 10,000 of which must be designated for low-income households, by 2031.

The price drop in Oakland is part of a national trend. Rents across the country are on their way down, with an average rent price decrease of 1.3% over a year ago. Nationally, the median rent for a one-bedroom apartment now sits at $1,170. Rents fell year over year in 71 of the country's largest 100 cities, Apartment List found. This comes after rents in cities across the country have surged in recent years as construction slowed and the housing shortage worsened.