Krista Knudsen Thomas has lived in Temescal, a vibrant multicultural neighborhood in North Oakland, Calif., since 2007. She moved into a 1920s house on 44th Street, one of a pair that the family of her then-boyfriend (now husband) had bought for a total of about $625,000. Her sister-in-law lives in the other house. “A little compound,” Ms. Knudsen Thomas, 41, calls the arrangement.

From the secure niche, Ms. Knudsen Thomas, who owns a Pilates studio in the Montclair Village neighborhood of Oakland, has watched Temescal develop with the unevenness of a colt. Referring to the continuing homelessness, crime and spotty conveniences (the neighborhood, for instance, lacks a grocery store), she said, “There’s an influx of people with more money, but I haven’t seen that it’s improved people’s lives.”

She was speaking last month at Aunt Mary’s Cafe, one of several popular restaurants on Telegraph Avenue, Temescal’s main commercial street. A couple of blocks north, the daily lunchtime queue was inching into Bakesale Betty, which is celebrated for its fried chicken sandwiches. Nearby, in Temescal Alleys — a cluster of 18 independent businesses set up in stalls that once housed trolley horses — customers admired handmade jewelry, ate high-end ice cream and had their beards trimmed.

With its appealing stores and fine dining, Telegraph Avenue has helped make Temescal a destination for visitors, but there is concern about the neighborhood’s future for residents. Realtors say that an overheated housing market in the rapidly gentrifying Oakland flats, which include Temescal, is driving prices far above actual property values.