Yes, the garage was converted into living space. One must apply to the building department to see if this is allowed and if not, if it can be. Public records show this property as having 1 bedroom/1 bath, and nothing in the permit history shows permit for expansion. It does, however, have the sewer lateral and gas cut off valve already done.
To check the permit history for this, and other properties in Alameda, see http://alamedaca.gov/epermit-portal
Price reduction to $384K. Some upgrades in the house. Not a bad location --- short distance to Park St shopping district. Neighbors on that street park half on the street half on the sidewalk. They all have unspoken agreement that they shouldn't take someone else's space in front of his own property.