I would have to say that overall El Cerrito has indeed gone down over the past couple of years, just like most parts of the Bay Area. Both Contra Costa County and Alameda Counties are reassessing tax bills so if your friends value has gone down it makes sense that their tax bill would as well.
While prices are down from what they were several years ago, multiple offers are happening. My clients have recently experienced excessive overbidding in the $450k - $700k range in El Cerrito, some houses with as many as 22 offers. 22 offers is not the norm, and is not meant to discourage you- there are some really great opportunities out there. In addition rates are super low and there is the first time home buyer tax credit that is still available. To know if there are good buys out there depends on your own finances, goals, and housing needs. I know, I know, that isn't very specific, but a good buy for you may not be a good buy for someone else.
Best of luck!