Quick Take
The Santa Cruz County housing market saw a seasonal drop in the number of homes available to buy in December, but sales remained largely level with November, and high for December. Meanwhile, mortgage advisers aren’t quite sure what to make of the criminal investigation into Federal Reserve Chair Jerome Powell, but will be paying close attention to who takes over for him following the end of his tenure as chairman in May.
The Santa Cruz County housing market stayed relatively busy in December, especially given the typical seasonal slowdown in the industry. Inventory, however, took a noticeable dip when compared to the previous month. That likely signals that while sales stayed steady, fewer prospective sellers put their homes on the market.
Few homeowners list their homes for sale in December, said Coldwell Banker real estate agent Jessica Wallace, and some even take their properties off the market.
“They want a break for the holidays,” she said, adding that a few clients of her own did just that, and are now getting ready to put their homes back on the market. “We’ll start getting more as we get further into January.”
The number of available homes dropped to 237 from 393 in November, according to the latest data from the Santa Cruz County Association of Realtors. Local inventory has been dropping steadily over the past few months, as November was the first month with fewer than 400 homes on the market since March 2025. However, despite the large drop in December, inventory was still about 13% higher than in December 2024.
In December, 105 home sales closed, 5% higher than in November, when there were 100 sales. Prices also dipped across the county, as the median sales price was down to $1,135,000 from $1,294,500, a 14% decrease, according to data from the realtors’ association.
Properties sold faster than they did in November, averaging 50 days on the market in December compared to 63 days in November. Wallace added that she isn’t entirely sure why this December appeared busier than the month usually is, but the lower median sales price could indicate that the properties available were favorably priced.
“It’s a pretty small market pool, so a few things can skew our data in a given month,” she said.
Wallace said that 2025 was fairly flat in terms of market activity, consistent with the years after the pandemic when mortgage rates dropped to below 3%. She hopes the market continues in this direction into 2026. “Interest rates are trending down, but not dramatically, but I think things are not going to be too dramatic in the real estate world,” she said.
Mortgage rates are already taking a dip after President Donald Trump ordered government-backed financial services companies Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bond debt. That caused mortgage rates to drop into the high 5% and low 6% range last week. However, the revelation over the weekend that Trump’s Department of Justice is investigating Federal Reserve Chair Jerome Powell might affect the market, but Monterey Bay Mortgage Advisor Scott Goodrich said it’s still too early to tell how.
Regardless of how that criminal investigation plays out, Goodrich said he’ll be paying close attention to who takes over for Powell once his term ends in May. The most pressing question is how independent that person will be from the administration.
“Chances are, it’s going to be someone more aligned with Trump, and that does not necessarily mean good things for rates,” he said. “If interest rates are bumped down just for lowering interest rates’ sake, that can actually backfire.”
Goodrich said a similar situation happened during Richard Nixon’s presidency, when then-Fed Chair Arthur Burns lowered rates at Nixon’s request, leading to “stagflation,” or a period of high inflation, little to no economic growth, and high unemployment rates: “It’s kind of one of the worst things that can happen to an economy.”
In the meantime, Goodrich said the market is getting back to normal following the holidays, and he hopes the more balanced market from 2025 sticks around for 2026.
“If interest rates can stay kind of where they are, or go down a little bit, that will help people who feel like they’re locked into their house,” he said, meaning that more homes could hit the market, giving buyers more to choose from and more negotiating power.
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