Quick Take
The county’s housing market in February closely mirrored January, but agents are seeing more listings and are hosting more open houses, which they believe could mean busy upcoming months. Meanwhile, the war in Iran could affect buying power and buyer psychology, should it drag on for an extended period of time.
The Santa Cruz County housing market stayed the course in February, looking mostly similar to January, but real estate agents say the next few months could be busy, with more new listings hitting the market and open houses.
Sereno Group agent Jennifer Watson said her photographer has been booked and busy photographing new listings recently, and will remain so until at least the second week of April. “This tells me we are setting up for a busy next few months in local real estate,” she said.
However, the war in Iran could have some unpredictable effects on the market, should prices of gas and other goods rise or if the war continues well into the future.
The number of available homes rose slightly to 283 from 274 in January, a 3% increase, according to the latest data from the Santa Cruz County Association of Realtors. Local inventory had been dropping month over month during the latter half of 2025, with November being the first month with fewer than 400 homes on the market since March. Inventory is still on the lower end, but it’s still about 11% higher than in February 2025.
In February, 86 sales closed, a nearly 51% increase from January, when there were 57. Prices also rose across the county, as the median sales price jumped to $1,362,500 from $1,028,300, a 32% increase. However, both the average home square footage and lot square footage were much larger in February, which likely plays a big role in the high median sales price.
Properties sold much faster in February, averaging 54 days on the market compared to 89 in January. Watson said this type of change isn’t particularly rare for this time of year, as the market usually begins to heat up in the spring.
“People are more likely to scramble, it’s spring and they want to get what they want to get,” she said, adding that agents are accustomed to a surge of activity after Super Bowl Sunday, which can carry into the spring.
That comes with a shift in buyer interest, too, said Watson, adding that coastal properties and homes close to beaches are in higher demand now, a trend that will likely continue into the warm months. As usual, properties with the potential for accessory dwelling units (ADUs) are also hot, with owners typically either planning to rent it out or to have family members move in.
However, the war in Iran is a less predictable market factor. Watson said it can take people two ways — she said one buyer she met with recently is closing a purchase on a home in the near future, as he believes that his money will be more secure buying a house than keeping it in a potentially volatile stock market.
“He said he has stocks in fuel and natural resource markets,” she said. “He talked with a financial advisor and they couldn’t find a reason why it wouldn’t be better to buy the house.”
The other side, she said, is rising prices putting pressure on one’s financial situation, keeping them out of the market for the foreseeable future. Monterey Bay Mortgage advisor Scott Goodrich said the war has already pushed mortgage rates up to about 6.25% from just below 6% prior to the war.
“The question is, how long will this last? The longer it goes on, I think you’re going to see more of an impact,” he said. “In a short-term situation, buyer psychology probably won’t be affected too much. If there’s a longer-term situation, that’s when it can affect things.
“We keep being told this is going to be very short-term,” he added. “I heard days and weeks, and we’re already past that.”
Goodrich said purchasing power is the biggest factor at play not just with the rising interest rates, but with the war’s “ripple effect” on the general cost of living. How it plays out remains to be seen, he said.
“We’re seeing higher oil prices, which leads to higher gas prices, which leads to higher prices for just about everything we buy,” Goodrich said. “All of those things combined can pile up, but it’s still too soon for that.”
Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.