Deep-pocketed investors account for a third of home purchases in Santa Cruz County

Deep-pocketed investors have been snapping up a growing share of local properties in Santa Cruz County, including hundreds of single-family homes, a new analysis of real estate data has found.     

Investors, defined as buyers who own three or more properties nationwide according to the real estate data firm Cotality, accounted for nearly 34% of single-family home purchases in the county in 2025 as of October, up from around 25% in 2021. 

The trend started in 2021 at a time when sales were high, spurred on by the pandemic and record low mortgage rates, according to data provided to Lookout by Cotality. 

Investors have bought more than 920 single-family homes since 2021, according to Cotality. A search of property records shows that individuals, property managers, renovators, investment firms and family trusts are all among the investors who have bought single-family homes in Santa Cruz County over the past three years. 

Since 2021, investors have spent nearly $1.45 billion on purchases of single-family homes, accounting for around 44% of total sales value. Investors have bought more than $611 million worth of single-family homes in the county this year alone.

A rise in investor home purchases has helped send home prices higher in recent years. In Santa Cruz County, investors paid up to 10% more than the median home price paid by non-investors as of October, according to Cotality’s data. When investors pay above typical home sales prices, it tends to show they are competing with homebuyers and betting prices will rise in a tight housing market, according to a Realtor.com report.

Big investors have also been taking a larger slice of the local housing market in the past two years. Investors who own more than 100 properties nationwide accounted for nearly 9% of single-family home purchases in Santa Cruz County as of October, tripling from 3% in 2023.

Investors’ impact on home prices and rents

Individual home buyers have slowly been purchasing fewer homes primarily because of rising interest rates following the pandemic. Investors, meanwhile, have maintained a steady stream of purchases, often using cash or financing unavailable to everyday buyers. Those dynamics have allowed investors to gain a bigger share of home sales.

In Santa Cruz County, home sales among non-investors have fallen because of a mix of other factors, including high prices, homeowners who prefer to stay put rather than sell, and a scarcity of six-figure jobs that can support an expensive home purchase, according to Renee Mello, a local real estate agent and president of the Santa Cruz Association of Realtors. Additionally, she said, after years of intense bidding wars, many local buyers don’t realize they have more negotiating power now that competition has cooled and can be hesitant to offer below asking price.

“We are going to have to attract people from over the hill because the people who are local can’t afford to buy in Santa Cruz,” she said, adding that homes have been on the market longer this year than last.

Yet despite a decline in home sales, prices haven’t come down significantly, said Kaelin Wagnermarsh, a local independent realtor with Keller Williams Thrive Santa Cruz who works with many first-time homebuyers. 

The typical single-family home in the county had a value of around $1.31million in October, which is down 1.8% from a year ago, according to Zillow.

Investors often move in when they see home prices rising, betting the trend will continue and let them resell at a profit or rent, said Thomas Malone, principal economist at Cotality.

Investors, he said, add demand to housing markets, and more demand means higher rents and home prices. “They obviously increase prices,” he said. “More demand means higher prices. That’s Econ 1.”

Still, Malone said it is difficult to pinpoint how much investors are propping up the county’s high home prices since there are other factors such as housing shortages, inflation and the general health of the economy.

“They increase prices. How much? That is difficult to say,” he said. If a large number of investors stopped buying in Santa Cruz County, Malone said he would expect home prices to drop modestly in the 3 to 4% range.

“Demand would drop in the home-buying market, and median prices would drop in turn,” he said. “How much is a tricky thing to tease out statistically.”

Wagnermarsh argues that investors aren’t the main reason that prices have risen in Santa Cruz. A housing shortage driven by decades of slow construction that has not kept up with job growth has largely driven a surge in home prices across the greater San Francisco Bay Area. “We live in an affluent area, that’s the problem,” she said, adding that the number of homes available for sale in the county is low compared to other parts of the country.

“There are so many other things I would say are contributing before I would necessarily go to an investor,” she said. “Are they capitalizing? Absolutely.” 

The recent uptick in investors means more competition among homebuyers for the most affordable homes, said Rob Barber, chief executive of real estate analytics firm ATTOM. That could add more properties to Santa Cruz County’s tight rental market. However, Barber said large investors can jack up rent prices in housing markets where they cement their position.

“If you can’t afford to buy, you’re a renter,” Cotality’s Malone said. “Rental demand increases and investors step in to fill this rental demand.”

Who is investing in Santa Cruz? Flippers, firms and family trusts

Santa Cruz’s housing market is popular with investors who renovate and resell homes, a business known as home flipping. Wagnermarsh said she often gets multiple texts a day from home flippers.

“I get calls all the time, ‘Hey, do you have a seller who doesn’t want to fix it up?’” she said. “All of these homeowners are getting letters in the mail … They want to buy the property off-market, flip it and sell it because they know that the values are good.”

One of the biggest local home flippers is John Flaniken of Trade-In Real Estate, which typically owns nine to 15 homes at a time in Santa Cruz County and the surrounding areas.

Flaniken said the average homebuyer doesn’t want or can’t buy the homes he acquires because they come with various issues, including maintenance, permit challenges and lack of traditional financing. Investors also offer speed and ease to sellers who might need to move out fast, he said. Homeowners with properties requiring a lot of work or who need money for an emergency could be inclined to sell privately to an investor rather than spending time listing their homes on the public market.

“Investors are the only people who can come in really quickly and take that on,” Flaniken said. “Even if [non-investors] did buy that house at a discount, they would have no idea what to do with it.”

Flaniken said remodels often involve new kitchens, bathrooms, roofing, plumbing and sometimes foundations. He said the eventual buyers of the refurbished properties are usually first-time homebuyers or people upgrading to a new home. Flaniken typically makes a 10% to 15% profit off the resale value on homes he flips, he said.

“The average home we buy is what I would call a full cosmetic rehab,” Flaniken said. “We are taking the worst house in the neighborhood and making it average or better.”

Big investors move in

Santa Cruz County has also seen a bigger jump in the share of larger investors buying homes, those who own more than 100 properties across the country. “This is not the trend we’re seeing nationally,” Cotality’s Malone said. 

A growing slate of regulations are causing smaller investors to pull back from Santa Cruz and California in general, said Peter Cook, co-founder of local real estate and property management firm Lighthouse Realty, which manages around 250 housing units, mostly in the city of Santa Cruz. 

For instance, he said smaller investors are getting cold feet from a statewide rent-control law that went into effect in 2020 and a 2024 rule that landlords can charge a security deposit worth only one month’s rent, unless they own two or fewer properties. Cook said when he got started in property management in 1997, a typical lease was seven pages long and is now 72 pages. Bigger investors with more legal resources are better positioned to deal with these issues, including any potential litigation involving tenants.

“The number of people buying a property to rent out is going down, and I don’t think that’s really ever going to come back,” Cook said.

The growth in larger property investors in Santa Cruz county might foster more “litigious” relationships between renters and landlords, he said. “The smaller mom-and-pop investors I have found are much more likely to charge reasonable rents and have an actual relationship with their tenants,” Cook said. “It’s not the same kind of relationship.”

One larger firm that has been active in flipping homes in Santa Cruz County is Redondo Beach-based Wedgewood Properties. The company has bought two homes in the past 12 months that it has already resold, Wedgewood said in an emailed statement. Property records show Wedgewood, through its affiliate Redwood Holdings, acquired deeds in the county for 11 properties between 2021 and 2023.

“Our past activities in Santa Cruz County were shaped by favorable market conditions and opportunities that aligned with our business model: acquiring, renovating and reselling homes that create new opportunities for homeownership,” a Wedgewood spokesperson said.

Wedgewood has been controversial, however. The firm reached a $3.5 million settlement with the California attorney general in 2021 following allegations of unlawfully evicting tenants. In 2019, Wedgewood owned at least 125 properties in the Bay Area, NBC Bay Area reported. The Wedgewood spokesperson said the company doesn’t currently own any single-family homes in Santa Cruz County.

“Our business model is focused on purchasing distressed properties,” the spokesperson said, adding that around 97% of its homes are eventually sold to homeowners, not other investors.

Another larger investor is San Jose-based SV Ventures Holdings, which buys homes with cash to renovate and resell, according to its website. SV Ventures bought two single-family homes in Santa Cruz County in 2025, property records show. SV Ventures didn’t respond to requests for comment.

Investors can also sell and reinvest in new properties through 1031 exchanges, which allow them to reinvest the proceeds from the sales without paying capital gains taxes if they buy a new property within 180 days. For instance, an investor who bought a property in the 1970s for around $50,000 that is now worth $2 million could avoid hundreds of thousands of dollars in taxes this way and then go on to buy new properties. 

The most active such intermediary in the county is Coast 1031 Exchange, said Thomas Foster, president of the firm and a Santa Cruz local. He said he mostly works with smaller investors and, lately, he has lately seen more older mom-and-pop landlords flee the market due to not wanting to deal with tenants or regulations. 

Foster also said that there are families who exchange into a property in the county that they then rent out to their children who will eventually inherit the home. “With Santa Cruz housing prices being so high,” he said, it can be the only solution to keep their family nearby.” 

Other investors frequently sell one property in Santa Cruz County and acquire multiple rentals in more affordable parts of the country, he said.

But Foster said there are some corporate buyers that are exchanging properties into Santa Cruz County to build multifamily units. For instance, they can buy one or more homes on or near land they plan to develop.

Developer Workbench is building multifamily properties locally and has purchased single-family homes in the past for projects, such as two for 15 townhomes in Soquel built in 2024.

Some residents might oppose developers buying single-family homes to build denser housing, but Sibley Simon, principal at Workbench and president of New Way Homes, argues that developers can help ease some of the county’s affordability and housing shortages.

He said Santa Cruz is one of the nation’s most expensive rental markets partly because the county hasn’t moved fast enough to convert single-family homes into denser housing.  

“Some people are against the change that is adding apartment buildings, but I’m fundamentally in this because I’m against the change of reducing the income diversity of who can live here,” he said.

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