Quick Take:
The Santa Cruz County housing market began to heat up in March, as usual, with home sales and inventory both ticking up noticeably. Realtors say that some high-end buyers have shifted their perspective, opting to take out mortgages instead of paying all cash, in order to maintain their liquidity among geopolitical and economic uncertainties.
The county housing market took a jump in March as spring sets in and the market shakes off the usual winter chill.
However, realtors and mortgage advisors shared anecdotes that some high-end buyers, who usually pay cash, are choosing to enter mortgages in order to invest their money in what they believe could be a more stable location than stocks.
Sereno Group agent Jennifer Watson said that these buyers are likely concerned about geopolitical tensions surrounding the war in Iran and, by extension, economic instability. They are looking to invest in real estate to maintain their liquidity and have money on hand.
“I think people are nervous and they think ‘Where is a safe place to put my investment while this is going on? Oh, real estate,’” she said, explaining that while stocks can be volatile, real estate is typically far less so. “And when it has been [volatile], it’s usually over years, not days or weeks.”
The number of available homes rose to 349 from 283 in February, a 23% increase according to the latest data from the Santa Cruz County Association of Realtors. Local inventory had dropped month over month during the back half of 2025, with November being the first month with fewer than 400 homes on the market since March. However, in 2026, it has begun to inch back up.
In March, 108 sales closed, a 25% increase from February, when there were 86. Prices stayed largely stagnant across the county, dropping to a median of $1,348,250 from $1,362,500, just a 1% decrease.
Properties sold faster in March, averaging 47 days on the market compared to 54 in February. That is to be expected as the winter months come to a close and the market moves into its busiest time of year – spring and summer.
Watson also said that “buydown mortgages” are rising in popularity, which is generally new for this area. She said that a mechanism like a “3-2-1 buydown” may open the door for more buyers to close, as it will make it easier for them to take on mortgages. The mechanism essentially allows buyers to ease into their mortgages. For example, their rate starts at 3% the first year, goes to 4% the next year, then 5%, and finally 6%, which is about where most 30-year fixed mortgages sit right now.
Monterey Bay Mortgage advisor Scott Goodrich said that he is seeing some buydown mortgages, and expects to see more of them if mortgage rates remain in the mid-6% range or higher:
“If you can get a 4.5% rate for year one, 5.5% for year two, and 6.5% for year three,” he said, “that’s very enticing, especially with the ultimate thought of refinancing when rates do come down.”
Goodrich said he’s also heard of people opting for mortgages over all-cash payments, even though he so far has not dealt with it himself. However, he said it makes sense given the uncertainty of the economy and geopolitical events.
“When there’s uncertainty in the marketplace, whether it’s the stock market, bond market, or general economic cycle, people want to have more cash on hand,” he said. “I think this can be one of those times where if people were planning to buy all cash, they may be looking at a mortgage as a better way to leverage their money right now.”
Goodrich pointed to just the events of Tuesday and Wednesday to illustrate that uncertainty. Iran, Israel, and the United States reached a ceasefire deal, which he said caused oil prices to come down and the stock market to rally. By Wednesday, the ceasefire itself was no longer certain, and despite a strong day from the stock market, he expected some pullback.
“Until there’s really a huge breakthrough in this thing, I think we’re just going to be one day up, one day down,” he said.
