Santa Cruz County is now the second-most-expensive rental market in the country, report finds

A chart showing the most expensive areas to rent property in the U.S., with Santa Cruz No. 2

Despite all the attention increasingly paid to housing affordability, Santa Cruz has moved up in the rankings. The just-released “Out of Reach” report from the National Low Income Housing Coalition puts hard numbers on just how difficult it is to find and pay for shelter.

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Santa Cruz is moving up in the rankings — rankings it wants no part of.

The Santa Cruz-Watsonville metro area, which is comprised solely of Santa Cruz County, is now the second-most-expensive rental market in the country, according to a just-released “Out Of Reach” report from the National Low Income Housing Coalition. It moved up from No. 3 in last year’s report, passing the San Jose-Sunnyvale-Santa Clara metro area.

How much does a two-bedroom rental cost here, according to the study?

The fair market rent (FMR) — or the 40th percentile of rents paid by recent movers in a given area — of a two-bedroom rental in the county is $3,138, having increased 70% percent over five years, as shown below.

The “Out Of Reach” report, which has been published annually for more than 20 years, ranks Santa Cruz County No. 2, and in striking distance of claiming the top spot.

The San Francisco metro area, Santa Cruz-Watsonville metro area, and San Jose-Sunnyvale-Santa Clara metro area have held the top three spots each year since 2019. For reference, in this year’s report, the neighboring San Benito County metro area and the Salinas metro area have a two-bedroom “housing wage” of $31.71 and $37.83, respectively.

Rankings are one thing. The income required to pay for rentals is astronomical.

At that $3,138 per month for a two-bedroom rental, tenants would need to work four full-time minimum-wage jobs, at $15 an hour, to afford rent.

How does the National Low Income Housing Coalition get to that number?

The report calculates a “housing wage” for Santa Cruz County of $60.35 an hour. That’s the hourly wage a full-time worker must earn to afford a modest rental home without spending more than 30% of their income on housing costs. That 30% is one widely used as a healthy figure, meaning that people have adequate income, beyond housing, for food and other necessities.

That $60 an hour then equates to four minimum-wage jobs. Consider, beyond minimum-wage jobs, that the mean wage for the estimated 38,000 county residents who rent is $19.78. So that would mean working three such jobs to meet the same metric.

Home prices in Santa Cruz County have flattened and even begun to drop in recent months, as they have across the...

Only the San Francisco metro area posts a higher “housing wage,” taking the top spot at $61.50, $1.15 higher than that of Santa Cruz.

“This report just confirms the sobering reality in our community that many of us are actively trying to change,” Don Lane, Housing Santa Cruz County (HSSC) board chair, said in a media release. “Santa Cruz County is experiencing a critical shortage of affordable housing. The work HSCC and other advocates are doing to support affordable housing projects and policies has never been more vital.”

HSCC is a countywide coalition of local organizations and individuals working to increase affordable housing opportunities for local residents and workers.

Lane says the numbers are concerning.

“When I think about where the community is headed and the change that will continue to happen if we don’t fix this, it’s so worrisome,” he told Lookout on Thursday. “The kind of diverse community that we want to have is really threatened by this.”

Though worrisome, the ranking does not come as a huge surprise.

“Everybody knows that we’ve been in bad shape, but then to see that, other than San Francisco, we are in the worst position for people who live in rental housing is a little surprising,” he said.

Kyle Kelley, transportation and public works commissioner for the City of Santa Cruz and former Santa Cruz YIMBY leader, says both short-term and long-term solutions are vital.

“In the short term, we need rent stability so people can feel like they can stay in one place, and in the long term, we need to build a mix of housing types, particularly multifamily housing,” he said. “All of this is a policy choice. We can change policies to address these issues.”

The National Low Income Housing Coalition is a nonprofit founded in 1974 that aims to expand and preserve housing for people with low or extremely low incomes.

“Out of Reach” is the organization’s annual publication, which calculates the “housing wage” for communities around the country. It is based on the U.S. Department of Housing and Urban Development’s fair market rent, which is an estimate of what a family moving today can expect to pay for a modest rental home in their area.

“Housing wage” is calculated by dividing the income needed to afford the area’s two-bedroom FMR ($125,520) by 52 (weeks per year) and then by 40 (hours per work week).

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