Suddenly rising interest rates have thrown a new wrench into the plans of prospective home buyers. Can it get any worse? We asked a pair of real estate agents, veteran Kelley Trousdale and relative newcomer Rebecca Wallace.
As of Tuesday, national interest rates for a 30-year fixed mortgage were at 5.25% — and that concerns realtors Kelley Trousdale and Rebecca Wallace, the former a 28-year veteran of the market, the latter a relative newbie.
Housing costs are on the rise nationwide, and Santa Cruz’s triple threat — lack of development, lack of inventory and Silicon Valley competition — makes it all the more difficult for prospective buyers to get their own slice of Surf City. The pair from Century 21 Sandcastle Realty in Aptos shared their concerns over the changes with Lookout last week, as everyone in the real estate business prepares for a sudden era of rising interest rates.
Veteran Trousdale — who ranks in the top 1-2% of Century 21 agents nationwide in relation to the number of average yearly sales and commissions — acknowledged that the current market is the most competitive he’s seen in his 28 years. As of Tuesday, the multiple listing service (MLS) showed 199 active listings for single-family homes countywide, a slight increase from our April report. Trousdale said just 95 of those homes were listed for less than $1.5 million.
“These high prices in this market have got to slow down, it’s got to slow down — I’ve watched these cycles come and go,” he told Lookout.
With 28 Centurion awards under his belt — bringing in a minimum commission of $320,000 per year — and a vast well of experience, Trousdale looks to the future of Santa Cruz’s real estate market and the fresh faces he can bring along.
Earlier this year, he brought Wallace — a former educator and metalwork artist — into the fray as a newly minted real estate agent who’s lived in Santa Cruz for 15 years. The pair, with seasoned and novice lenses, report how cutthroat the market has become. Neither expects it to let up anytime soon.
Trousdale’s simple summation, startling to many who have long called Santa Cruz home: “Not everybody really gets to live in a beach town.”
Lookout talked with them about the market today.
The following interview has been edited for clarity.
Lookout: What makes this market so difficult for prospective buyers, and different from other parts of the Bay Area?
Kelley Trousdale: In nearly 30 years as a realtor and a builder in Santa Cruz County, this is the biggest housing shortage I’ve seen. To be fair, this is going on all over the country, but it’s more acute here because it’s so hard to build, and we’re seeing lots of wealthy second, third homebuyers coming in and competing for the very limited housing stock. It’s so competitive when you write an offer now, if you have the ability to pay all cash, you’re almost better doing that to even be considered.
Rebecca Wallace: I had seen what was going on pre-COVID, and now, post-COVID, it’s interesting — it definitely seemed like there was a lot more action happening. Normally, you would get nine to 10 pages of listings on a broker tour, and now you maybe get five.
Lookout: How does the difficulty of the market also align with the housing stock and prospective housing development?
Trousdale: From January 2016 to now, Santa Cruz County has built only 644 housing units. And now, they’re supposed to build nearly 13,000 units by 2031. Based on a county-funded study, the permit submittal rejection rate is currently 98%.
I also know that there are so many people looking to develop housing that are waiting eight, nine years for the county to approve development, and keep going through all of this rigmarole. It’s almost like some Orwellian movie, like, what is the county doing? It seems like they don’t want housing. I mean, I’ve been involved in some projects with the California Coastal Commission that have taken 12 years for approval.
Wallace: In Santa Cruz, [developers, cities and the county are] building more and more, but it is a small place, physically. There’s really only so much they can do.
Regional housing needs allocation (RHNA) numbers are a fancy way of putting a metric to an area’s need to build a...
Lookout: You’ve lived here a while. How does that inform how you talk with prospective buyers about their expectations?
Trousdale: I’m tough love with buyers. I left town when I was 20, because I realized that making the kind of money I was, I wasn’t able to live in Santa Cruz, with the lifestyle I wanted. [My wife and I] eventually moved back here in the early 1990s from the East Coast when we were making enough money to afford to live, because we wanted to be here — but not everybody really gets to live in a beach town. ... I went to junior high and high school here, when my sister went to UC Santa Cruz when it opened in 1965 — 90% of the people I went to school with aren’t here anymore.
Wallace: I’ve been in Santa Cruz for 15 years, ready to jump back into nature and have a healthier lifestyle after living in San Francisco for eight years. When I moved here at the time, I was going to school for fashion design at the City College of San Francisco, but I soon realized that I needed to learn more about computers, and ended up going to Cabrillo College. Over the next decade and a half, I worked in education as a substitute teacher and a nanny, and then went into metalsmithing at Cabrillo and later San Jose State University.
At that time, I had to take care of my mother, who was in poor health. When she passed, my sister and I needed to figure out how to take care of her property, and — while her realtor was great — I realized I would do things differently if I was the agent. So I went back to school and got my license on March 17, 2022, aiming to work with prospective buyers in Santa Cruz.
My parents, back when I was growing up, would always purchase homes that were fixer-uppers, do some work and then flip them, so I already grew up with real estate in the back of my mind, and was always curious about what that world really entailed. After dealing with the whole situation [following my mother’s passing] — the condo I inherited in Seal Beach and everything — I started to think, if I was a realtor, I would handle it like this, or would have done this … so that was in the back of my mind, and it was good to have that knowledge.
Lookout: Do you think there’s any relief on the horizon?
Trousdale: No. Unfortunately, I think it’s going to get worse. Look at where we are, between San Francisco and Carmel — is it going to get cheaper? Probably not.
You end up having that kind of fractured society where you have a lot of people commuting to Salinas, Marina and outlying areas, where they’re just trying to have a foothold and driving 45 minutes just to get to work. This is like a pressure-release valve — there won’t be much housing built in Santa Cruz for the next 15 to 20 years, unless they really speed it up.