Santa Cruz County has assumed the sad distinction of California’s most expensive rental market in 2025, which requires residents to make a whopping $168,920 annually just to maintain a simple two-bedroom apartment. The Central Coast city, about 75 miles south of San Francisco, has been at the top for the third consecutive year, and the gap between it and other expensive markets grew even wider.
The housing wage crisis
Per the National Low Income Housing Coalition’s 2025 Out of Reach report, Santa Cruz County renters have to be paid a housing wage of $81.21 per hour to rent at fair market rent but not have more than 30% of their budget be spent on housing. That is a slightly more than 30% increase from $63.33 per hour in 2023 when Santa Cruz was number one for the first time.
To place that in context, the minimum wage in California is $16.50 per hour, so a minimum wage earner would have to work 4.9 full-time jobs just to pay rent in Santa Cruz. The average Santa Cruz County renter only makes $22.13 per hour, and would have to work about 3.7 full-time jobs just to get by.
Increasing costs and market conditions
The Santa Cruz County two-bedroom fair market rent has increased to $4,223 per month in 2025 from $4,054 per month in 2024—a 4% annual increase. More sharply, the total has increased by 28% from $3,293 in 2022, showing the increasing rate of housing expense.
Recent reports on rental markets give a conflicting series of average rents based on source and technique:
- Zillow cites an average rent of $3,700 for all types of property
- Apartments.com places the average at $2,550 a month
- Rent.com sees it higher with studios at $3,182 and two-bedrooms at $5,067 average
California tops national rankings
Santa Cruz’s position at the top of the most expensive rental markets is no isolated California tale. Eight of the ten most expensive metropolitan areas in the nation are in California, including San Jose, San Francisco, Salinas, and Santa Barbara. By and large, California requires a housing wage of $49.61 an hour for a two-bedroom apartment—higher than any U.S. state and more than three times the federal minimum wage.
Santa Cruz County supremacy has increased as time goes by. Santa Cruz to the second-most costly market, San Jose-Sunnyvale-Santa Clara metropolitan area, housing wage gap has grown to nearly $15 an hour, and Santa Clara County demands $66.27 an hour. Santa Cruz fair market rent is 22% more than Santa Clara County’s $3,446.
Supply shortage and demand pressures
The crisis is a fundamental supply and demand crisis. Santa Cruz County requires about 33,000 units of housing to keep up with present demand, and the city of Santa Cruz alone has to construct 3,700 units over the next nine years to keep up with state quotas—about 4.5 times what was constructed in the last eight.
The Association of Monterey Bay Area Governments (AMBAG) has established ambitious goals, and progress is moving slowly. State figures indicate that 96% of California’s 539 local governments, including the Santa Cruz County and its cities, are failing to meet their housing goals.
Causes of the crisis
There are a number of interrelated reasons that drive Santa Cruz’s crisis of affordable housing:
- Geographic restraints: Physical constraints of available land for development and coastal location restrictions severely limit options for new development.
- Regulatory barriers: Protracted environmental analysis, zoning regulations, and delayed approvals boost development costs and timelines.
- Construction costs: Material prices, shortage of labor, and costly environmental requirements balloon construction costs.
- University pressure: UC Santa Cruz’s addition to its student population adds more pressure to a restricted existing market.
- Community resistance: Local citizen resistance to density and height has traditionally capped development prospects.
Challenges and opportunities
Community housing activists agree on how serious it is. Elaine Johnson, executive director of Housing Santa Cruz County, explained that despite working day and night on building, “the more we build, the more we need.” She explains that obstacles such as lack of space and neighborhood resistance make development even harder.
Former Santa Cruz Mayor Don Lane is also cautiously hopeful that the surge in new market-rate and below-market-rate housing developments could slow the tide of rent hikes, observing “a real flattening of rents” but not decreasing. But he sees finance issues as likely the largest barrier to constructing enough below-market-rate housing.
Read more: Neither Santa Ana nor SoHo – These are the 10 wealthiest U.S. suburbs to live in 2025
Read more: These are the immigrants who can receive a $10,000 payment from ICE if an unlawful detainer is made
Read more: Neither Las Vegas nor Miami: this is the best place to get married in the U.S. in 2025
