Santa Cruz Tops the Nation’s Rental Affordability Rankings for Third Consecutive Year

Santa Cruz, California, has once again claimed the title of the most unaffordable rental market in the United States. According to the latest Out of Reach report from the National Low-Income Housing Coalition, renters in this coastal town now need to earn a staggering $168,920 annually to afford a modest two-bedroom apartment. This marks the third year running that Santa Cruz has topped this list, with a sharp increase in the hourly wage required to rent in the area.

The Rising Costs of Renting in Santa Cruz

The report shows that, in 2025, the hourly wage needed to afford a two-bedroom rental in Santa Cruz has increased from $63.33 in 2023 to $81.21 in 2025. This marks a nearly 30% rise in just two years. To maintain affordability, a renter would need to spend no more than 30% of their gross income on rent, which in this case would allow them to pay a maximum of $4,223 per month.

At California’s current minimum wage of $16.50 an hour, this translates into needing to work almost five full-time jobs just to cover the cost of housing. The disparity is striking, as the average renter in Santa Cruz only earns $22.13 per hour. At this rate, it would take nearly four full-time jobs to afford rent.

A Worsening Housing Crisis

Elaine Johnson, executive director of Housing Santa Cruz County, expressed deep concern over the situation, stating, “This is a No. 1 we don’t want to be,” referring to the high cost of living in the area. She emphasized that resolving the crisis requires collective action and urgent attention.

California continues to dominate the affordability rankings in the Out of Reach report, with eight of the ten most expensive rental markets in the country located within the state. This includes areas like San Jose, San Francisco, Salinas, and Santa Barbara. The report states that the average housing wage for a two-bedroom apartment in California is nearly $50 per hour the highest of any state.

The Unaffordability Strain

The reality for renters in Santa Cruz reflects broader trends in California’s housing market. A full-time worker earning California’s minimum wage would need to work 120 hours per week to afford a two-bedroom apartment in the state, as the minimum wage falls far short of the income required to cover housing costs. Nationwide, the report notes that no state, metro area, or county offers full-time minimum-wage workers the ability to afford a modest two-bedroom home.

The report also points to a critical shortage of affordable housing across the country, with a national deficit of 7.1 million rental homes for extremely low-income households. This shortage has been exacerbated in California due to regulatory challenges, such as the California Environmental Quality Act (CEQA), which some critics argue make it difficult to build enough housing to meet demand.

Local Factors and Policy Impact

Critics such as Dr. Wayne Winegarden, a senior fellow at the Pacific Research Institute, argue that California’s housing crisis is largely a result of restrictive zoning and environmental regulations. These layers of bureaucracy, along with prevailing wage mandates, inflate the cost of housing and restrict the supply of new developments.

Additionally, local policymakers are facing mounting pressure to address the issue. Mike Lelieur, chair of the Santa Cruz County Republican Party, pointed to local government policies that discourage private development. “The local planning department has made it so outrageously expensive to build that it’s just not profitable unless you’re backed by a big corporate developer,” he said. “Then you add CEQA, coastal commission reviews, endless permit delays, and greenbelt restrictions. It’s a bureaucratic blockade by design.”

The University’s Role in the Crisis

Lelieur also criticized the University of California, Santa Cruz (UCSC), for expanding its student body without expanding on-campus housing. This, he argues, puts additional pressure on the local rental market, as students often compete with residents for available housing. With parents footing the bill for their children’s rent, the demand for housing intensifies, and landlords respond by increasing rents.

As rents continue to climb in Santa Cruz, the affordability gap widens, leaving many long-time residents and newcomers struggling to find suitable housing. With the high cost of living and a complex web of local policies, the path to solving Santa Cruz’s rental crisis remains uncertain.

Looking Ahead: The Need for Reform

The situation in Santa Cruz is a reflection of broader trends in California’s housing market and poses serious questions about how the state’s regulatory and housing policies can evolve to meet the needs of its residents. While efforts to increase housing construction have been made, they have yet to address the magnitude of the issue. Without substantial reforms, areas like Santa Cruz will likely remain out of reach for many potential renters, contributing to California’s ongoing affordability crisis. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.