In 30 Years, Santa Cruz Affordability Has Been Cut in Half

- Dax Nollenberger

In 30 Years, Santa Cruz Affordability Has Been Cut in Half

December 18, 2025

National housing data often understates what happens in high demand coastal markets like Santa Cruz. I recently analyzed affordability at a national level and found that buyers today face tougher conditions than at any point in the modern data set, including the high-interest rate period of the 1980s. This analysis asks a simple question: does that same conclusion hold locally, and if so, how much worse is it? As with all Dax’s Data deep dives, I’ll push bias aside and let the numbers lead.

How this was analyzed

If you’d like to read the National analysis, that you can read HERE. Note that the local data was only available since 1996.

Data Source:

Data for Median Sales Price, Mortgage Rate Average, and Median Household Income were pulled from FRED.org.

Important Metrics:

In order to measure true affordability, we need to understand the cost of homes, how much households were making, and the interest rates at the time. Once we have that, we can calculate the Principal, Interest, & Taxes (Insurance note included). We then use 28% as a front-end Debt-to-Income ratio to calculate the required monthly income.

• Affordability Index: An Affordability Index above 1.0 means the median household earns enough to qualify for the median priced single family home under standard assumptions. A value below 1.0 means the median household falls short.
• Price-to-Income Multiple: This is a measure of how much higher home prices are relative to the median sales price. It’s a structural measure of housing cost relative to earnings, but not a measure of payment affordability. It shows how many years of income it would take to buy the median home if you spent every single dollar of income on it.

Caveats:

• 2025 data won’t be available deep into 2026, so estimates were made.
• FRED data used. Affordability results depend on the data source, and figures from NAR, FRED, or the Census can differ due to variations in methodology and definitions.
• Local data was pulled monthly as compared to annually for National Data.

Local Data:

 

 

 

 

National Data:

 

 

 

 

Findings:

My findings are going to address two hypotheses: first, that now is a more difficult time for buyers than any other in the data set, and second, that Santa Cruz is exaggerated in difficulty compared to national data.

Lets first discuss todays difficulty. There are two clear windows of difficulty in this data set that are a cause for a bit of concern: 2004-2007 and 2022-2025. The first right before the housing crash and the second is now… what comes next is TBD. We won’t get a financial crisis similar to the last because lending restrictions have been tightened so aggressively. That is besides the point though. Since 2022, Santa Cruz County averages an Affordability Index of .31. No period has a worse affordability score than the current window from 2022 on.

The best affordability windows occurred from 1996-1999 and from 2009-2013. The period from 2014-2020 was in line with the data average.

As for Price-to-Income. The period trends follow a similar path to the Affordability Index. The two worst periods for Price-to-Income Multiple are: 2004-2007 and 2022-2025. For the former, the the average Price-to-Income Multiple was 12.23. For the current window, the Price-to-Income Multiple is 12.35.

Let’s put this into perspective given current incomes: the current household income is around 108k and yet, the median single-family home is 12x that number. Over the course of 30 years, the Price-to-Income multiple has more than doubled while the Afforability Index has been cut in half. Safe to say buyers today have it worse.

On to the second point, Santa Cruz is exaggerated in difficulty to buy compared to national data. While expected, to the extend is startling.

• Since 1996, affordability in Santa Cruz has been cut roughly in half, while nationally affordability has declined by only about 11 percent.

• Santa Cruz price to income multiples doubled from ~6x to ~12x, while the national multiple only rose from ~4x to ~5x.

• National affordability has declined modestly over the last three decades, largely tracking interest rate cycles. Santa Cruz affordability has not. Prices have outpaced incomes to such an extent that rate relief no longer meaningfully restores affordability.

What is clear from the data is that we have seen a divergence where Santa Cruz has seen exponential unaffordability. Santa Cruz behaves like a constrained asset market driven by scarcity, external capital, and lifestyle demand. That divergence is likely to continue to accelerate at an exaggerated pace.

Bottom line: Santa Cruzans aren’t imagining it, the climb to homeownership is exponentially steeper than in the past, and while the nation feels the affordability squeeze, the data proves that the squeeze is substantially more severe here on the coast.

Key Metric Takeaway: Over the course of 30 years, the Price-to-Income multiple has more than doubled while the Afforability Index has been cut in half.

What This Means for Buyers and Sellers

For buyers, this data reframes the challenge. Waiting for rates alone to “fix” affordability in Santa Cruz is unlikely to work the way it has nationally. Successful buyers increasingly rely on strategy, timing, flexibility, and long-term thinking rather than perfect conditions. For sellers, this explains why demand remains resilient even in tougher rate environments. Scarcity, not cheap money, is the dominant force locally. Homes that are priced correctly and positioned well still command attention because the underlying affordability gap is structural, not cyclical.

Dax Nollenberger
📩 dax@sereno.com
📞 831-227-5847