Santa Cruz County saddled with unaffordable housing crown for fourth straight year

SANTA CRUZ — Santa Cruz County must once again lay claim to a title it would much rather let go of.

For the fourth consecutive year, the Santa Cruz-Watsonville metropolitan area, which includes the entire county, was named the most expensive rental market in the nation by the National Low Income Housing Coalition’s 2026 Out of Reach report.

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The determination was made based on the housing group’s signature “housing wage” statistic, which is the hourly rate a full-time worker must earn to afford a modest rental home at fair market value without spending more than 30% of their income. The 30% figure is important because that is the technical benchmark used by state housing officials to qualify as “affordable.”

According to the study, the county’s housing wage was $81.04 per hour, meaning, a local full-time worker earning the California minimum hourly wage of $16.90 would have to work 4.79 jobs to comfortably afford a two-bedroom rental. The second least affordable metropolitan area in the country, consisting of Marin, San Francisco and San Mateo counties, trailed Santa Cruz by $11.73 with a housing wage of $69.31.

The Santa Clara County region came in third with a wage of $66.98, while Napa County slid into the top four at $63.75.

The report’s authors stated in their introduction that the private housing market on its own will never be able to provide enough supply to support the country’s lowest-income renters and that the federal government needed to step in with public subsidies to help bridge the financial gap. But for years, it has failed to do so.

“The chronic issue of underfunding stems largely from housing assistance programs receiving allocations through discretionary funding, where housing programs must compete with other discretionary federal priorities,” the introduction reads. “To meaningfully address the affordable housing crisis, the federal government must adequately fund housing programs in a way that would expand rental assistance and both preserve and increase the supply of deeply affordable homes for those with the lowest incomes.”

The county’s housing wage was $81.21 in 2025, $77.96 in 2024 and $63.33 in 2023, according to previous Out of Reach studies.

Statewide, the housing wage is $52.79, assuming a two-bedroom fair market apartment costs $2,745 per month. California is home to 5.9 million renter households and about 44% of the population, or more than 17.3 million people, are renters, according to the report.

The National Low Income Housing Coalition released its annual report almost a month after the Santa Cruz County Civil Grand Jury shared its own detailed analysis of housing conditions in unincorporated parts of the county. The jury concluded that the county is far off pace from constructing the 4,634 units it was tasked by state housing authorities with establishing by 2031 and that local policymakers needed to take another look at how they can better facilitate construction.

The jury found that, from a legal standpoint, the county had satisfied all of its zoning and planning requirements, but the equation for developers to actually build units was still too expensive to pencil out. Therefore, jurors argued, the Board of Supervisors and its staff are obligated to explore tangible adjustments that can help close the gap between planning and actual production.

Recommended courses of action included creation of a comprehensive housing financial feasibility analysis, identification of key local regulatory barriers to building, and regular publishing of progress reports along with a publicly available dashboard of all new local housing projects. The county has 90 days to file a formal response to the grand jury’s findings.

Meanwhile, the federal government’s role in alleviating the state and country’s housing woes remains uncertain at best, according to the coalition.

“Despite the acute affordability challenges facing the nation’s renters, many of the current administration’s policies undermine housing stability by making it more difficult for people with low incomes to afford rent or to receive housing assistance,” the authors wrote. President Donald Trump and his allies initially proposed a 44% cut to essential housing programs in the U.S. Department of Housing and Urban Development’s fiscal year 2026 budget, according to the coalition. Those cuts were eventually rejected by Congress, which actually increased funding in this year’s Transportation, Housing and Urban Development spending bill. But it’s not clear if that will happen again.

“The president has, again, requested drastic cuts to HUD programs in his (fiscal year 2027) budget, and the House Appropriations Subcommittee on Transportation, Housing and Urban Development (THUD) has followed suit,” the report authors wrote. “As of this writing, Congress has not yet passed its (fiscal year 2027) spending bill, so it remains uncertain whether these cuts will be included in the final legislation.”