The real estate market is so much more than just buying and selling homes—it's about understanding the stories behind the trends and how they impact the way we live, work, and invest. Currently, one of the most significant talking points is mortgage rates. With rates climbing higher than we've seen in years, affordability has become a real challenge, leaving some buyers hesitant to take the plunge. But that's only part of the picture.
In Santa Cruz County, we're seeing significant changes in what buyers want. Take the rise of remote work: it's made places like Scotts Valley and Santa Cruz popular for people who want both nature and modern life. Also, after the recent wildfires, people are looking for homes that are not only nice but also safe and eco-friendly. We're watching all this happen right here, up close. Features like solar panels and energy-efficient designs have moved from "nice-to-have" to "non-negotiable" for many buyers. By understanding shifts in the market, you can better position yourself to seize opportunities and avoid potential pitfalls.
Inside this Article:
What Impact Are Interest Rates Having on the Santa Cruz Real Estate Market?
In its first meeting of 2025, the Federal Reserve announced on January 29th that it would leave its benchmark interest rate unchanged, holding steady in the range of 4.25% to 4.5%. This decision follows three consecutive rate cuts in late 2024—a half-percentage point cut in September and quarter-point cuts in November and December. So, what does this mean for the housing market? The answer isn’t straightforward. Mortgage rates, which had fallen sharply ahead of the Fed’s first rate cut—dropping from 8.01% in October 2023 to 6.20% in September 2024—climbed back above 7% in January 2025, even after the Fed’s end-of-year cuts.
This serves as a reminder that the Fed doesn’t directly control mortgage rates. The National Association of Realtors (NAR) remarks that despite the cuts to the short-term interest rates by the Federal Reserve, mortgage rates have largely refused to budge. For buyers and sellers in Santa Cruz County, these broader economic trends add another layer of complexity to an already dynamic real estate market.
What Are the Key Trends Shaping the Santa Cruz Housing Market?
The Santa Cruz housing market is constantly changing. Keep up with the latest trends to make better choices when buying or selling.
Days on the Market
Yes, but only a little. Since February 2025, homes in Santa Cruz County have spent an average of 55 days on the market, down from 53 days last year, according to Realtor.com, but still a significant jump from the DOM of January, which was 69 days on average. While it takes longer for buyers to decide, activity remains stable, creating a balanced environment for all parties. For sellers, this underlines the importance of patience and strategic pricing to attract the right offers. In the meantime, buyers benefit from the opportunity to consider their options thoughtfully without feeling rushed.
Home Prices
Home prices in Santa Cruz homes for sale have started to level off after years of rapid growth. It is an early indication of a shift toward a more balanced market. In January 2025, the median listing price for homes in Santa Cruz was $1.4 million, reflecting a 7.7% increase year-over-year. The median price per square foot was $854, while the median sold price was $1.3 million. As of February 2025, the median listing price increased somewhat to $1,398,500, whilst the median sold price stayed constant at $1.3 million.
While prices have stabilized for sellers, the market remains advantageous. Implementing strategic pricing and highlighting your home's distinctive attributes may enhance its visibility in this changing environment. For buyers, stabilized market prices are offering more flexibility, though competition remains high, particularly in popular neighborhoods like:
- Santa Cruz Homes for sale (Downtown and Westside)
- Proximity to the beach, UC Santa Cruz, and downtown amenities.
- Features: historic homes, modern condos, and easy access to shopping, dining, and entertainment.
- Capitola homes for sale
- Features: beachfront properties, quaint cottages, and a lively community with shops and restaurants.
- Aptos homes for sale
- Family-friendly with excellent schools and outdoor activities. Features: spacious homes, forested areas, and close proximity to beaches and state parks.
- Scotts Valley homes for sale
- Suburban feel with good schools and commuting options to Silicon Valley.
- Features: larger lots, newer developments, and a quieter, family-oriented environment.
- Soquel homes for sale
- Combination of rural and suburban lifestyles with convenient access to Santa Cruz.
- Features: ranch-style homes, larger properties, and a close-knit community.
- Boulder Creek homes for sale
- Secluded, forested area with a strong sense of community.
- Features: custom homes, cabins, and large lots, ideal for those seeking a rural lifestyle.
- Felton homes for sale
- Quaint mountain town with a relaxed atmosphere.
- Features: historic homes, modern builds, and access to redwood forests and outdoor activities.
- Charming beach town with a vibrant village atmosphere.
Santa Cruz Migration & Relocation Trends
Data from Redfin reveals that from November 2024 to January 2025, Santa Cruz saw a clear divide in homebuyer preferences:
Where Are People Moving to Santa Cruz From?
Nationwide, 3% of homebuyers searched for properties in Santa Cruz from outside major metropolitan areas. Leading the list of origin cities was Honolulu, with Knoxville and Santa Barbara also ranking high as common starting points for those relocating to the area.
Where Are People from Santa Cruz Moving To?
For the 26% of Santa Cruz homebuyers looking to leave the area, Sacramento emerged as the most popular destination. Los Angeles and San Diego followed closely, rounding out the top three choices for those seeking a change of scenery. Meanwhile, the majority of residents—74%—chose to stay within the local metropolitan area, reinforcing the appeal of Santa Cruz as a long-term home.
Buying Trends: What Are Buyers Looking for in Santa Cruz Homes for Sale?
When searching for a home in Santa Cruz County, buyers today prioritize properties that reflect modern lifestyles—homes that blend comfort, functionality, and sustainability seamlessly. If you're in the market, here's what's likely topping your wish list:
Flexible Spaces
With remote working becoming a permanent fixture for many, homes offering flexible spaces are in high demand. Whether you need a dedicated home office, a guest room or a comfortable reading room, buyers want a home that can evolve to suit their needs.
Energy Efficiency
Energy-efficient features like solar panels, updated insulation, and modern appliances are no longer optional—they're essential. These improvements help you reduce your impact on the planet and provide savings over time, which makes them a smart choice for buyers nowadays.
Outdoor Living
Santa Cruz's natural beauty makes outdoor space a must. Boats, terraces and houses close to parks or beaches are very popular. If you value fresh air and connection with nature, these features can make your home a true retreat.
High-Speed Internet
In today's interconnected world, reliable, fast internet access is indispensable. Whether you work remotely, stream or stay in touch with loved ones, homes in neighborhoods with strong community ties are particularly attractive.
The Impact of Remote Work
The advent of remote work has brought professionals to Santa Cruz from the Bay Area. Drawn by the region's coastal lifestyle and relative affordability compared to Silicon Valley, these buyers are driving demand for homes with dedicated office space and modern conveniences.
First-Time Buyers
If you're a first-time buyer, you're not alone in facing challenges like high prices and rising interest rates. Many are considering condos and townhomes as more affordable options, particularly in neighborhoods like Capitola and Scotts Valley. .
What’s Driving the Santa Cruz Housing Market?
The Santa Cruz housing market is unlike any other, shaped by a unique mix of factors that keep it both competitive and resilient. If you’re wondering what’s fueling this dynamic market, here’s a closer look at the key drivers:
A Desirable Coastal Location
Santa Cruz's spectacular beaches, towering redwood forest, and year-round temperate climate attract shoppers who want to live a relaxed coastal lifestyle. Whether you are attracted by the sound of crashing waves or by the tranquility of forest walks, the natural beauty of the area continuously attracts buyers from both local and foreign countries.
A Strong Tech Presence
Thanks to its proximity to Silicon Valley and the Bay Area, Santa Cruz has become a haven for tech professionals. The rise of remote work has only amplified this trend, as more people prioritize lifestyle over long commutes. Santa Cruz offers the perfect blend if you're looking for a balance between work and leisure.
Limited Housing Supply
Santa Cruz County has long struggled with limited inventory, which keeps prices elevated. Strict zoning laws, geographic constraints, and a focus on preserving open spaces all contribute to the scarcity of available homes. This means competition can be fierce for buyers, but for sellers, it's an opportunity to highlight your property's unique features.
Economic Uncertainty
Even though the market is still going strong, buyers are starting to be a bit more careful because interest rates are going up and there's talk about a possible recession. This has caused a small dip in demand, but prices are still high because people really like living in this area. If you're thinking about buying or selling, keeping an eye on these trends can help you feel sure about the choices you make.
Is Now a Good Time to Buy or Sell in Santa Cruz County?
Is it a good time to buy or sell in Santa Cruz County? Well, that really depends on what you're hoping to achieve:
- If you're thinking of selling, the market is still looking pretty good, particularly in popular spots like Santa Cruz and Capitola.
- If you're looking to buy, you'll find that prices are high, but things seem to be leveling out a bit. Plus, with more homes on the market, there are opportunities for buyers who are prepared to move fast.
The Santa Cruz housing market is hot right now, creating opportunities for buyers and sellers alike. Understanding the latest trends and hot topics will allow you to make informed judgments regarding the buying or selling of property in Santa Cruz County.
Thinking of venturing into the Santa Cruz Marketplace? Let's get started on turning your real estate vision into reality! Call me today for a personal consultation or go ahead and get my free guide on shopping and deals in Santa Cruz!
Paul Burrowes, CRS, CCEC, SFR, NHCP, LHC, REALTOR® Licensed REALTOR® with over 15 years of experience and expertise. Commits to being on time and transparent. Acts as your consultant to ensure you make the best decisions to fit your transaction at every step in the process. Negotiates towards a low-stress, win-win outcome. Handles all the details for you, ensuring the hundreds of steps in your real estate transaction go smoothly. Proudly serving Silicon Valley, Santa Cruz, Monterey, and Santa Clara Counties! | DRE# 01955563 | (831) 295-5130 | paul@burrowes.com.
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