Even as SF rent skyrockets, Santa Cruz is still the most expensive place to rent in the US

As rents in California metros continue to skyrocket, one smaller coastal city not only outpaces the rest of the state — but also leads the nation in rental costs.

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And that place, for the fourth year in a row, is Santa Cruz.

Since 2023, the greater Santa Cruz-Watsonville metro area has held the dubious honor of being the most expensive rental market in the U.S., according to data compiled by the National Low Income Housing Coalition. 

The Washington, D.C.-based nonprofit, tasked with coming up with housing solutions and housing equity, was founded in 1974, and one of its main directives is to track housing costs by ZIP code and compile those statistics annually. 

The resulting report is entitled “Out of Reach.” Visitors to the organization’s website can enter their state or ZIP code and find out via an interactive map exactly how much a person has to make per hour to afford housing in their area while spending no more than 30% of their income. Known as the 30% rule, it’s how much financial advisers recommend spending on rent monthly. 

The report announces itself with the simple message: “How Much Do You Need to Earn to Afford a Modest Apartment in Your State?” In Santa Cruz County, on average, a worker needs to make $81.04 an hour to access modest housing. In some oceanfront communities like Capitola, that amount runs up to $83.85 per hour — nearly double the average hourly wage in California, which the Bureau of Labor Statistics sets at $42.29. It’s also nearly five times the amount that someone making minimum wage, which is $16.90 an hour in Santa Cruz County, can afford. 

And while the San Francisco metro area has had some jaw dropping recent rental market news at a required $69.31 per hour in wages on average, it still comes in at almost $12 less than what someone needs to make to live in Santa Cruz.

In an email to SFGATE, Jenny Panetta, the executive director of the Housing Authority of the County of Santa Cruz, called the news that Santa Cruz County topped the coalition’s list as the least affordable rental market for the fourth time “incredibly disheartening.” 

“At the same time, it probably doesn’t come as a surprise to anyone who lives here,” Panetta wrote. “Families experience this reality every day as they struggle to find housing they can afford or make increasingly difficult choices to remain in the community they love.”

The Central Coast has some of the most expensive ZIP codes in the country. Up there with Santa Cruz are parts of Santa Barbara County, such as Montecito ($78.65/hour), and other places like Carmel ($72.88/hour). But nothing in the nation touches Santa Cruz County, as well as the San Francisco metropolitan area and Santa Clara County, which have occupied the second and third spots on the list since 2023, respectively.

Santa Cruz residents and housing advocates also acknowledged that outrageous rent, mostly a byproduct of a lack of housing, is a problem they’ve lived with — and that has worsened by design — for decades. 

“I think we dug ourselves a very deep hole over the last 40 years, and that hole is just going to take some time to dig out of,” Rafa Sonnenfeld, a spokesperson for Santa Cruz YIMBY, a volunteer-run pro-housing organization, told SFGATE. 

Since the 1980s, Sonnenfeld contends, Santa Cruz County has fallen woefully short of meeting the bare minimum guidelines for building new housing. This is reflected in a shortfall of housing being planned or built in its current Regional Housing Needs Allocation, or RHNA, cycle, which concludes in 2031. The county is mandated to build . The area has, as Sonnenfeld puts it, “fallen short.”

“If we’re not meeting our goals, we’re not going to be able to dig ourselves out of the hole anytime soon,” he continued. “If at all.”

Housing advocates said the fight continues regardless of the skyrocketing cost of housing and supply not keeping up with demand. Panetta’s organization is addressing the problems facing rental assistance, which allows nearly 13,000 people, “including seniors, people with disabilities, veterans, and working families,” to remain in stable housing. “For many households, that assistance is the difference between stability and either homelessness or displacement,” she wrote.

But the housing tide can’t turn with just rental assistance alone, Panetta said. The , released in June, laid bare the need for the region to catch up on building. “As of year-end 2025, the County has fallen significantly behind on its goals,” the report said, noting that the 279 permitted units are “a mere 6% of its target yet it is more than 25% through the current eight-year housing cycle.”

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“We need more housing of all types, and we especially need more affordable housing,” Panetta continued. “Until supply better matches demand, affordability will continue to be a challenge.”

Santa Cruz YIMBY’s Sonnenfeld pointed out that even locals can glaze over the problem: When study after study and list after list point out the issue, it loses its shock value. The proof, he said, is in seeing who can afford to live here versus those he knows directly who have been displaced — week after week, month after month. 

Sonnenfeld said he first really recognized the problem about 15 years ago when he returned to the area from Seattle, where he went to college and worked for several years after graduating.

“I came back in my late 20s, and there were very few people I grew up with who could afford to live in Santa Cruz,” he said, noting that at his 20-year high school reunion, those who still lived in Santa Cruz had jobs with high salaries, working for Google or Facebook or as doctors or attorneys. And even those people had inherited homes from their families, he said. “Everyone else had to leave for better opportunities in other places.”

He recognizes that Santa Cruz is a nice and cherished place to live and that it may not be possible for everyone who grows up here to stay or to be able to afford to move here and make enough to pay rent, much less afford a mortgage. Still, it’s creating a community he feels is aging rapidly, and one where basic services are no longer being provided. 

“I’ve had four or five primary care physicians in the last two years,” Sonnenfeld said. “There’s just greener pastures elsewhere when it comes to quality of life, and that’s mainly due to the cost of housing. Santa Cruz is a fantastic place to live if you can afford it. We’ve just not been particularly interested in allowing apartments in more places within city limits or building apartments where it is legal.”

In the end, Sonnenfeld said, what drove him into advocacy was seeing firsthand that a lack of affordable housing directly leads to homelessness, as he served on a city committee to help tackle issues related to homelessness. Many Santa Cruz residents, he said, “don’t want to accept that NIMBYism or lack of affordable housing is the primary cause of homelessness.” 

Nonprofits and city appointed committees can “mitigate the challenges of people living outside,” but those problems will be perpetuated without affordable housing, Sonnenfeld noted. 

In spite of the glaring cost of the area’s existing, limited housing, there are signs in Santa Cruz that change is coming, albeit slowly. 

Sonnenfeld said after years of pushing, the city is starting to see some new development projects come online and that government-funded entities like the school district are starting to build housing for teachers and staff. The wheels, he said, are turning slowly — but at least they’re starting to turn. 

Housing authority executive director Panetta agreed that there are signs of hope. 

“Over the past few years, our community has brought many affordable housing developments online, with more projects currently under construction or in predevelopment,” she wrote. “Those developments represent years of collaboration among local governments, nonprofit organizations, developers, lenders, and community partners. They won’t solve the problem overnight, but they are moving us in the right direction.”