Santa Cruz remains America’s most expensive rental city as housing crisis deepens
TOI World Desk | TIMESOFINDIA.COM | Jul 17, 2025, 20:50 IST
( Image credit : TIL Creatives )
Santa Cruz, California, retains its title as the most expensive rental market in the U.S., demanding an annual income of nearly $169,000 for a two-bedroom apartment. The hourly wage needed has surged to $81.21, pricing out most residents. Critics cite restrictive regulations and a lack of affordable housing as key factors, with the crisis extending nationwide.
For the third year in a row, Santa Cruz, California, has taken the unfortunate title of the most expensive rental market in the United States. A recent report from the National Low Income Housing Coalition (NLIHC) has revealed that the cost of renting in this coastal city has soared to new heights, requiring an annual income of nearly $169,000 to afford a modest two-bedroom apartment.
According to the 2025 Out of Reach report, the hourly wage needed to rent a two-bedroom home at fair market rates in Santa Cruz has skyrocketed from $63.33 in 2023 to a staggering $81.21 in 2025—a jump of almost 30 percent in just two years. This wage translates to $168,920 annually, or over $4,200 per month in rent, pricing out the vast majority of working residents.
In contrast, the average renter in Santa Cruz earns just $22.13 per hour. To meet the rental threshold, a person on this wage would need to work 3.7 full-time jobs—or roughly 120 hours a week—underscoring a severe and widening affordability gap.
“This is a No. 1 we don’t want to be,” said Elaine Johnson, executive director of Housing Santa Cruz County, in a statement to the Santa Cruz Sentinel. “This is an all-hands-on-deck kind of time for everyone involved.”
The report paints a grim picture across California, where eight out of the ten most unaffordable metro areas are located. Cities like San Francisco, San Jose, Salinas, and Santa Barbara also made the list. Statewide, the average housing wage required for a two-bedroom apartment has reached nearly $50 per hour—higher than any other state in the country.
Critics point to a combination of restrictive regulations, a lack of affordable housing supply, and flawed policy decisions as key drivers of the crisis. The state faces a shortfall of approximately 7.1 million affordable homes for extremely low-income households, according to the NLIHC.
“California’s housing shortage is deeply rooted in bureaucratic hurdles,” said Dr. Wayne Winegarden, a senior fellow at the Pacific Research Institute. “Zoning restrictions, environmental mandates under the California Environmental Quality Act (CEQA), and prevailing wage laws all contribute to inflated construction costs.”
Santa Cruz County Republican Party Chair Mike Lelieur also weighed in, calling the affordability crisis a result of decades of progressive policy. “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,” Lelieur told Fox Business. He added that additional permitting delays, CEQA reviews, and coastal commission regulations further discourage new housing developments.
Lelieur also criticized the University of California, Santa Cruz, for expanding its student population without building sufficient dormitories, exacerbating local rental demand. “UCSC keeps expanding, but they’re not building dorms fast enough. So students flood the market and landlords jack up the rents—because mom and dad are paying the bill.”
The 2025 Out of Reach report makes it clear that the housing crisis isn’t isolated to Santa Cruz. Nationwide, the minimum wage in no state, county, or metro area is high enough for a full-time worker to afford a modest two-bedroom apartment.
The findings serve as a wake-up call for policymakers, developers, and communities alike. Without swift, structural reform in housing policy and development processes, experts warn, the crisis will only continue to grow—pushing more working Americans to the margins in places they’ve long called home.
According to the 2025 Out of Reach report, the hourly wage needed to rent a two-bedroom home at fair market rates in Santa Cruz has skyrocketed from $63.33 in 2023 to a staggering $81.21 in 2025—a jump of almost 30 percent in just two years. This wage translates to $168,920 annually, or over $4,200 per month in rent, pricing out the vast majority of working residents.
In contrast, the average renter in Santa Cruz earns just $22.13 per hour. To meet the rental threshold, a person on this wage would need to work 3.7 full-time jobs—or roughly 120 hours a week—underscoring a severe and widening affordability gap.
“This is a No. 1 we don’t want to be,” said Elaine Johnson, executive director of Housing Santa Cruz County, in a statement to the Santa Cruz Sentinel. “This is an all-hands-on-deck kind of time for everyone involved.”
The report paints a grim picture across California, where eight out of the ten most unaffordable metro areas are located. Cities like San Francisco, San Jose, Salinas, and Santa Barbara also made the list. Statewide, the average housing wage required for a two-bedroom apartment has reached nearly $50 per hour—higher than any other state in the country.
Critics point to a combination of restrictive regulations, a lack of affordable housing supply, and flawed policy decisions as key drivers of the crisis. The state faces a shortfall of approximately 7.1 million affordable homes for extremely low-income households, according to the NLIHC.
“California’s housing shortage is deeply rooted in bureaucratic hurdles,” said Dr. Wayne Winegarden, a senior fellow at the Pacific Research Institute. “Zoning restrictions, environmental mandates under the California Environmental Quality Act (CEQA), and prevailing wage laws all contribute to inflated construction costs.”
Santa Cruz County Republican Party Chair Mike Lelieur also weighed in, calling the affordability crisis a result of decades of progressive policy. “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,” Lelieur told Fox Business. He added that additional permitting delays, CEQA reviews, and coastal commission regulations further discourage new housing developments.
Lelieur also criticized the University of California, Santa Cruz, for expanding its student population without building sufficient dormitories, exacerbating local rental demand. “UCSC keeps expanding, but they’re not building dorms fast enough. So students flood the market and landlords jack up the rents—because mom and dad are paying the bill.”
The 2025 Out of Reach report makes it clear that the housing crisis isn’t isolated to Santa Cruz. Nationwide, the minimum wage in no state, county, or metro area is high enough for a full-time worker to afford a modest two-bedroom apartment.
The findings serve as a wake-up call for policymakers, developers, and communities alike. Without swift, structural reform in housing policy and development processes, experts warn, the crisis will only continue to grow—pushing more working Americans to the margins in places they’ve long called home.