Renting in Santa Cruz, California now requires a stifling income of more than $168,000 just to rent a two-bedroom, a figure that makes it the most unaffordable market in the nation for the third year in a row.
In the Santa Cruz area, located on the Central Coast about 75 miles south of San Francisco, the hourly pay needed to afford a modest two-bedroom has risen from $63.33 in 2023 to $81.21 in 2025, according to the National Low-Income Housing Coalition’s 2025 Out of Reach report.
This is up nearly 30% since 2023, when they were first put at the top of the list.
That means a renter must now earn $168,920 a year to be able to afford a modest two-bedroom at fair market rent in the metro area, the report shows. That would be a max of $4,223 a month in rent to stay under 30% of their gross income. In California, where the minimum wage is $16.50, that’s the equivalent of working 4.9 full-time jobs.
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The report finds that the typical renter doesn’t come close. The average renter in Santa Cruz County earns $22.13 an hour. At that rate, it would take about 3.7 full-time jobs to afford an apartment.
“This is a No. 1 we don’t want to be,” said Elaine Johnson, executive director of Housing Santa Cruz County to the Santa Cruz Sentinel. “This is an all-hands-on-deck kind of time for everyone involved.”
California state dominates affordability rankings, according to the Out of Reach report. The Golden State is home to eight of the ten most expensive metro areas, including San Jose, San Francisco, Salinas, and Santa Barbara. Statewide, the average housing wage for a two-bedroom apartment is nearly $50 per hour, which is the highest of any U.S. state.
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At the current minimum wage, a full-time California worker would need to put in 120 hours a week to afford the average two-bedroom apartment. According to the report, “Nowhere in the United States—no state, metropolitan area, or county—can a full-time minimum-wage worker afford a modest two-bedroom rental home.”
The report attributes the problem to a severe and persistent supply shortage, estimating a national gap of 7.1 million affordable rental homes for extremely low-income or ‘ELI’ households.
Critics say California’s housing market is also hindered by overlapping layers of regulation.
“CEQA[California Environmental Quality Act] and restrictive zoning regulations are key contributors to California’s housing shortage,” said Dr. Wayne Winegarden, senior fellow at the Pacific Research Institute. “Prevailing wage mandates coupled with expensive environmental mandates… further inflates housing costs.”
Santa Cruz County Republican Party Chair Mike Lelieur told FOX Business the affordability crisis is a direct 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 said. “Then you add CEQA, coastal commission reviews, endless permit delays, and greenbelt restrictions. It’s a bureaucratic blockade by design.”
He also criticized the University of California, Santa Cruz, for expanding its student population faster than it builds housing. “UCSC keeps expanding, but they’re not building dorms fast enough. So students flood the local market and landlords jack up rents — because mom and dad are paying the bill,” he said.
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“This is a housing crisis created by policy,” Lelieur said. “And unless we change course, it’s only going to get worse.”
The Santa Cruz Beach Boardwalk and the Santa Cruz County Business Council did not immediately respond to FOX Business’ request for comment.
The full report can be found at https://nlihc.org/oor
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