Quick Take
Santa Cruz County’s housing market largely stayed the course in September, with many houses on the market and plenty of sales closing. However, with trade tensions and the government shutdown lingering, real estate professionals say conditions could change rapidly.
The Santa Cruz County housing market appears to be tightening up again, with the number of homes sitting on the market dipping below a key threshold for the first time in months. But with the federal government shut down and other shaky indicators of economic instability, local real estate professionals warn uncertainty could weigh on the market in the coming months.
The number of homes available for sale dropped to 479, according to the latest figures from the Santa Cruz County Association of Realtors. That was down from the previous month, and the first time that local housing inventory has fallen below 500 since April. That’s not just a round number — to the local real estate industry, it’s also an indicator of balance between available inventory and buyers.
There were other signs that the housing market was warming up in September: The number of sales rose about 30% compared to a year ago, jumping to 129 last month from 99 in September 2024.
Still, real estate agents say the Santa Cruz County market is still far from the frenzied pace of home sales local buyers and sellers saw during the post-pandemic years.
Homes in Santa Cruz County sold at about the same rate as they did in August, averaging 51 days in September compared to 56 in the month prior. Buyers still have a lot of properties to choose from, which means that sellers aren’t yet seeing their homes fly off the market as they used to in the past.
“It takes a little bit longer to sell because buyers have a little bit more choice. They take their time to really go through and be selective about what they’re looking for,” said Sereno Group’s Jennifer Watson, who said she and other agents are telling sellers to “be prepared for a month or two rather than a week or two.”
Sellers are also seeing somewhat lower prices across the board. The median county sale price fell about 14%, to $1,274,000 from $1,486,095 in August. And while available housing inventory might have dropped below the important threshold of 500 last month, it was still 24% higher than the number of homes on the market in September 2024.
Watson said short-lived mortgage rate cuts in mid-to-late September spurred activity, likely contributing to the small inventory decline, since buyers were more likely to snatch up properties quickly when they could lock in slightly lower rates.
As buyers are still benefiting from the ability to explore options more than they’re used to, Watson said several features are particularly sought after, including one that has been hot for years: accessory dwelling units (ADUs), or at least the option to build one.
“Many times, people are trying to figure out how their aging parents can come here, or where they can put their kids who don’t want to leave,” she said. “You’ve got the whole range of people from just above millennials to just below senior age groups looking for that home with an ADU, or something convertible.”
On a similar note, Watson said single-story homes are extremely popular because they make it easier for people to age in place. She said that’s at least in part because of Santa Cruz County’s aging population.
“I’ve been working with a lot of seniors, and this is why these people bought these houses,” she said. “A single-level really hits every age group that can buy.”
On a bigger picture level, the economic outlook remains uncertain and volatile, said Monterey Bay Mortgage advisor Scott Goodrich. Last Friday’s selloff in the stock market in response to President Donald Trump’s talk about increasing tariffs on China were “a good example of how one day can sometimes be very tumultuous,” he said. Tariffs and trade tensions make the economic outlook uncertain and make changes in mortgage rates less predictable, which can weigh on local buyers navigating the market.
The ongoing government shutdown has seeped into the local housing market, too, Goodrich said. He spoke to a prospective buyer who works for the U.S. Geological Survey and is currently furloughed. Federal workers without paychecks will find themselves in a bind if they’re looking for financing.
“It used to be that a government job was stable, and the best client you could have from a lending perspective,” Goodrich said. “Now, they have to either get creative with their financing or they just have to wait.”
Even temporarily ineligible buyers could leave more houses sitting on the market for longer periods as the shutdown drags on, Goodrich said.
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