3 days ago
This California city tops list of most expensive US rental markets for third year in a row; renters need 4 jobs to afford a home; here's why
Santa Cruz in California remains the most expensive rental market in the United States for the third year in a row. This city requires a person to have an overwhelming income of more than $168,000 just to rent a two-bedroom, according to Fox Business. The National Low-Income Housing Coalition's 2025 Out of Reach report suggests that 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. This is almost 30% higher than it was in 2023, when they first reached the top of the list.
The data shown in the report signifies that a person planning to rent a house must now earn $168,920 a year, or $4,223 a month, to afford a two-bedroom at fair market rent in the metro area. According to Fox Business, California has a minimum wage of $16.50; that's the equivalent of working 4.9 full-time jobs.
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Average renter earns $22.13 an hour in California
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The new report says most renters can't afford it. In Santa Cruz County, the average renter makes $22.13 per hour. To pay for an apartment, they'd need to work about 3.7 full-time jobs. "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."
The Out of Reach report also reveals that California dominates affordability rankings. The Golden State has 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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Considering the current minimum wage, a full-time California worker would need to work 120 hours a week to afford the average two-bedroom apartment. "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," according to the report.
Regulations and supply shortages make California housing market expensive
The Out of Reach report says that the problem is a severe and persistent supply shortage, estimating a national gap of 7.1 million affordable rental homes for extremely low-income or 'ELI' households. According to critics, 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 inflate 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. "This is a housing crisis created by policy," Lelieur said. "And unless we change course, it's only going to get worse."
