Santa Cruz, a coastal city in California known for its beaches and boardwalk, has experienced significant changes in its housing market. From 2017 to 2019, the city saw a decrease in homeownership rates alongside a substantial increase in average home prices. The homeownership rate declined from 46% to 40%, while average home prices rose from $912,288 to $976,065, representing a 7% increase.

This inverse relationship between homeownership rates and average home prices suggests that rising property values may have made homeownership less attainable for many residents. During this period, federal interest rates increased from 1% to 2.16%, which typically makes mortgages more expensive and can discourage homeownership. However, the decline in homeownership rates in Santa Cruz was more pronounced than what might be expected from interest rate changes alone, indicating that local factors likely played a significant role.

As homeownership declined, the percentage of renters in Santa Cruz increased from 54% in 2017 to 60% in 2019. Concurrently, average rent prices rose from $1,780 to $1,979, an 11.2% increase. This rise in both renter percentage and average rent prices suggests a growing demand for rental properties, possibly driven by the city's population of 64,605 in 2019 and the challenges of homeownership in an expensive market.