According to the WSJ, the "number of first-time home buyers [has fallen] to lowest level in three decades." The last time we saw first-time homebuyers represent a 32% share of the marketplace it was 1987. Historically, this figure has averaged around 40%.
The biggest obstacles noted by would-be first time homebuyers are saving for a down payment and high student loan debt. Santa Cruz's rapidly increasing rental rates have only compounded the issue; higher rents have made it more difficult to save.
Further aggravating the issue is the non-existent price difference between a condo and a home.
Yup, you heard me right. The gap in price between a condo and a home is almost non-existent.
Within Santa Cruz city boundaries the two lowest priced active homes are listed at $575,000 and $599,000. Both are two bedroom homes, under 1000 square feet in size. The lowest priced two bedroom condo is listed for $549,000. However, with the condo's $380 HOA fee, the monthly cost to own the condo is essentially the same as the single family home.
|170 Everson Dr is a condo listed for $549,000.|
|315 Button St has been on the market for 136 days. Listed for $599,000|
On the other hand, the affordability factor (or lack of it) is alarming.
If you have the typical 20% down payment saved up ($120,000) and $0 debt, you would need a household income of about $100,000 to purchase a $599,000 property. The median household income for Santa Cruz is currently $62,755.
With property values rising so quickly, the entry-level market has essentially disappeared. Condos and townhomes alike have risen drastically in value. Their prices are competing with that of single family homes.
(On a side note, this is GREAT news for condo/townhome owners who bought when the units were still at entry-level market prices.)
Affordable Options are available
Santa Cruz City currently has Measure O in place, a voter-approved initiative to require developers to designate a certain number of new units as affordable housing units. Recently, developer Bill Brooks had 2 units set aside in the new Delaveaga Park Home development on Sunny Ln in Prospect Heights. There was a wait list of about 20 parties who were interested in purchasing an affordable housing unit. Likewise, the County has a similar initiative in place- Measure J.