Santa Cruz County Housing Market Takes a Sudden Dip: What This Shocking Trend Means for You!

The Santa Cruz County housing market experienced a seasonal dip in available homes for sale in December, continuing a trend that many real estate professionals anticipated. The latest data from the Santa Cruz County Association of Realtors indicates that the inventory of homes plunged to **237** in December from **393** in November. This marked a significant drop and was the first month with fewer than **400** homes on the market since March **2025**. However, despite this decrease in inventory, December sales remained robust at **105** closed transactions, a **5%** increase from **100** sales in November. This sustained activity is notable given the typical slowdown many markets experience during the holiday season.

Local real estate agents, like **Jessica Wallace** of **Coldwell Banker**, noted that many homeowners opt to take their properties off the market during December, seeking a break for the holidays. “They want a break for the holidays,” she explained, adding that several of her clients have already begun preparing to relist their homes as January progresses. This seasonal behavior is not uncommon, but it does contribute to fluctuations in inventory levels.

Interestingly, despite the drop in homes available, the median sales price in Santa Cruz County saw a significant decline, decreasing to **$1,135,000** from **$1,294,500**—a **14%** reduction. This price drop coupled with quicker sales, which averaged **50 days** on the market in December compared to **63 days** in November, suggests that buyers are responding favorably to more competitively priced properties. Wallace remarked, “It’s a pretty small market pool, so a few things can skew our data in a given month,” indicating that current market dynamics might be influenced by a limited selection of homes.

The overall trend in **2025** has been somewhat stable, particularly following the pandemic when mortgage rates fell below **3%**. Looking ahead, there is cautious optimism among real estate professionals for **2026**. Wallace expressed hope that the market remains balanced, saying, “Interest rates are trending down, but not dramatically, but I think things are not going to be too dramatic in the real estate world.”

Mortgage rates have recently dipped further, coinciding with a directive by former President **Donald Trump** for government-backed entities like **Fannie Mae** and **Freddie Mac** to acquire **$200 billion** in mortgage bond debt. This action pushed mortgage rates down into the **high 5%** and low **6%** range last week, much to the interest of potential buyers and investors alike.

However, the climate is complicated by ongoing investigations into **Jerome Powell**, the Chair of the Federal Reserve, by the Department of Justice. **Scott Goodrich**, a mortgage advisor, highlighted the uncertainty this creates for the market, stating, “It’s still too early to tell how” the investigation might play out. He emphasized that the appointment of Powell’s successor—whose term ends in May—could have significant implications for interest rates. “Chances are, it’s going to be someone more aligned with Trump, and that does not necessarily mean good things for rates,” he warned, drawing parallels to historical precedents such as the **Nixon** administration, where political influences on the Fed led to economic turmoil known as stagflation.

As the market stabilizes post-holidays, Goodrich remains hopeful that the more balanced state observed in **2025** will persist into the new year. He reflects, “If interest rates can stay kind of where they are, or go down a little bit, that will help people who feel like they’re locked into their house,” suggesting that this could lead to an increase in available properties, providing buyers with more options and enhancing their negotiating power.

As this complex situation unfolds, Santa Cruz County residents will be keeping a close eye on the housing market, mortgage rates, and the broader economic conditions shaped by political influences and Federal Reserve decisions.