Boulder Creek Realtor Gordon Rudy of Schwarzbach Associates believes the spring real estate market could be poised to have great activity. (Contributed)

Homeowners may gloat at long-term home price growth, but others struggle to enjoy the blessings of mountain home ownership. Redfin states: “In November 2023, Santa Cruz home prices were down 20.8% compared to last year, selling for a median price of $1.2M.”

With interest rates on 30-year fixed mortgages at around 6.4%, one needs good credit and a down payment of $240,000 to get conventional loans for average houses without PMI.

Low supply and high demand explain pricing: rapid industrial expansion with high salaries impacts housing, while zoning ordinances limit new construction. Building codes increase safety and energy efficiency at the price of affordability, while environmental regulations drive up the price of lumber and transportation gas.

2023 septic regulations drive buyers and sellers apart with point-of-sale inspections, delays and possible $80K additions to home purchases. Rent controls stronger than the Tenant Protection Act of 2019 may discourage repairs and stifle construction of new rental housing.  

I love open spaces for hiking as much as anyone, and don’t really want six-story buildings and dangerous houses raised on windy Scenic Drive, but regulations that protect my guilty pleasures harm renters and the homeless.

CFPs make predictions that are not personal advice and interest rate predictions frustrate experts without crystal balls. High federal deficits threaten inflation long term. Interest rates fell and will fall more because the Fed sees inflation easing, growth moderating and elections looming.

The New York Times reports that inflation dropped from 9.1% last year to 3.1%. Rates have dropped lately, qualifying more buyers, and are likely to drop further because lenders can ignore inflation. I concur with Preston Caldwell of Morningstar, who predicts that the 30-year mortgage rate will fall to 4.5% by 2025.

High CA income taxes help housing supply by encouraging flight. So paying down credit cards or buying bonds seem timelier now than paying down low interest mortgages, doing 1031 exchanges or getting reverse mortgages. The CA Association of Realtors predicts a real estate rebound, and Gordon Rudy, a SLV realtor, sees silver linings:    

“With falling interest rates, we feel the spring real estate market could be poised to have great activity. But if we have another severe winter with road closures, it will stall the market.”

Scarcity of housing raises rents too, so buyers may consider:

Conventional loans typically require debt to income ratios under 36%, credit scores above 720, and private mortgage insurance until you gain 20% equity. Loans may conform if under $766,550 in most areas; beyond that, apply for Jumbo loans.

FHA Loans, insured by the Federal Housing Administration, depend less on credit scores (above 580) than conventional loans, but need a 3.5% down payment, tighter FHA appraisals, and FHA mortgage insurance, which may last as long as the loan. VA loans are more generous.

CalHFA loans, starting in 2024, will allow some to buy without down payments in return for sharing 15% of the gain in equity on sale with the state.

Seller financing lets fleeing homeowners grant mortgages to buyers who don’t qualify for conventional loans. Seek legal advice for this option. Sellers may also keep existing mortgages in place but use “wrap-around mortgages” to get cash from another mortgage paid by the buyer.  If your landlord might sell, consider lease to own contracts or options to purchase.

Land loans and construction loans and FHA 203(k) loans are available for those hearty enough to survive the costs and delays of permitting and skillful enough to supervise building.

I would counsel potential sellers to sell right now or wait a few years as I expect housing prices to rebound. Today is not 2008: most borrowers don’t get subprime equity-based loans with balloon payments. But they also don’t get justifiable equity-based loans cheaply and must prove capacity (debt/income), character (FICO scores) and collateral. 

Buyers must not weep about waiting for interest to drop. Fannie Mae predicts a 2.85 rise in housing prices this year, but lowered interest and increased wages should make housing more affordable. And millennials will soon start purchasing.

Robert Arne, EA, CFP, MS, of Carpe Diem Financial Life Planning, is a Certified Financial Planner who gives holistic financial advice as a fiduciary pledged to advise with your best interests first. He serves mostly Santa Cruz Mountain dwellers. Learn more at

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Robert Arne, EA, CFP, MS, of Carpe Diem Financial Life Planning, is a Santa Cruz Mountains Certified Financial Planner who gives holistic financial advice as his client’s fee-only fiduciary. These articles are not personal financial, mortgage, tax or investment advice; consult appropriate professionals. Learn more at


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