Ask building developers and managers and they’ll tell you there’s never a shortage of lower-income renters seeking apartments, which make up a relatively small percentage of large-scale housing developments that also offer more profitable units pegged at market rates for the privileged few who can afford them.

But for moderate-income families there’s also “below market rate” units, which, if Santa Cruz County follows regional trends, are ending up with too many empty units.

Santa Cruz County, the coastal part of it, is one of the most unaffordable locations in the U.S., both in the price of buying a home or trying to find an affordable rental. Housing prices have been rapidly rising across the U.S., but especially in California. Home prices in coastal California are nearly 400% above the national average, and California has the second-lowest home ownership rate in the nation at 56% (New York’s is lowest, 54%). In other parts of the country, moderate-income households don’t need below-market rate apartments because they can afford the market.

But in coastal California, the high cost of living is just getting higher.

California’s housing department recently released a report that revealed earning a six-figure salary as a single person without dependents is considered “low income” in five counties in Northern California — and, surprise, Santa Cruz is one of them. But, as CalMatters reported this week, no California county in 2020 considered a six-figure salary low income.

The state report comes as rising insurance costs are driving up rents; electric bills in California remain some of the highest in the U.S.; and inflation is “projected to accelerate” under President Donald Trump’s tariff policies.

The high cost of living in our county means a couple making $300,000 a year can barely afford a starter home. The supply of “affordable” housing is so severely constrained that many high-income earners, who in other places might be buying homes, find themselves relegated to the equally pricey rental market.

Meanwhile, cities and counties, as we noted earlier this week in an Editorial, are being forced to bring on new housing developments — nearly 13,000 units across Santa Cruz County by 2032.

As our Bay Area News Group reported this week, to keep developers from building only at the top of the market, state and local government programs have sought to incentivize — or require — new apartment complexes to reserve some units for rent-restricted housing.

These initiatives were first aimed at lower-income renters, but policies have expanded to consider moderate-income renters, typically defined as people making between 80% and 120% of Santa Cruz County median income of $132,800 or a family of four ($106,000 to $159,000), as “below-market-rate” renters. (Santa Cruz County’s Acutely Low, Median Income and Moderate Income levels for 2025 all remained the same from 2024 levels, according to state figures, but the income limits to qualify for Extremely Low, Very Low and Low were all raised.)

“Moderate rents” for 1, 2 and 3 bedroom units are set at $2,770, $2,967 and $3,560, respectively. For renters who qualify for these units, future rent increases also are capped.

But according to the news report, a review of rental data showed hundreds of “below-market-rate” units across the Bay Area remain vacant, months and sometimes even years after they opened for leasing.

It also may seem counterintuitive that “below-market rate” units are priced at levels that can be above market. The 120% metric is partly to blame, say developers. And this is a by product of the federal formula that determines affordability thresholds — pegged not to actual market rents, but to the area median income. Thus, as the area’s median income rises, so do the caps on what’s considered “affordable,” even if the real rental market tells a different story.

So, as Alex Schafran, a housing policy researcher based in Oakland, told reporters, “‘Affordable housing’ isn’t necessarily affordable, and ‘below-market rate housing’ isn’t necessarily below market rate.”