Santa Cruz Homeowners Face Rising Renovation Costs: What’s Driving the Increase?
Santa Cruz homeowners looking to renovate in 2025 are facing higher-than-expected construction costs, with local contractors reporting increased prices across materials, labor, and permitting fees. As demand for home improvements continues to grow, residents are navigating a rapidly shifting market that has made remodeling projects more expensive—and in some cases, more complex to complete.
With Santa Cruz’s real estate values remaining high, many homeowners are opting to renovate rather than relocate, fueling a surge in demand for kitchen remodels, home additions, and ADU construction. However, supply chain disruptions, inflation, and stricter building regulations have led to longer project timelines and higher overall costs.
The Rising Cost of Construction in Santa Cruz
For homeowners like Michael and Rachel Carter, who began planning a major home remodel in early 2024, the reality of the price increases became apparent as soon as they started requesting estimates.
“We originally budgeted around $200,000 for a kitchen and bathroom remodel, but the quotes we received were closer to $275,000,” Rachel explained. “Everything—from lumber to appliances—was more expensive than we expected.”
Their experience is not unique. Santa Cruz contractors cite material shortages and rising labor costs as the primary factors driving up expenses. Lumber, drywall, plumbing fixtures, and electrical components have all seen price hikes in recent months, making even mid-range renovations significantly pricier.
Additionally, securing permits in Santa Cruz County has become a longer and costlier process, especially for homeowners undertaking structural changes. Projects that require foundation work or modifications to historically designated homes must go through additional approval steps, adding both time and expenses.
Why Homeowners Are Still Choosing to Remodel
Despite these challenges, many homeowners in Santa Cruz County still see renovation as the best investment. With limited housing inventory and the cost of moving significantly higher than in past years, updating an existing home remains an attractive option.
Local construction firms, such as OCA Builders, have seen a steady increase in demand for home renovations, particularly in neighborhoods like Capitola, Soquel, and Aptos, where residents are expanding their homes rather than looking elsewhere for more space.
“It’s a tough market to buy in right now,” said Oren Atia, Owner of OCA Builders. “For many of our clients, the smarter choice is to upgrade their existing home—whether that means adding a second story, opening up their floor plan, or even building an ADU for rental income or extended family.”
ADUs, or Accessory Dwelling Units, have been especially popular among Santa Cruz homeowners, as the county has relaxed certain restrictions to encourage more housing development. However, these projects still come with costs, particularly in terms of zoning approvals and utility connections. Homeowners considering an ADU or major home expansion have sought guidance from trusted Santa Cruz construction professionals to navigate the complexities of permitting and compliance.
What This Means for Future Renovations in Santa Cruz
Industry experts predict that construction costs will remain high throughout 2025, though some material prices may stabilize. For homeowners planning major renovations, the key to avoiding excessive expenses will be proper planning, early contractor engagement, and flexibility in material choices.
For those who have been holding off on home renovations, the decision to wait may not necessarily lead to lower prices. Contractors recommend starting the planning process as early as possible, particularly for homeowners looking to remodel before the next wave of material cost fluctuations.
As demand for construction in Santa Cruz remains steady, one thing is clear—homeowners are still committed to investing in their properties, whether through kitchen and bathroom upgrades, full-scale home expansions, or the increasingly popular trend of ADU construction.
