New Construction Is Back: Why Santa Cruz Builders Are Flashing 4.99% (and What It Means for You)

LC Kelly
Sep 9
4 min read

Updated: Oct 14

Bay-to-Beach fam, your girl is buzzing. New construction is rare in Santa Cruz County, but three local spots are making serious moves and multiple builders are rolling out 4.99% 30-year fixed incentives. Translation: lower payments, real buying power, and a chance to level up without getting squeezed by today’s headline rates.

Let’s break down the trend, why builders are choosing permanent rate buydowns over temporary ones, and what’s specifically happening at The Dwellings (Soquel), Hillcrest (Watsonville), and Aptos Village (Aptos) plus exactly how much you could save each month.

Why 4.99% Is Popping Up (and why it’s often temporary outside of builder deals)

Across the country, builders are using incentives to keep sales moving while resale inventory stays tight. More than half of homebuilders have been offering incentives (including mortgage buydowns) to help buyers bridge the affordability gap. New home listings have also been far more likely than existing homes to offer a rate buydown, because builders can coordinate with preferred lenders and price the incentive into the project budget.

Here’s the key: when you see a buy-down advertised in resale transactions, it’s usually a temporary 2-1 buydown or similar a short-term reduction where your rate steps up after year 1 or 2. Those can be useful if you plan to refinance, but they don’t last.

Builder incentives are different. Builders are often using a forward rate commitment or paying points to lock in a longer term, sometimes permanent lower note rate like the 4.99% 30-year fixed we’re seeing at Hillcrest, The Dwellings, and Aptos Village. That makes payments predictable for the buyer and keeps absorption steady for the builder.

Meanwhile, broader housing headlines show builders are leaning into incentives to avoid aggressive price cuts and keep momentum as buyer demand ebbs and flows with rates. Reuters

Local Spotlight: Three Santa Cruz–Area Projects to Watch

1) The Dwellings — Soquel, CA

Boutique new construction with five floor plans (~956–1,694 sq. ft.) and a modern, low-maintenance vibe right in Soquel. Recent financing language on the official site outlines a 4.99% 30-year fixed scenario via a builder-paid forward commitment (subject to credit, LTV, and model selection). If you’ve been waiting for a turnkey nest near Capitola vibes and beach breezes, this is your moment. The Dwellings+1

2) Hillcrest — Watsonville, CA

Watsonville’s first new residential community in ~17 years, Hillcrest brings modern three-bed townhomes on an 11-acre site with trails and outdoor amenities. Even better: they’ve advertised a 4.99% fixed 30-year promotion for select homes with a preferred lender exactly the kind of incentive that makes monthly payments behave. Hillcrest Residences Watsonville

3) Aptos Village — Aptos, CA

Aptos Village blends walkable retail + residential right at the Village Green (hi, New Leaf runs!). Their site and local coverage have featured limited-time 4.99% fixed scenarios through a preferred lender. Recent county updates also show new construction and Measure J affordable inventory moving through Phase 2. If you want a lifestyle upgrade with coffee, dining, and forest trails at your doorstep, add this to the shortlist. Aptos Village+1 Santa Cruz County

Show Me the Money: Monthly Payment Savings at 4.99% vs 7.00%

For Santa Cruz buyers, loan sizes often sit in the $700k–$1M range. Here’s what happens if you lock 4.99% instead of 7.00% on a standard 30-year fixed (principal & interest only):

These visuals compare typical loan amounts ($700k, $900k, $1M) and show how a builder’s permanent buydown can translate into hundreds sometimes over $1,000 per month in savings versus a 7% market rate (exact savings depend on credit, LTV, points, and current market).

Heads up: Always budget for taxes, insurance, and any HOA—those are not in these charts and vary by community.

Permanent vs. Temporary Buydowns: Which Is Right for You?

Temporary “2-1” buydown: A short-term affordability bridge (e.g., 2% lower in year 1, 1% lower in year 2, then reverts). Works best if you’re very likely to refinance or expect income growth, but payments rise later. Some buyers in past cycles got caught when refis didn’t work out as planned so read the fine print. Moneywise

Permanent buydown (like 4.99% fixed): True note-rate reduction for 30 years. Higher builder cost upfront, but predictable monthly payment for you. Builders use forward commitments and preferred lenders to make this pencil and to keep closings steady without slashing list prices. Main Street Realtorsnewhomeco.com

Local Momentum Check

Hillcrest (Watsonville): New townhomes, modern finishes, outdoor amenities, and the confirmed 4.99% offer on select homes via preferred lender. Starting in the high-$800Ks when last advertised. Hillcrest Residences Watsonville
The Dwellings (Soquel): Fifteen homes, five floor plans, and published 4.99% financing scenario language (subject to terms). Boutique scale, Soquel-close convenience. The Dwellings+1
Aptos Village (Aptos): Mixed-use living by the Village Green with limited-time 4.99% scenarios and recent Phase 2 completions, including Measure J units. Walkability + lifestyle is the headline here. Aptos Village+1 Santa Cruz County

Quick Disclosures (because I protect my people)

Builder incentives including the 4.99% fixed are limited-time, on select homes, with preferred lenders, and subject to credit, LTV, and program guidelines. Always read the APR, points, and conditions; ask for a Loan Estimate and compare to alternatives. I’ll quarterback that comparison for you and keep it transparent. Hillcrest Residences Watsonville The Dwellings Aptos Village

Ready to tour?

Comment “HILLCREST,” “DWELLINGS,” or “APTOS” and I’ll send a private list floor plans, current availability, HOA ranges, and the exact incentive math for your price point and down payment. I’ll also hook you up with trusted lenders for side-by-side scenarios (yes, including 4.99% eligibility where available). Let’s upgrade your lifestyle and start building that Bay-to-Beach equity with receipts.