By Eric Engelbert
Rancho Santa Margarita was built as a master-planned community around a manmade lake, and it was finished long ago. Incorporated in 2000 as Orange County's last city, it has almost no vacant land. That is a big reason buyers searching for new construction here mostly come up empty, and why the city's housing market is driven almost entirely by resale.
The state still requires Rancho Santa Margarita to plan for 680 new homes between 2021 and 2029. In August 2024 the city answered by rezoning 15 specific properties, a shopping center, a cluster of restaurant, bank, and office pads in the Town Center, two business park office buildings, and three large business park parcels occupied by Applied Medical. No developer has filed plans yet, but the rules are now in place. Here is every site, what is on it today, and what it means.
The Mandate: 680 Homes in a Built-Out City
For the 2021 to 2029 cycle, Rancho Santa Margarita's Regional Housing Needs Assessment allocation is 680 units:
| Income category | Units |
|---|---|
| Very low income | 209 |
| Low income | 120 |
| Moderate income | 125 |
| Above moderate income | 226 |
| Total | 680 |
That is one of the smaller mandates in Orange County, but it is still hard to meet in a city with nowhere obvious to build. Regional planning data showed almost none of it could come from existing approved projects or vacant land. Nearly all of it had to come from rezoning commercial and business park property, so that is what the city did.
How the City Made Room: Two New Zoning Tools
On August 28, 2024, the City Council approved its Housing Element Implementation and Rezoning Project, amending the General Plan, the zoning code, and the zoning map. It created two paths for new homes:
- Mixed-Use designation on 12 sites, about 26.6 acres. Ten were General Commercial properties in and around the Town Center and two were business park office properties. The city estimates capacity for about 320 homes, in buildings that can combine housing with shops or be entirely residential.
- A Workforce Housing Overlay on 3 business park sites, about 38.4 acres. The overlay keeps the business park's existing uses but allows homes near the city's biggest job center, so people can live where they work. The city estimates capacity for about 344 homes.
With credit for about 40 accessory dwelling units, the plan adds up to roughly 704 homes, just above the 680 required. State law sets the ground rules for these sites: a minimum of 20 homes per acre, at least 16 homes per site, and by-right approval, meaning no discretionary hearing, for qualifying projects that set aside at least 20 percent of their homes for lower-income households.
All 15 Sites, and What Is There Today
The city's Housing Element Sites Inventory map identifies the 15 properties. They fall into two clusters on either side of the 241 Toll Road.
| Site | Address | What is there today | Designation |
|---|---|---|---|
| 1 | 22931 Arroyo Vista | Applied Medical facility | Workforce Housing Overlay |
| 2 | 29977 Avenida de las Banderas | Applied Medical facility (large site) | Workforce Housing Overlay |
| 3 | 30200 Avenida de las Banderas | Applied Medical facility (large site) | Workforce Housing Overlay |
| 4 | 30021 Tomas | RSM Office Center / Lakeview Tower offices | Mixed-Use |
| 8 | 22342 Avenida Empresa | Empresa Corporate Plaza offices | Mixed-Use |
| 5 | 22022 El Paseo | BJ's Restaurant and Brewhouse | Mixed-Use |
| 6 | 22012 El Paseo | Bank branch pad | Mixed-Use |
| 7 | 22032 El Paseo | RSM Health Center medical offices | Mixed-Use |
| 9 | 30832 Santa Margarita Parkway | Town Center Car Wash | Mixed-Use |
| 10 to 15 | 22205 to 22372 El Paseo | Plaza El Paseo shopping center | Mixed-Use |
As with any housing element list, being on it does not mean a business is closing or a building is coming down. It means the land is now zoned so that housing can be built if the owner decides to redevelop.
The Business Park and the Applied Medical Angle
West of the 241, the business park along Avenida Empresa, Avenida de las Banderas, Aventura, and Tomas is the city's employment center. The three Workforce Housing Overlay sites are all occupied by Applied Medical, the surgical products maker headquartered in Rancho Santa Margarita and one of the largest employers in South Orange County.
The two biggest overlay parcels, on Avenida de las Banderas, are each larger than 10 acres. The state normally treats sites that large skeptically, but during review the city received a letter from the property owner expressing interest in workforce housing there. That is the most intriguing part of Rancho Santa Margarita's plan. If housing does come to these parcels, it could put homes within walking distance of thousands of jobs, which is rare in suburban South County.
Two other business park properties, the RSM Office Center at 30021 Tomas and Empresa Corporate Plaza at 22342 Avenida Empresa, were redesignated Mixed-Use. Both sit near the Santa Margarita Parkway and 241 interchange.
The Town Center Sites: Plaza El Paseo and the Parkway Pads
East of the 241, the rest of the sites sit along El Paseo in the city's commercial core. Six of them make up Plaza El Paseo, a roughly 206,000-square-foot community shopping center at 22205 to 22372 El Paseo, just off the 241 ramps. Four more are individual pads near Santa Margarita Parkway and Buena Suerte: BJ's Restaurant and Brewhouse, a bank branch, the RSM Health Center medical building, and the Town Center Car Wash.
These are the most likely places to see classic mixed-use buildings someday, apartments or condos over shops and restaurants, within walking distance of the lake, the Town Center, and Santa Margarita Parkway's dining. During review, the state questioned how realistic some of them are, pointing to active businesses, small lot sizes, and limited parking at centers that are still busy. Any redevelopment will depend on owners deciding housing pencils out better than their current tenants.
Where Things Stand
The rezoning is approved, but no housing project has been filed on any of the 15 sites, and nothing is under construction. Most current building activity in the city is commercial, including expansions in the business park.
There is also an open compliance question. In March 2025, the state Department of Housing and Community Development wrote to the city asking for confirmation that the required rezoning had been fully completed by its statutory deadline, and warned that the city's housing element could lose its compliance status if it had not. The city's response has not been made public in the sources reviewed for this post. Cities that fall out of compliance can face penalties and the "builder's remedy," which lets developers propose projects that bypass local zoning, so the outcome matters for what Rancho Santa Margarita ultimately looks like.
What It Means for Owners and Buyers
For buyers, the near-term reality is unchanged: Rancho Santa Margarita is a resale market. If you want to live here in the next few years, you will be buying an existing home, condo, or townhome. The rezoning is a long-term story, and when projects do come they are likely to bring something the city barely has, newer apartments and condos within walking distance of shopping and jobs.
For homeowners, the changes are concentrated in commercial areas rather than residential neighborhoods, which limits the impact on existing streets. A livelier Town Center with more residents generally supports local restaurants and shops, and workforce housing near the business park could ease commute traffic on Santa Margarita and Antonio Parkways. For commercial property owners on the list, the rezoning may have meaningfully increased what their land could be worth to a residential developer.
Rancho Santa Margarita remains one of South County's most desirable places to live, with its lake, trails, top-rated schools, and easy access to the 241. For more projects across the county, see our New Developments in Orange County page.
Buying or Selling in Rancho Santa Margarita?
We track every housing development across Orange County and will update this page if any of these sites move forward. In the meantime, if you are thinking about buying or selling in Rancho Santa Margarita, we can give you a clear picture of what is on the market today and what your home is worth.
Homes for sale in Rancho Santa Margarita | Mission Viejo | View all OC new developments
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