Los Osos Building Moratorium Update 2025: What Property Owners and Buyers Need to Know

The Los Osos building moratorium has shaped local development, home values, and growth patterns for nearly 40 years. Now that the moratorium has finally been lifted — and new rules are rolling out — buyers, sellers, and property owners are understandably asking: What does this mean for my property? Can I build in Los Osos now? What’s the status of the water waitlist?

At BH Realty Group, we follow these updates closely because they have a direct impact on real estate opportunities, property values, and long-term growth potential in the community. Below is the most current update on the Los Osos building moratorium as of 2025, including how it affects vacant lots, development timelines, and future home construction.

1. Why the Los Osos Building Moratorium Was Created

Los Osos was placed under a building moratorium in the mid-1980s due to groundwater issues tied to aging septic systems. As septic tanks leaked nitrates into the soil, the upper aquifer became contaminated, and officials feared long-term over-pumping could cause saltwater intrusion into the lower aquifer — the community’s only drinking-water source.

Because Los Osos relies entirely on local groundwater, the County and State halted nearly all new construction. This decision froze development for decades and heavily influenced today’s Los Osos real estate market.

2. The Sewer System Was a Major Step, But Not Enough to Lift the Moratorium

From 2014 to 2016, Los Osos transitioned to a modern wastewater treatment facility. Roads were trenched for sewer lines, septic tanks were decommissioned, and treated water began to help recharge the basin.

This project solved nitrate contamination issues — but it did not resolve Los Osos’ long-term water supply challenges, which remained the core barrier to lifting the building moratorium.

3. Groundwater Sustainability Became the Key Issue

Even after the sewer was completed, studies showed that the Los Osos groundwater basin was still experiencing:

• Unsustainable pumping levels

• Continued decline in water levels

• Evidence of saltwater intrusion near the coast

The Basin Management Committee (BMC) was created to oversee basin recovery and protect Los Osos’ drinking water. These efforts continue to guide building policies today.

4. The Supplemental Water Pipeline Project

To secure the long-term future of Los Osos development and real estate, the Los Osos Community Services District proposed a pipeline connection to the State Water Project.

The pipeline is designed to bring in approximately 200 acre-feet of supplemental water each year to:

• Reduce groundwater pumping

• Replenish the Los Osos aquifer

• Slow down or reverse saltwater intrusion

• Support controlled residential growth

Environmental review is complete, and funding opportunities are underway. While the pipeline isn’t built yet, it remains a crucial part of Los Osos’ long-term water sustainability strategy.

5. The Moratorium Has Been Lifted — With Strict Growth Controls

In late 2024, the County of San Luis Obispo and the California Coastal Commission officially lifted the Los Osos building moratorium. This marked a major turning point for the future of Los Osos real estate, housing, and local development.

However, new construction is not “wide open.” Growth in Los Osos is now managed under strict rules to protect the groundwater basin.

Annual Growth Cap

• Up to 1 percent population growth per year, or about 50 new homes annually

• For 2025, the County set an even more limited cap of 0.4 percent (approximately 25 homes)

Environmental Protections

The new Los Osos Habitat Conservation Plan (LOHCP) requires:

• Habitat mitigation fees

• Biological impact analysis

• Protection measures for endangered species, including the Morro manzanita

These requirements ensure that future development in Los Osos remains sustainable and environmentally responsible.

6. Why Some Building Activity Slowed After the Moratorium Lifted

Shortly after the building moratorium was lifted, additional review was required by the California Department of Fish and Wildlife due to Morro manzanita habitat. This did not reinstate the moratorium but did temporarily slow permit movement and allocation availability.

The County expects to release growth allocations and notify property owners on the waitlist once final environmental coordination is completed — anticipated in late 2025.

7. The Los Osos Water Waitlist: Why It Matters More Than Ever

The water waitlist has historically been a source of frustration for vacant-lot owners in Los Osos. But with the moratorium lifted and controlled building now allowed, being on the waitlist is actually an advantage.

Why being on the Los Osos water waitlist is a benefit today:

1. You now have priority for new building allocations

Only a small number of new homes can be built each year. Your position on the waitlist determines when you’ll be eligible to apply for a building permit.

2. Property values for buildable lots have increased

Because new construction remains extremely limited, lots with favorable positions on the water waitlist have become more valuable.

3. There is finally a realistic path to building

For almost 40 years, waitlist movement was nonexistent. Today, there is a defined system for allocating new development slots — slow, but real.

If you own a lot in Los Osos, your waitlist position is now a meaningful asset.

8. What This Means for Los Osos Real Estate in 2025

If you own a vacant lot:

• You may be eligible to build when your allocation becomes available

• LOHCP mitigation fees and biological reviews will apply

• Your waitlist priority directly affects your timeline

If you own an existing home:

Limited new construction means existing homes remain highly desirable. Inventory will stay tight for years, supporting long-term property values.

If you’re considering buying real estate in Los Osos:

This is a unique time. The moratorium is lifted, but growth is still extremely limited, creating a stable and competitive market with strong long-term demand.

Conclusion: Los Osos Is Entering a New Phase of Controlled Growth

The Los Osos building moratorium has officially ended, but the future of development is intentionally slow and highly regulated. Environmental protections, a strict growth cap, and long-term water planning all shape how Los Osos real estate will evolve.

For property owners, investors, and buyers, this creates a rare combination of stability and opportunity — especially for those on the water waitlist or those holding existing homes in Los Osos.

If you want to understand how these updates affect your property or your future plans, BH Realty Group is here to help you navigate the new landscape of Los Osos real estate with clarity and confidence.