______________________________________________________________________________________________________ Predictions
in progress. While supply is trying to even out with demand, the need for affordable housing continues to skyrocket in California, so we expect to see continued growth in 2026.
Market-rate housing
Due to stabilization, market-rate housing will see a slight decline in development, however it varies per location. In the City of Los Angeles, there is a 5.5 percent tax on sales for projects over $ 10 million, causing developers to look at surrounding areas.
For R. D. Olson, we continue to see excellent demand and opportunity for housing projects outside of Los Angeles. In 2026, we will be completing Vintage Farms, an $ 80 million residential village in Murrieta, a smaller hillside town that lies between Los Angeles and San Diego. The project is within a prime development opportunity within the Inland Empire, as the region has lower costs to build and more land available. While demand is stabilizing in the region, the project will bring 330 units spread across 11 buildings. Projects like these are becoming more popular as they provide opportunities for families and young renters to live an affordable lifestyle while being within an hour from major metropolitan areas. They also provide an escape from city life and more access to nature. However, with vacancies over six percent( Avison Young), the Inland Empire will be facing more risk than some other Southern California counties as rent growth may continue to be muted. The region will also be reeling from a significant surge of construction over the past year, which makes developers question whether to pursue projects as demand will need to catch up with the activity that was pursued.
Orange County, which possesses a sub five percent vacancy rate, one of the lowest in the US, will be experiencing a positive net-in migration, the first time since 2015( Institutional Property Advisors). As the market is already one of the strongest in California, multifamily development remains promising for the coming year due to its strong economy and desirable lifestyle. Many leading companies are headquartered in Orange County, bringing more professionals to live there over Los Angeles or San Diego. The region also brings a suburban feel, attracting families looking for comfort and safety. Even with robust demand, developers and construction firms will see less starts in the region as the priority will be to await current projects to their completion. This will also lessen competition among developers and construction firms as there isn’ t a race to start something new.
For R. D. Olson, the slowdown in construction starts is definitely something we are aware of and have faced previously. To mitigate business risks, we are consistently in contact with developers, 77 percent of which we have worked with previously, to highlight what’ s transpiring in the market and plan to ensure developments are completed when the time is right. Even as construction won’ t be as robust in different sectors compared to previous years, 2026 will be ample time to plan innovative projects for when construction starts grow again towards 2030. ■
Bill Wilhelm www. rdolson. com
Bill Wilhelm is President of R. D. Olson Construction. Over the past 30 years, Bill has been a driving force behind R. D. Olson Construction’ s rise as one of the nation’ s top general contractors. R. D. Olson Construction is one of the top 40 general contracting firms in California, and is a premier builder of multi-unit properties, hotels, office, retail, education, senior living projects and more.
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