Santa Margarita's housing reflects its rural setting. The community is small and unincorporated, with a mix of older homes in and around the historic town center and larger rural properties and ranch parcels on the surrounding acreage. Because it sits within San Luis Obispo County's inland foothills rather than a master-planned suburb, housing tends toward single-family residences on varied lot sizes, with open space and hillside views common. Inventory is limited by the community's size, and buyers are typically drawn by the combination of country living, access to Santa Margarita Lake, and proximity to Atascadero and San Luis Obispo rather than by dense development.

As a small unincorporated community, Santa Margarita functions as a single village rather than a set of distinct subdivisions. The older core clusters around the town's main streets, including H Street, where the local elementary school and long-established homes anchor the center. Around this core, residential roads spread into a rural fringe of larger lots, ranch properties, and hillside parcels that blend into the surrounding open landscape. The historic Santa Margarita Ranch wraps the community, reinforcing a cohesive, low-density character with no single large planned development dominating the area.

Life in Santa Margarita is quiet, rural, and rooted in ranching tradition. The community is small enough that daily life revolves around the elementary school, local gathering places, and the surrounding ranchland rather than a commercial downtown. Its position along State Route 58 puts residents within easy reach of Atascadero to the north and San Luis Obispo to the southwest, while the Paso Robles wine country lies to the north. The pace is unhurried, and the landscape of oak-dotted foothills, open pastures, and the nearby lake shapes a lifestyle oriented to the outdoors and to the Central Coast's agricultural heritage.

Santa Margarita is served by the Atascadero Unified School District, the public system for the northern San Luis Obispo County communities of Atascadero and Santa Margarita. Santa Margarita Elementary School operates within the community, offering programs including Gifted & Talented education, and is one of eight elementary schools in the district. Students continue on to Atascadero middle and high schools, giving Santa Margarita families access to the district's full K-12 pathway while allowing the community to retain its own local elementary campus. The small-school setting reflects the town's close-knit character.

Santa Margarita sits along State Route 58, a two-lane highway that crosses the Temblor Range toward California's Central Valley and links the community to US Highway 101 and the Central Coast corridor. This positioning places Santa Margarita a short drive north of San Luis Obispo and south of Atascadero, with Paso Robles and its wine country accessible to the north. The town's location near Cuesta Grade, the historic pass through the Santa Lucia Range, is part of its identity. Daily travel is largely by car on rural roads, and the community remains removed from major traffic congestion despite its proximity to the 101 corridor.

Santa Margarita's defining outdoor amenity is Santa Margarita Lake Recreation Area, operated by San Luis Obispo County Parks. The reservoir supports boating and fishing, with developed campgrounds for overnight stays and roughly 25 miles of single-track and double-track trails around the lake. Adjoining the developed park, the Santa Margarita Lake Natural Area protects several thousand acres of open space managed for natural resources and passive recreation, open to hikers, bicyclists, and equestrians. The surrounding foothills and the historic ranch landscape offer further opportunities for riding, wildlife viewing, and exploring the oak-studded countryside.