The John Burns Real Estate Consulting team congratulates the management teams behind the top 50 master-planned communities, which sold at least 437 new homes per community during 2020. This threshold is the highest in our 10-year survey history!
Over 37,000 home buyers purchased new homes in these master plans, reflecting a 31% increase from 2019 and a new combined sales record. Six master plans achieved sales of 1,000 new homes or more in 2020, rising from 5 in 2019, including 3 Florida master plans and one each in Las Vegas, California’s Inland Empire, and Salt Lake City.
We expect a master-planned community to have:
- A range of home sizes, types, and prices and a variety of builders (with rare exceptions for especially large and well-segmented communities)
- Consistent themes, such as signage, landscaping, lighting, street names, mailboxes, etc.
- Shared or reciprocal amenities and activities for a variety of lifestyles
- Branding and marketing that give the community a unique and well-recognized identity
The COVID-19 Effect: Home Sales Surge Nationally
2020 started off strong following an unexpectedly solid 4Q19. Builders were enjoying the strongest spring selling season in years, until fear of COVID-19 and stay-at-home restrictions hit.
- The onset of COVID-19 halted new home sales across the country. In late March, we downgraded every market in the country to our Slow or Very Slow ratings based on new home sales and pricing.
- After a 2-week stall, the new home market began to improve, starting with the entry-level segment.
- Entry-level demand was the first to show its strength, driven initially by renters wanting to move out of dense urban settings. Today this segment generates the highest average sales rates and strongest YOY price appreciation.
- Next the move-up market began to soar, led by buyers seeking more space in their homes, yards, and neighborhoods. Many quickly realized their current living situation would not accommodate multiple people needing to work and school from home.
- Then luxury and 2nd-home sales started to surge as the stock market improved, mortgage rates remained low, and work-from-home permissions were extended indefinitely.
- Sales to the active adult buyer were the last to recover. The 55+ sector sales are finally matching or slightly exceeding pre-COVID volumes. With COVID cases rising again and vaccinations on the horizon, we believe this group may shift back to the sidelines temporarily.
- Today new home sales remain robust, both inside and outside of the master plans. Our proprietary builder survey reflected 35% YOY new home sales growth nationally as of November, paired with 8% YOY new home price appreciation.
Amenities Retain Their Appeal
Master-planned communities continue to dominate the new home sales scene across the “smile states” as buyers in every life stage find appeal in the thoughtful community planning and highly desirable lifestyle. Despite amenity closures during the spring pandemic restrictions, buyers are viewing these features with a longer horizon. Many want to ensure access to outdoors areas that are more controlled than public spaces outside of their communities.
Florida and Texas Master Plans Lead Sales Growth
Prior to COVID-19, in-migration from California was augmenting strong local demand in the Southwest and Northwest regions, benefiting numerous master plans ranked in the top 50 this year. The pandemic accelerated several migration trends nationally and generated a burst of luxury home sales.
- Migration from urban to suburban locations increased within metros or regions. Buyers are seeking less density, larger floor plans, and control over private outdoor spaces. Low mortgage rates, relatively affordable housing options, and the shift to working/schooling from home supported suburban migration.
- Examples: Bay Area workers flowed into the adjacent Stockton MSA, boosting sales at the River Islands master plan. Similarly, Seattle builders migrated to Tehaleh in the adjacent Tacoma MSA.
- Migration from gateway cities to secondary markets continues to rise, boosting new home sales and driving robust price appreciation in smaller metros such as Boise, Spokane, Reno, and Charleston.
- Luxury and 2nd-home sales soared in locations drivable from major coastal metros. Some of these homes have become the primary residence for now, giving buyers time to decide whether to keep or sell their previous homes.
- Examples: New home sales increased across the price spectrum in Naples, benefiting affordably priced Ave Maria, and at more upscale Lake Nona in Orlando. Sales of move-up and luxury homes popped in 2020 in Salt Lake City and Las Vegas, benefiting Daybreak and Summerlin, respectively.
New home sales at this year’s top 50 masterplans increased in Florida, Texas, Southern California, and the Southeast. In this graph, the Southwest’s decline in sales volume is driven by closeouts of some popular masterplans and broad-based shortages of replacement lots following 2–3 years of robust sales. New home demand remains robust across the Southwest, exceeding supply.
2021 Challenges and Opportunities
As we look ahead to 2021, we expect new home demand to remain strong and home prices to continue rising, but supply challenges to hinder sales growth in the near term.
- New home sales at the top 50 master plans rose 31% YOY in 2020 to over 37K, the largest YOY growth we have seen in nearly a decade. We expect low mortgage rates and buyers’ sense of urgency to improve living situations (as described above) to support strong demand well into 2021.
- New home prices rose 8% YOYÂ according to our proprietary builder survey. Robust demand and limited supply are driving prices up, up, up. We do not forecast this trend to change any time soon.
- However, supply constraints may limit sales growth in 2021.
- Finished inventory per community remains anemically low, falling -54% YOY to below one completed home per community on average.
- Builders are restricting sales at 28%Â of their communities nationally, to align with production capacity and lot supply.
- Finished lot supply runs low. Builders are scrambling to find new land deals and develop additional lots after selling far ahead of expectations. Some of the new lot supply won’t be ready until the second half of 2021, especially in markets with difficult approval processes.
- Building product delays and shortages continue to plague the builders, extending build times for homes in their enormous backlogs.
- Resale home supply remains very low in most metros, encouraging even more consumers to consider new homes.
- Finished inventory per community remains anemically low, falling -54% YOY to below one completed home per community on average.
Sales totals may adjust slightly.
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Our developer and builder contacts rush to provide us with annual sales just days following year-end. Final accounting over the next couple of weeks may produce minor adjustments up or down.
During 2020, the John Burns Real Estate Consulting team:
- Wrote about The Great American Land Rush, a surge in land acquisition activity driven by the strong demand for new homes, which prompted developers and builders to resume land acquisition, planning, and development activity.
- Produced a podcast summarizing the boom in 2020 new home sales paired with many supply shortages, particularly lots and developed land.
- Explored masterplans across the country, searching for the best healthy amenities to curtail the stay-at-home blues. In JBREC’s survey of 20,000+ new home shoppers, 68% wanted paths and trails in their community, more than any other amenity. Bike rentals and dog parks followed closely behind.
- Revealed rising exurban land opportunities as employers gave the greenlight to work from home permanently, inspiring more home buyers to head to the suburbs for more space and affordability. Â
- Reported to our research clients that 91% of top land brokers in our survey report increased demand for land purchases in more distant suburban locations nationally.
- Advised apartment builders on the concept of space. To succeed during lease-up, the more than 400,000 apartment units currently in some stage of construction also need to capitalize on tenants’ need for space. We recommended efficient floor plans that provide privacy and natural light and outdoor community amenities that are both secure and flexible. The bottom line: “under roof” outdoor activities translate to health.
- Launched the New Home Trends Institute (NHTI) in 2021, which includes the following resources for masterplans:
- A member-only council focusing on master plan trends led by our in-house master plan expert, Ken Perlman, that meets multiple times a year to discuss the latest and greatest ideas and innovations
- Multiple master plan mini-events: webinars followed by virtual breakout rooms for discussion and networking
- A master plan trend report featuring proprietary survey data and examples from across the country
- Monthly DesignLens™ newsletters, featuring a deep-dive analysis of a new master plan each month
- A searchable master plan database that includes curated coverage of 71 (and growing) outstanding master plans
We connected with developer, builder, and capital source contacts to consider 475+ master-planned communities nationwide.
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We invest significant time and effort to identify all top-selling master plans; however, some developers and investors choose not to participate. Also, we excluded several single-builder master plans developed and built by public home builders, with sales volume that would otherwise qualify these communities for the top 50.Â
For decades, our team has been helping developers maximize sales by segmenting master-planned communities by life stage, price range, lot size, and a lifestyle built around the amenities and programming suitable for the local market.
For more information, please feel free to reach out.Â
