The boom in work-from-home demand drove record master-planned community sales in 2021. And all of the 500+ communities we surveyed certainly would have sold more if not for supply constraints. Florida dominated the list with 6 of the top 15 best-selling communities, all of which benefited from domestic migration.
The John Burns Real Estate Consulting staff congratulates the management teams behind the top 50 master-planned communities, which sold at least 460 new homes per community during 2021. This threshold is the highest in our 11-year survey history, well above the 437 sales required to make our 2020 ranking!
Over 39,000 home buyers purchased new homes in these master plans in 2021, reflecting a 9% increase from 2020 and exceeding the 31,000 sales captured by the top 50 master plans in 2019.
Six master plans exceeded 1,000 new home sales in 2021, up from five in 2020, including two Florida master plans, two in Las Vegas, and one each in Charleston and in California’s Inland Empire.
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
Sold out! Tight finished lot and new home supply held back additional sales in 2021.
New home demand remained robust throughout 2021, with a hint of seasonally slower sales in September and October that dissipated in November. Developers and builders struggled to meet the strong housing demand due to widespread supply constraints. Numerous master-planned community developers and builders tell us sales would have been even stronger in 2021 if they’d had:
- Replacement communities for those that sold out earlier in the year. New home community counts fell -16% YOY.
- More engineering, planning, utilities, and development resources to prepare and open new communities. Amid widespread development delays and labor and materials shortages, top land brokers nationally indicate development costs (labor and materials) soared by 15% YOY on average.
- More staffing and cooperation from jurisdictions to approve new community plans, provide inspections, and issue permits. 75% of the top land brokers surveyed point to jurisdiction requirements and approvals as impediments to expanding lot supply.
- More finished lots ready for starting homes. 93% of the top land brokers say developed lot and land supply in B-C locations is below historical norms. The low supply and strong demand drive higher lot prices, which in turn boost new home prices. Finished lot prices increased 17% YOY in suburban to exurban locations where many master plans are located.
- Sufficient materials and labor needed to start and complete homes. Construction costs jumped 22% YOY per our October builder survey, and broad-based materials delays and gaps are likely to continue through the first half of 2022.
- More fully or partially finished inventory homes for buyers needing a quick closing. Finished inventory per community fell -68% YOY in our national builder survey, which constrained new home sales.
The RainDance master plan near Fort Collins achieved the highest year-over-year sales growth at 177%.
Build for rent (BTR) is likely coming to a master plan near you.
Build-to-rent construction has made its way into a number of master plan developments across the US, so much so that we had to ask developers to intentionally exclude bulk transactions in their new home sales numbers this year.
- The product has been very well received by home buyers. Many are choosing to sell their existing homes today and moving into a build-to-rent community within the master plan where their new home is being built, while awaiting its completion.
- Downsizers also love the product, which gives them the freedom to move near their families, but without the financial and maintenance burdens that homeownership requires.
- Families with children appreciate the build-to-rent option because they can live in a great master plan and send their kids to good schools, even if they aren’t ready or able to purchase a home in the same community.
These are a few excellent examples of build-to-rent sections within top 50 master plans:
Work-from-home and migration trends benefit the master plans.
Buyers took advantage of low mortgage rates and extended work-from-home permissions, allowing many to buy homes based on lifestyle preferences over office location. Without a commute to consider, more buyers sought out suburban living for affordability, increased space, and access to amenities—features offered by the master plans.
- Permission to work from home influenced 28% of moves during the pandemic, according to a New Home Trends Institute (NHTI) survey of 1,150 full-time employed heads of household. More buyers prioritized living near family, improving safety, and accessing outdoor amenities in the suburbs.
- Out-of-state buyer activity also jumped. The New Home Trends Institute reported that 28% of remote workers interested in moving planned to leave their state in its September Insight Report. Cash-heavy California, New York, and Northwest buyers flocked to top metros in Florida, Texas, and the Southwest, often driving home prices beyond what locals can afford.
- Nearby sister cities provide an affordable escape for some. The Tradition master plan in Port St. Lucie reports a 42% YOY pop in sales, mostly fueled by out-migration from West Palm Beach. Buyers can purchase the same home in Port St. Lucie for a $100K or greater savings compared to West Palm Beach. Similarly, builders enjoyed strong sales at the River Islands master plan in Stockton, driven in part by Bay Area employees who can work from home while saving substantially on their housing costs.
Sales totals may adjust slightly.
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.
2022 challenges and opportunities
We expect new home demand to remain strong in 2022, though supply constraints may prevent the top master plans from fulfilling all of the demand. The supply-demand imbalance will contribute to rising new home prices, but at a decelerating rate from 2021. A substantial jump in 2022 FHA and GSE conforming loan limits will help buyers purchase new homes in desirable master plans and allow builders to pass along the rising lot and construction costs.
We connected with developer, builder, and capital source contacts to consider 500+ master-planned communities nationwide.
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.
Our experienced consulting team helps developers maximize sales by segmenting master-planned communities by life stage, price range, and lot size and offering a lifestyle built around the amenities and a community identity.
For more information on master plan segmentation, MPC ranking, or our Housing Design Summit, please fill out this form.
