Transcript
Dean Wehrli:
Hi, this is Dean Wehrli for the New Home Insights Podcast by John Burns Real Estate Consulting. We recently released our list of the top 50 best-selling master plans for 2020. These were a reflection of the rollercoaster ride that was the housing industry in 2020 with record-breaking sales and remarkable growth year over year. This meant though that our top 50 list was pretty tough to crack. So we decided to take a look under the hood of some of these success stories. We talked to six of the folks behind about 15 or so of the top 50 master plans to get their insights on what drove the success and what trends they picked up on. Even though we tried to keep each segment as brief as we could, there were so many insights from our participants that we’re going to do this in two parts. So we’ll cover Daybreak in Salt Lake City and several communities each, from Brookfield Communities and Newland Communities in this episode.
Dean Wehrli:
Next week, for part two, we’ll look at Lakewood Ranch in Florida, River Islands in Northern California, and then Johnson Development in Texas. First up is Cameron Jackson from Daybreak in Salt Lake City, Utah. It is a 4,000 plus acre community that dominates the regional new home landscape. Cameron is the Senior Director of Marketing for Daybreak. He’s been doing this thing for almost 20 years and is comfortable with the nuances of marketing new homes, as well as using data-driven approaches to understanding consumer behavior
Cameron Jackson, Director of Marketing at Daybreak Communities
Dean Wehrli:
Hey, welcome to the New Home Insights Podcast by John Burns Real Estate Consulting. I’m Dean Wehril, your host. Each episode, we’re going to bring you some of the best minds in the housing business talking about some fascinating topics or trend or innovation or issue, just like the one you’re about to listen to. Enjoy.
Dean Wehrli:
Now we have Cameron Jackson, the top dog, whether he likes it or not. Also, the director of marketing at the Daybreak Master plan in Salt Lake City, Utah area. Cameron, how are you doing this morning?
Cameron Jackson:
I’m doing good. Thanks for having me on. Good to be here.
Dean Wehrli:
Good that you’re here. So Daybreak just barely snuck into our top 50 best-selling master plans for 2020 with 1,055 sales. Good for the sixth place, so just eked in.
Cameron Jackson:
Just barely. Skin of our teeth.
Dean Wehrli:
With a 40%, by the way, year over year growth level. So, pretty remarkable.
Cameron Jackson:
Yeah, it was a great year.
Dean Wehrli:
What has been the best, the biggest driver for your sales at Daybreak here this last year plus?
Cameron Jackson:
You know, what’s interesting for us is it’s difficult. I’ve been asked that question a lot and it’s difficult to just put my finger on any one thing. I think for us, it was really the fact that we just have a really broad variety of choices in the community. So within Daybreak, we actually have, Daybreak is really five communities in one, we have different neighborhoods for families, for move-up buyers, for first-time buyers, active adults. We’ve got a luxury neighborhood on an island in the middle of a lake, and so that range of product offering is really what I think has really driven our success over the last couple of years, really, and especially in 2020.
Dean Wehrli:
Do you guys take pains to make sure that you’re properly segmented just consistently? You have breadth of product? Is that something you’re always concerned with?
Cameron Jackson:
Absolutely, yeah. I mean, we analyze that very, very closely and we work closely with our builders to make sure that everybody’s staying in their lane, and that really gives us that breadth and allows all of our builders to get the sales volumes that they’re looking for. And it just creates a lot of choices for the consumer.
Dean Wehrli:
Daybreak’s not really a core location. It’s a little bit out there. It’s unusual, isn’t it? To have that kind of breadth of product given that kind of location.
Cameron Jackson:
Yeah. I mean, in a big market, in Houston or some of the Florida markets, they’re huge, something like that, where you have really big master plans. We’ve learned from a lot of that and brought that here to the Salt Lake market. And there really isn’t anything like what we were doing in the Salt Lake market. And so to get to a thousand homes, over a thousand homes in 2020 in such a small market that Salt Lake is compared to a Houston, or Orlando, or Tampa, something like that, I think is pretty remarkable.
Dean Wehrli:
I think so too. That might also be a little bit of a secret of the appeal of master plans, in that they are more able to bring product breadth to relatively outlying areas than any kind of a standalone would be.
Cameron Jackson:
Yeah. I mean, absolutely. I think that people, you certainly have relocation buyers that we see that are coming from California or other places that are used to master plans, but then when there aren’t a ton of master plans in a market, it definitely stands out in the mind of the consumer. And I think we see probably about a 10% pricing premium over your typical bill or subdivision, even if it’s just right outside of Daybreak because people see the value in the careful design, the architecture, the amenities, and the culture that we’ve tried to create here.
Dean Wehrli:
Does Daybreak, given its size and scope, have a bigger advantage in a Salt Lake City where there’s just, I think, tell me if I’m wrong, just nothing like it, than maybe a master plan elsewhere might have?
Cameron Jackson:
I mean, there’s probably something to that for sure. I mean, we do have a lot of builders here that are doing lots of different small subdivisions in different places. We’ve got just to the South of us, larger landholdings where developers are starting new master plans. So we’ve definitely had our share of competition and certainly we’re not competing with them on price. I mean, when we run the numbers in the market and compare ourselves to all of the other large communities, we do have the highest sales volume, but we also sell at the highest price per square foot of any community in the market. So we certainly don’t compete on price, and that’s an area where if someone really wanted to, they could really give us a run for our money. But again, I think it goes back to the public’s education and awareness of the value of a master plan and their willingness to pay for it, to pay the premium for it really.
Dean Wehrli:
Has there been any buyer segments, any buyer types have been the star of the show this last year or so?
Cameron Jackson:
And again, it’s tough to put a finger on that. It’s really been across the board. I think what we’ve seen is we’ve seen some success that we didn’t necessarily anticipate we’d have right out of the gate with really small lots single family products, because basically in our market, and I would assume in most markets across the country, the townhome or the condo is basically the new first time buyer product. And so what we’ve done, it’s often referred to as kind of the missing middle, so to speak, but we’ve found some success with three story single family homes on smaller lots that are competing almost with townhomes on price, but then gives the buyer that detached single family home experience.
Dean Wehrli:
But you’re doing even flats now, aren’t you? For sale? My colleague, Kristin Matthews has been out there, and I’m, to be honest with you, surprise to how dense you’re getting out there.
Cameron Jackson:
Well, we have, I mean the whole concept behind our master plan is really trying to balance the jobs to housing ratio. So what we’re doing is we’re building denser. We have a town center area that’s next to a freeway and has light rail that comes right into it. We have two light rail stations. And in that area, we’re creating what, I believe it’s John Burns who coined the term surban. We’re creating a kind of a surban village within our community and we’re building those staff flats in there. They just barely got started with sales here a couple of weeks ago. And so, yeah, we’re finding that people still like cities, people still like being able to walk to restaurants and walk to a train, and sometimes they want to just leave the car in the garage and go somewhere nearby. And that safe, urban lifestyle has been pretty popular here in Daybreak.
Dean Wehrli:
Has Daybreak got a big dose of that COVID inspired our COVID impacted out migration kind of demand?
Cameron Jackson:
I think we have. I mean, it’s so interesting how some of us worked from home for a long time, and then all of a sudden one day it was like a switch and half the world was working from home and we all learned that we could do it. What’s great about Utah is low cost of living, great economy, great access to the outdoors. I live in Daybreak myself and I can jump in my car and be on the ski slope in half hour to 40 minutes. I can be in the mountains with my mountain bike in about the same amount of time. Or if I live in Daybreak, I can carry my own kayak or my standup paddleboard down the lake that’s 10 minutes away on a lunch break. And so those sorts of things are really appealing to people. And so we’ve absolutely seen, particularly from California, little bit from the Midwest, but we’ve had some months this year where 17 or 18% of our sales for a given month have been from out-of-state buyers.
Dean Wehrli:
Wow. And paddleboarding on the lunch break, okay. All right.
Cameron Jackson:
Yeah, it’s fun. You should try it sometime.
Dean Wehrli:
I don’t know where I would go paddleboarding. Have you had a star also in the terms of marketing and outreach? What has worked better lately than something else?
Cameron Jackson:
I think what we’ve tried to do on the digital marketing side is we’ve really tried to study the numbers and really crunch the numbers on our performance. I mean, that’s the great thing about digital marketing, is you can really see what’s working and what isn’t. I mean, we’re actually big proponents of a balanced marketing approach. We do a fair amount of traditional marketing, but certainly Facebook has been one of the big stars for us, and Zillow, because I don’t know if you’ve seen any of those commercials or the fake Saturday Night Live skits, there are people that when they’re bored, they’re, they’re spending time on Zillow just dreaming about what they might go by and what they might do. And so Zillow’s been a real star for us because I think a lot of people have been sitting home bored and ruminating in what they don’t like about their current house and looking at Zillow and saying, “Ah, that would be great. Let’s go look at that.” So we’ve seen a lot of success there.
Dean Wehrli:
I don’t think I have seen the Zillows. If it’s not sports or foreign mysteries on Netflix, I don’t think I would see those ads.
Cameron Jackson:
Well, there’s an off season, Dean. So you can check it out when your favorite sport is in its off season.
Dean Wehrli:
I like them all. Except for soccer. Hate soccer. How have you maintained your master plan, your cohesion, your lifestyle? Master plan’s interactions are so critical, community interactions. How have you maintained that during this COVID time?
Cameron Jackson:
It’s definitely been challenging and it definitely has not been the same when you can’t get 3,000 people on the valley grime for a concert series on a Friday or a Saturday night, which is what we’re used to doing. We’ve done a lot of the art. We have a great organization called Live DAYBREAK that’s our nonprofit and they’re funded through a transfer fee or a community enhancement fee. And what they do is they plan a lot of events, they run a lot of book clubs and paddleboard clubs and bike clubs. I mean, you name it. And they do a number of really great events.
Cameron Jackson:
And so they did a lot of things over Zoom that they’ve done. We’ve tried to do things responsibly in smaller chunks rather than the big events, and it’s worked out okay. I can’t say it’s been perfect, but I think the use of digital tools and the use of video and some of those things has helped us try to keep it together. But you’re absolutely right. I mean, the hallmark of a good master plan community is the ability for people to get together and interact. And that’s been tough, for sure.
Dean Wehrli:
But because in a master plan you’re more likely, I think, to know your neighbors, there’s a certain cohesion there, do you think master plans have a little bit of a safety advantage? They just feel a little safer?
Cameron Jackson:
Yeah. I mean, absolutely. And in our community we follow a traditional neighborhood design, and so almost every home has a porch and the porch has become the star of COVID, right? It’s the place now where it’s safe to sit and chat with your neighbors, whether they come over or whether you just see them as they walk by. And even just out on the walking trails, around the lake, in the parks, because they’re near to your home, closer than you would be in a regular subdivision. And so there’s definitely been opportunities for interaction, and people have even discovered the use of their front porch, like I said, as a place where that can happen. And so, yeah, I think master plans are resilient in terms of the way that they’re designed. They’re designed for… I’ve just been surprised at how well people have been able to interact, definitely in small groups and not big groups, but being able to interact nonetheless. It’s been great.
Dean Wehrli:
You said a minute ago that your master plan like to like against a standalone might have a 10% price premium, roughly. Is that more now with COVID than it was pre-COVID?
Cameron Jackson:
I haven’t really analyzed that, but my guess would be yes, because again, if you’re sitting home a whole bunch and you’re looking for something to do that’s right outside the door that you can walk around the corner to a park or to a local restaurant to grab a bite to eat or something like that, it’s much easier to do that in a master plan than it is someplace else. And there is that notion of familiarity with your neighbors in terms of who’s around you and that sort of a thing. So, yeah, I mean, our pricing has been… I was just looking at our numbers from February sales and we track the price per foot of what we’re selling. And we hit for the first time ever.
Cameron Jackson:
The average of all of our sales in February was 250 bucks a foot is what we were selling for, which for our market is pretty high. Our previous average, our market average, just to give you the data point is about 200 bucks a foot. So 250 is high even for us. And so we’re starting to see certainly a desire to be in a place like this.
Dean Wehrli:
The reason I asked that by the way is because our top 50 best-selling master plan list, every single master plan pretty much was up year over year from 2019. And not just up, but like you guys, up incredibly strongly. So it does make sense that there is something just people feel, again, maybe a little safer, maybe there’s a more of a consistent supply, but master plans seem to have increased their advantage here lately.
Cameron Jackson:
Well, and it’s the same thing we saw back in the previous recession, right? So in ’08 and ’09, we definitely saw a drop in our sales back then in that market, which was very different. But we did not see a huge dip in prices, and we definitely were able to, if not hold our own, outsell our regular subdivision competitors because there was that feeling of safety of long-term value that is created at a master plan when you design it in a certain way.
Dean Wehrli:
And I think I can anticipate this answer as well from what you said just a minute ago, but things so far in ’21 have been going swimmingly, it sounds like?
Cameron Jackson:
Yeah, they’ve been great. I mean, as long as we have inventory we’ve been selling. January actually surprised us. We sold 85 homes in January, and we didn’t have quite that many in February. I think we were in the low 50s, but where we have bought inventory available, we’ve seen great sales success. The demand certainly hasn’t dropped off. The challenge is really just having enough lots of each type in each segment to be able to meet the demand.
Dean Wehrli:
We’re hearing that literally from everyone everywhere. How about in terms of… Let’s wrap up with this. What has been just that really something special about Daybreak that lets you stand out from the crowd?
Cameron Jackson:
Boy, I think it’s really a strong commitment to authentic design. And people notice that. When you drive down a tree-lined street and the architecture has that authentic feel of the homes that look like they could be a hundred years old out of a Norman Rockwell painting, people know the difference between that and when someone is, for all intents and purposes, just putting lipstick on something. And so I think that authenticity in design, I think, comes through in the experience of living here and the way that people interact and the types of activities that happen here.
Cameron Jackson:
And so it attracts, I think, a certain type of person that’s looking for something that’s real, both in terms of what they buy and in terms of the relationships that they have with their neighbors. Master plans are really a unique thing in their ability to do that. But then when you add that layer of not just looking like the homes everywhere else, but having that authentic design, I think that’s what people really respond to.
Dean Wehrli:
And they have responded, like I said, over a thousand last year and heading for another great year in ’21. Thank you, Cameron, for coming on and joining us. Appreciate it.
Cameron Jackson:
Thank you. Good to be here. Appreciate you having me.
Caitlyn Lai-Valenti, Senior Director of Sales and Marketing at Brookfield Residential
Dean Wehrli:
Caitlyn Lai-Valenti is next. She is the Senior Director of Sales and Marketing for Brookfield Residential in Southern California, where she manages sales and marketing, strategy, modeling, customer experience, and technology initiatives. Though she’s based in Southern California, Caitlyn has a tremendous grasp of all things Brookfield. And in a minute, you’ll hear her speak eloquently and knowledgeably about all four of the Brookfield master plans from across the country that made our list.
Dean Wehrli:
Now, we have Caitlyn Lai-Valenti. She’s a senior director of sales and marketing from Brookfield Residential. Caitlyn how is everything with you?
Caitlyn Lai-Valenti:
Awesome. It’s been an awesome year so far, so we’re super excited.
Dean Wehrli:
And last year, too.
Caitlyn Lai-Valenti:
And last year, too.
Dean Wehrli:
So Caitlyn and I are going to chat about the four, count them four master plans that Brookfield either developed or co-developed, that appeared on our top 50 best-selling master plan list for 2020. Real briefly, they are the Ontario Ranch at number five, and Audie Murphy Ranch at number 42. Both of those are in Southern California’s Inland Empire, the 909, shoutout. East Mark, number 15 on our list, which is in the Phoenix area. And Easton Park, number 33 on the list in the Texas capital in Austin. Caitlyn that’s pretty darn impressive. Was this mainly you’re doing, I’m assuming?
Caitlyn Lai-Valenti:
It would be Adrian Foley’s doing.
Dean Wehrli:
Come on, take the credit at least do a humble brag and say, well, it wasn’t completely me. I had a little help. Come on.
Caitlyn Lai-Valenti:
We have a pretty amazing team here. So we’re happy to be here.
Dean Wehrli:
Let’s start with the big picture then. What has been your biggest and best the most important sales driver for your master plans in 2020 and onto this year?
Caitlyn Lai-Valenti:
I’d have to say that the three key drivers to why our master planned communities are thriving from Southern California to Phoenix to Austin is really kind of amenities and lifestyle location, and just that product segmentation with a strong value proposition. I mean, amenities and lifestyle are front and center, at each of our master planned communities. We really deliver high on lifestyle with that desirable resort style amenities and that prime resident programming for the community to create that sense of connection. I mean, that community engagement is key as it really appeals to our families all the way to our millennial buyers alike.
Caitlyn Lai-Valenti:
And in terms of location, I mean, we’re really in outstanding prime locations with proximity to employment centers, access to retail and those transportation corridors, which just gives our homeowners a better quality of life. And just in terms of the segmentation, the communities offer such a range of home sizes, types, and price points from a variety of builders. And so that really gives our home shoppers, they’re really seeing that overall value. Well you’ll see that across all of our master plans, lots of different synergy that exists within the community.
Dean Wehrli:
So you’re getting a lot of different folks buying there. Has any one segment kind of stood out and been in kind of a champion this past year or so?
Caitlyn Lai-Valenti:
It’s been in Ontario, it’s been wonderful to see all of the first time buyers and those who have been living at coming out and purchasing their first home over 50% of our home buyers, there are purchasing their homes for the first time and about 44% of our home buyers they’re under the age of 40.
Dean Wehrli:
Wow, okay.
Caitlyn Lai-Valenti:
So it’s pretty fantastic to see.
Dean Wehrli:
Yeah. Size and scope. A lot of your master plans, they’re pretty big, Ontario Ranch, is ginormous I know. I think Easton Park is pretty big too. Do you think that gives you an edge?
Caitlyn Lai-Valenti:
It does. One of the nice things about New Haven is that you really… it’s a very unique master planned community, and we’re able to have a reciprocal amenities centers there. And so that really makes it a… it gives the homeowners there that really the ability to have highly amenitized community brimming with recreation parks, gathering spaces, the residents there have access to over 15 acres of private resort style amenities, swimming pools, splash zones, you have a super playgrounds. And so we’re able to theme each individual amenity center with a different concept. So you have that outdoorsy, that sports theme, where you have super playgrounds, fitness centers and sports courts. Then if you want to relax, you can go over to where we’ve got social spaces and fire pits or picnic gardens, and so it really gives a nice robust space. It’s also a gigabit community with high speed internet access. And so we’ve been able to partner with the city there and introduce some really neat concepts. We’ll be rolling out clever scooters. We’ve got the Gita following robots that families can adopt really to kind of promote that more active lifestyle. And then we also have any hub smart nodes that will be coming to the local retail center there. So really some fun programming for the residents there.
Dean Wehrli:
Caitlyn, so clever scooters and robots. I’ve seen Terminator, should people be worried? It sounds a little scary…
Caitlyn Lai-Valenti:
They look a little bit like Pokemon, so you’ll see them following residents to the neighborhoods.
Dean Wehrli:
That can get a little spooky, I think maybe, but I’m sure it’s very cool. Did your master plans get a good chunk of that COVID augmented demand from those people who were fleeing higher density product or high density locations to you, was that a big driver as well?
Caitlyn Lai-Valenti:
We did see that. In Southwest Riverside, we were really seeing an influx of buyers coming from Los Angeles and Orange County as they now have the ability to work remotely, which opened up their geographic search options. I mean, home shoppers were really attracted to that value proposition because now you’re able to purchase a home at a lower price point for a brand new, larger home on a larger home site. In our Phoenix marketplace at East Mark. We’re also seeing an influx of home buyers from out of state. And also large families looking at moving up to nicer homes, looking for a little more space or for that connected community. So some of them moved a little bit earlier than they had originally planned to.
Caitlyn Lai-Valenti:
So I think that pandemic really kind of helped to change shift some of those priorities.
Dean Wehrli:
You’re not the first person to say that on this. So I’ve been asking kind of a follow-up for that, this sort of time shift in terms of that buying decision. Do you think there’s any, I don’t know, threats, not that’s too strong a word, but you think some of this demand is maybe stolen from next year or the year after, because of that time shift?
Caitlyn Lai-Valenti:
You know what? I think with the interest rate, we’ve really seen a lot of the buyers that demand has really increased because of the interest rates. It almost you have this FOMO, mentality because there’s this fear of missing out as you’re seeing interest rates are so low, you have price appreciation. So everyone’s afraid of getting priced out of the market. And then also that pandemic in terms of the stay at home orders and everyone looking for their own space to be able to really kind of spread out, have their own space to be able to quarantine at home.
Dean Wehrli:
Did you have any key marketing tactic or sales tactic or outreach that you thought really was very effective this past year or so?
Caitlyn Lai-Valenti:
Yeah. At the start of the pandemic, we really shifted our marketing dollars away from print ads and focused instead on increasing our digital footprint to really look, to meet our customers where they are. I mean, we really looked at targeted banner ads, virtual tours, walkthrough through videos, Matterport tours in terms of outreach e-blasts we really tried to focus on messaging that really resonated with today’s home shoppers. So it’s really that need around flexible space to support work from home, distance learning, families for now using their home for entertainment for fitness needs. New construction and the opportunity to personalize has also been strong messages that have really resonated with home shoppers. And then we also saw a lot of strong engagement on social media. I mean, many found themselves with a little more time to engage on social media and many were also looking for ways to kind of find that connection with others. So that was great to see.
Dean Wehrli:
Any sense of which platform on social media is most effective. Is it Facebook? Is it Instagram? Are you doing TikTok 15 second videos, getting out there, getting the kids?
Caitlyn Lai-Valenti:
We do a lot of Facebook and Instagram and we’ve seen a lot of engagement there. A lot of the families are also re-sharing our post, and so it’s been really nice to see that. And then also we’ve been trying to find ways in partnering with the association to be able to stay connected with those residents and find ways to have them tag us as well, whether it’s through the porch photos or just different ways to stay connected.
Dean Wehrli:
I’m just saying, think about doing dance moves on TikTok. I think that would be huge. Just think – consider that’s all I ask. How have you maintained your lifestyle here during COVID? There’s less interaction, there’s is all the shelter in place. Has that been an issue at any of your master plans and how have you reacted to that?
Caitlyn Lai-Valenti:
We have really had to kind of re-shift the way we thought about events, right? We want to stay connected. We still want to find ways to outreach to the residents to keep that engagement strong. So we really partnered with our onsite lifestyle coordinators and really established social committees that were led by our residents to nurture those community events, to say safe and creative with homeowner events. I mean, we think about East Mark with approximately 16,000 families that live in the neighborhood. Eventually the main pool and recreation centers were able to open at a reduced number, but it required residents to reserve appointments online. They also tried to do in terms of like Easter events. So instead of having an Easter event where everyone came to the clubhouses, they posted a route map and had a real-time schedule where residents could track where the Easter bunny was at and they could come out and wave at them.
Caitlyn Lai-Valenti:
They also did a spaced outdoor fitness classes, which have also been really popular and then doing more smaller, intimate events that on online forums as well. So that’s been great, but we’ve just kind of re envisioned those spaces. And so, paint and sip nights, so more virtual inspirational pieces where you can connect with neighbors and create masterpieces. So a lot of different ways of keeping everyone connected.
Dean Wehrli:
I was worried when you brought up Easter eggs, I thought you were going to say something like we spaced the Easter eggs out about quarter mile into the desert and let the kids run around and find them. So, that wouldn’t have been a bad solution something like that.
Caitlyn Lai-Valenti:
So now we’re using everyone’s line, we’re doing, you can sign up to get egged and the vendor will go out and hide Easter eggs on everyone’s individual lawn, as opposed to doing it at the shared community.
Dean Wehrli:
You might want to rethink the name of that, getting your house egged. I don’t know, that could be misconstrued. Do you think that master plans are viewed as safer since COVID? You do have the greatest spaces, I don’t know, there’s more connection with the folks around you. Do you think that’s been an advantage?
Caitlyn Lai-Valenti:
I do. HOA payments are funneled back into the community to really contribute towards community engagement, safety, and security, maintenance, and lighting. And then it also services the administration and all of the management. So all of those factors really helped to contribute to a safer community. And there’s so much value in building a community of neighbors who are both engaged and who are also who also get to know one another. So they look out for each other. So I think that community programming from an experience management company not only gives residents that sense of connectivity, but it also provides confidence that their community is being maintained.
Dean Wehrli:
Has that confidence then in turn led to maybe some greater premiums in price or pace for a master plan versus your standalone non-master plans like home. Do you think there’s a bigger pop in other words, for master plans?
Caitlyn Lai-Valenti:
I would absolutely like to think so. I mean, premiums for homes and master planned communities over stand-alone communities. I think those have grown as buyers are now more attracted to new homes in a community that also offers open spaces and that low maintenance lifestyle. I mean, if we think about amenities, they’ve become increasingly more important in consideration when you’re purchasing a home, because as you’re leaving these rich urban centers with amenities, having trails, lakes, outdoor play at your doorstep, it almost becomes an extension of your home. So I think that’s very important.
Dean Wehrli:
That’s a good point. So, especially if you are one of those out migration buyers leaving instead of a mature environment with those, I don’t know, urban amenities, you’re being replaced by these great master planned amenities, and you’re not going to get that in a standalone suburban environment, are you?
Caitlyn Lai-Valenti:
Right. And you get all of that with that low maintenance lifestyle in the community. And so I think it really just brings it all together.
Dean Wehrli:
How’s 21 been for you so far? I think from what you said at the very top, pretty good.
Caitlyn Lai-Valenti:
It’s really been unbelievable. I mean, our communities are growing faster than ever. We have seen sales increase 13% year over year. And between our four master planned communities, we’ve seen price appreciation somewhere between 17 to 20% year over year. I was saying, we have to savor this moment because we have not been in a position where we’ve achieved 90% of our backlog for 2021 so early in the year.
Dean Wehrli:
Gosh, that’s amazing. It really is. 21 when it really does seem, if anything, it’s getting better because remember 20 had those depending on the market, those couple of months where sales were gutted and 21, the conditions are still just as strong and knock on wood, but we don’t see those couple of brutal months in the middle of it.
Caitlyn Lai-Valenti:
And we can barely keep homes in supply. I mean, we’ve really moved to metering our phase releases by releasing a handful of homes at a time, because we’re really not in a position to start any additional homes. So accelerating, those phase releases don’t make sense. At our community in Ontario Ranch, we’ve been seeing 50 to 60 loan applications come through a week. So as soon as homes are available, they’re gone again. So that’s stepped up that level of qualified buyers, but you’ve got that built in price appreciation as price continues to rise. We’re also seeing fewer cancellations.
Dean Wehrli:
Wow, let’s end with something that’s unique, maybe one or two of your master plans. What’s that something that really sets them apart and makes them special?
Caitlyn Lai-Valenti:
If you’re ever in Mesa, Arizona, you’ve got to stop and see Eastmark, at 3,600 acres. I mean, East Mark really continues to thoughtfully develop with the needs of the marketplace. I mean, I think our patience has enabled us to take advantage of the right opportunities when they presented themselves. The addition of Apple’s global operations center, which anchors that community’s technology enterprise district, it’s got a two acre organic commercial farm that feeds the local residents and restaurants and that cool 1940s Valentine’s diner. It’s really a chef run farm to table. And it’s located at the center of the community. So it’s more than just like cool features. There are additions and amenities that residents really prize and adds value to the entire surrounding community.
Dean Wehrli:
The Valentine’s diner has that been on a driver… What is it? Diners drive-ins and dives yet?
Caitlyn Lai-Valenti:
We’ve got to send in a vote, get it on there.
Dean Wehrli:
I have like 80 and my DVR queue. So eventually I’ll see it if it has been on, but if it hasn’t it should. Let’s make that happen. I’ll call Guy.
Caitlyn Lai-Valenti:
That’s right.
Dean Wehrli:
I don’t really know him. Okay, then. Awesome. Oh, Caitlyn, I appreciate all your insights and coming on the show.
Caitlyn Lai-Valenti:
Dean Wehrli it was my pleasure. Thanks so much for having me.
Peter Dennehy, Vice President of Customer and Market Research at Newland
Dean Wehrli:
Last up for this episode, we have Peter Dennehy. He is the Vice President of Customer and Market Research at Newland Communities, one of the largest real estate developers in the world. Peter has a probably unique background of working for all of the biggest and best firms in the real estate consulting business. He is now on the developer side of that with one of the best firms in that business, where he keeps tabs on consumer preferences and trends and helps make Newland master plan so successful.
Dean Wehrli:
Hey Peter. Good morning, how are you doing?
Peter Dennehy:
Good, how are you Dean?
Dean Wehrli:
This is Peter Dennehy, who I’ve known for a very, very long time. He is the vice president of marketing and consumer research at Newland Communities. He has a lot of ground to cover because Newland Communities has five, count them, five master plans in our list of the top 50 best-selling master plans for 2020. We have Estrella, in the Phoenix area. We have Elyson, in Houston. We have Bexley in the wonderful town of Land O’ Lakes Florida, not Minnesota, which is just North of Tampa. We have Nexton outside of Charleston, South Carolina. And we have Tehaleh, in Tacoma, Washington area. Do I have that right, Peter?
Peter Dennehy:
That’s correct.
Dean Wehrli:
Cool. So you have a lot to choose from here when you’re going through how successful your master plans, and why they’ve been successful. So just feel free to pick and choose, generalize to your heart’s content from one of the many that have done so well. So let’s start with the big fundamental question. Generally speaking, what’s been your biggest sales driver in 2020 that propelled all those sales in those five master plans?
Peter Dennehy:
I’m going to give an answer that we actually learned from doing a survey of our shoppers and buyers during the pandemic year. And what we found is that community matters more than ever. Among our buyers in 2020 that purchased a home during the pandemic period. They said that the number one motivation was a desire for being in a planned community with amenities. They were looking for a wide array of new construction options, including those that had either more space or multifunctional spaces, and they wanted a better sense of community. And those were all things that were at the top of the list in terms of motivators to buy specifically during 2020. And I’d also just say that master plans in general they typically, we have low interest rates at this time. That’s good for all of our projects, but I would say that the ones that made your list and that were top sellers for us tended to have very good segmentation with lots of product offerings, including homes that were targeted to that first time buyer or millennial buyer, which we saw a big increase in activity from this year.
Dean Wehrli:
That sort of presupposes this, so I think I know the answer now, but I’m going to ask it anyway. Has there been a buyer segment that performed better in 2020? And I know you have a lot of age qualified in yours too, but what was it millennials that were the stars of your demand as a more so than increased demand from the AQ sector or anywhere else?
Peter Dennehy:
I would say if we had to pick a buyer group that was the star, it was that millennial first time or first move up buyer. Buyers they were more likely to be renters, relatively high incomes. I wouldn’t say we don’t have true entry level housing or a lot of attached at all of our projects, but we generally had things that where at least affordable to a young family or a young couple that was planning to start a family, often renters, and they were the stars. Active adult buyers were there during the year. They did back off when the pandemic took on. And we saw them back away from projects maybe for a month or two, but even the active adult buyers started to really come back by early summer. And for them it was probably a, hey, we’ve been planning a move for a long time. And now that we’ve been released from our home, it’s time to get back out of here.
Dean Wehrli:
Did you get the sense you got any of those folks that were near retirement and just pull the trigger a little earlier? Maybe they even got a cash out from their employer. Any pop from that?
Peter Dennehy:
Yes. About a third of our buyers this year said that they moved their plans up because of the pandemic. And I think that it was both the renters living in a home that it might’ve been planning to make a purchase and thought this was a good time because of interest rates and their personal situation, but yes, also in some cases it was those people that just, we’re finally pulled the plug. I think particularly in people coming out of the Northeast or retiring to places like Austin from California and places like that, we saw a lot of that type of buyer this year.
Dean Wehrli:
Did you get any obvious, again, I’m assuming the answer is probably yes, but tease it out for me, that kind of COVID augmentation, that moving away from the outlying, I’m sorry from more urban areas, or more dense product into the more outlying area or a lower density.
Peter Dennehy:
We actually ask people who move to our communities and purchase this year what kind of environment they’d come out of. And to urban city or very dense urban, was actually a pretty small factor, it was 10 or 11%. Most of our buyers actually came from a more suburban location. They were already living in something like one of our communities, either a planned community or a suburb, probably in an apartment or an older home. And so, they wanted that suburban lifestyle. They were probably already somewhat used to it, living in a place that was more residential that had services and recreation nearby but they were motivated to go to a planned community that had new options with all of those features built in. I would say less urban. I’d say we did not prove the urban theory.
Dean Wehrli:
That’s interesting, because you are Houston, Phoenix. Those are places with some high density, urban environments and you are not seeing that as much, that’s interesting.
Peter Dennehy:
I think people came out of rental. If you consider a rental project to be more dense than a single family home, it’s probably people did. I don’t think a lot of people came out of a high rise in downtown Houston, straight to our project.
Dean Wehrli:
And to me that feels like, I’ve been asked a lot lately about this idea of stolen demand, stolen from the future. To me that person who, because of work from home could suddenly go where they wanted to go and live where they wanted to live. That to me is not stolen demand. That’s real demand that could have been there years ago. But you mentioned that a lot of your folks, a third, I think you said, kind of pushed up their plans. Do you think there is a sense of a little bit of stolen demand here in 2020 and even continuing now?
Peter Dennehy:
No, I think because conditions for housing were so strong beforehand. All those factors that are still in play, the growth of the millennial population, that’s been a trend we’ve seen over the last two years. Bloomers used to be dominant in our projects until about three years ago and then millennials are more and more so… Lower interest rates, good time to buy young families that are just coming into that age. I will say at some of our projects, particularly in the Pacific Northwest, we did see a lot of that work from home tech worker, just because they’re in the greater Seattle and greater Portland areas and they can live further away. So we did see some of that. I think it’s certain of our communities that work from home trend has really driven sales, so particularly for Tehaleh, which is in that Seattle Tacoma area. We already had a lot of people there that were working from home in the greater region or retiring, pre-retiring to a place where they were eventually going to retire. And that trend seemed to have exacerbated during this year.
Dean Wehrli:
Was there any marketing tactic? Any outreach that seemed particularly more effective than others?
Peter Dennehy:
Well, home shopping in the techniques that we use completely shifted during the pandemic and probably a lot of that is here to stay. Home buyers want to shop on their time and shop how they want to shop. And so, we quickly pivoted to offer all kinds of appointment one-on-one and virtual.
Peter Dennehy:
We quickly pivoted to offer all kinds of appointment one-on-one and virtual tours of all sites so that they could see exactly what they wanted to see when they saw it. So we found that visual tools were extremely important this year. They want to not just to see the home, but they wanted to see the community, the amenities, and those were a big success. And also providing a personal touch, whether that was kind of a chat, conversation online, or the ability to schedule an appointment or a visit when you were ready to have that personal interaction. So, we did an appointment schedule or online that we didn’t have before that gave you a variety of options there. And, so we really kind of met people where they wanted to be. And I think a lot of those sales tools will continue past this year.
Dean Wehrli:
It’s funny you say that because you have a virtual hub, I think, on your website for a lot of your master plans, I’ve noticed. So you guys have really adopted that wholeheartedly…
Peter Dennehy:
Yeah.
Dean Wehrli:
… as everyone has, I guess, I suppose, but you guys were kind of cutting edge there.
Peter Dennehy:
Yeah, we did some very unique things. I mean the Nexton project, I think you may have featured it in some of your stuff this year. They really pioneered for us the use of drone tours and, they did a weekend event. I think they targeted it through Facebook, people signed up and it was really essentially like a drone tour of the models, a drone tour of the active adult community, a builder for… I’m sorry, a realtor focused event that was also a drunk tour. We did meetings with our investors by drone last summer. So, that’s something we wouldn’t have done, I think without this year. And it was very successful in getting interest and, showing the communities to people during that time.
Dean Wehrli:
But I think the personal touch part that is shown in your data is important because people want both, don’t they? They want to be visual in virtual, but they still want to have when they want it, they want to have that personalization. And so it’s dangerous to go a hundred percent virtual.
Peter Dennehy:
Yeah. You’re absolutely right. We found that when people were ready to buy, buyers in particular, people who were shopping were very content to use the online tools, but when somebody was ready to make a purchase, it was the personal interaction tools that they turn to. They wanted to make an appointment. They wanted to come see the model, a one-on-one tour of the home that they were going to purchase. They wanted, information on back from the builder sales agent or us, on the community. And if we had any complaints about sales process, it was usually something that had to do with the personal interaction. I made an appointment and somebody didn’t show up or I didn’t get an answer back on my design options for five days or something like that.
Dean Wehrli:
Yeah, okay.
Peter Dennehy:
I think it really has to be a blend. People are comfortable with online shopping. We found that, the majority of our shoppers were happy to look online until they were ready to go.
Dean Wehrli:
Okay. Has it been a problem maintaining the lifestyle there in this, the restrictions to COVID with the shelter in place? How has it been? How have you done that at your master plans?
Peter Dennehy:
I think you’re asking a couple of different things. Obviously we virtually closed all of our sales, our info centers, where we had one, overnight. And so we had to kind of pivot to that virtual thing. And by appointment, of course the builders had to do that as well. I think most of our communities have a lifestyle director, we have outdoor spaces. So as a master planned community developer, we were still able to do events and kind of foster that master planned lifestyle. But by doing virtual events, whether that was the Zoom happy hour, or organizing the parade for the teachers or those kinds of things. The builders were able to do the live thing primarily by appointment when local jurisdictions allowed it, we as a master… kind of selling the community, selling the lifestyle, we’re able to also use some of those virtual tools to do events during that time. And of course the good news is we’ve kind of gone back to being open again everywhere.
Dean Wehrli:
So do you see master plans gaining a little bit more of a bump, a premium versus stand-alones because of what’s happened in COVID and how is it a little bit more cohesive environment there?
Peter Dennehy:
Yeah, I mean, that’s a $64 million question. What our teams would say is that, there’s master plan communities in good markets and bad typically do command a premium. They’re seen as safe places to buy and they offer a lot of home choices and amenities that people find desirable. And we found this year that there was incredible demand for our lots and we were able to raise home and lot prices. So I think, communities and master plans are important. COVID heightened that for both residents and shoppers, master plans are incredibly desirable communities right now. And so it’s easy to find builders and home buyers and choppers that want to be in them.
Peter Dennehy:
So I think that’s a long way of saying, I think the premium increased that they always command and then, the other interesting thing is that our projects all sold very well once we went back to selling. We exceeded our business plan for 2020 by almost 45%. So we had very strong sales and absorptions, and you, of course that’s premium in the market. And our lot prices went up, home prices went up, building costs also went up just to a degree. So partly that was offset. But all of our projects including the five that made your list increase their market share and their regions. And we saw that after the great recession as well, that master planned communities increase market share, in a more uncertain market. And we saw that again in 2020.
Dean Wehrli:
Especially here though, this particular to this event, this pandemic, master plans just do, they just seem safer. That it seem a little more controlled if that’s the right word. And I think that gave people a little more confidence to choose that environment, I think.
Peter Dennehy:
Yeah, I think so.
Dean Wehrli:
How has 21 been so far, so far more of the same?
Peter Dennehy:
We’re off to a really great start. That’s easy to answer right now, after a month or two we’re almost at 25% of our annual sales goals.
Dean Wehrli:
Wow.
Peter Dennehy:
So we had an extremely strong start of the year in the first seven or eight weeks of the year. But I would say that the conditions for housing are great. We are keeping a close eye on, builder inventory in our own piece of lot deliveries to ensure that builders can continue building and selling homes throughout the whole year. We’re paying attention to resale markets and affordability. We want to make sure that we keep a very broad product offering and product segmentation in the master plans. We’ve seen a strong demand from this first-time buyers and those younger buyers in particular, we want to make sure that we have as good options for them.
Peter Dennehy:
And then, as I said, we’re keeping an eye kind of on the resell market as well. If the time to bill… we benefited from resale inventory going down and, there’re not being a lot of choices in the resale market this year. But if that switches and it becomes easier to buy a resale home that can be a competitive disadvantage. And so we’re keeping an eye on the inventory and all of those things. Buyers want to buy a home now, they don’t want to wait six months to have it be built.
Dean Wehrli:
With resell inventory, just brutally low. The certainty, even if it’s a little bit longer time horizon of new is pretty attractive.
Peter Dennehy:
Exactly, exactly. I think that’s one of the reasons why 2020 turned out to be so surprisingly good. New homes had an advantage because they were the safe, clean environment. They offered more space in the functionality and builders had them to sell.
Dean Wehrli:
Now, feel free to answer this last question however you want, you can be real specific are you can be real general, but are there some really just items or factors in your master plans that have set them apart from the background noise? I know Nexton, I think is kind of just really wired and really the connectivity and the technology there is state-of-the-art. Is that true? Are there other things in, other than your master plans that have really made them special?
Peter Dennehy:
Yeah, as I said, outdoor spaces seem to be most important at this time to our buyers, they value the opportunity to be outdoors of the three top amenities for shoppers and buyers were parks and open spaces, walking trails and bike paths. So, I think what was unique about our projects, all of them offer that plan community setting with amenities, they all offer, as I said, a segmented array of new construction options, and they offer that better sense of community and particularly the opportunities to be active outdoors. Some of our projects that are on your list like Tehaleh offer the really unique location in the Pacific Northwest, with dramatic views of Mount Rainier. No other master planned community has, a mountain like that. That’s kind of looming over the community and has beautiful views and miles of open space and trails.
Dean Wehrli:
I’ve seen that that view from the Clubhouse, Peter, right? And it looks photo-shopped, it’s unbelievable, that view of Mount Rainier from the club, it’s amazing.
Peter Dennehy:
Yeah. So some of our communities just offer a really unique natural setting that just can’t be replicated. Estrella – once you arrived there it’s really like a desert oasis surrounded by mountains. And that community also has bike and walking trails with a very natural setting. So, I’d say it’s, partly the kinds of things that every master planned community has, new homes, amenities, the ability to do things outdoors. And then for certain of our communities, it’s just really spectacular natural settings that are very unique in the markets.
Dean Wehrli:
Yeah. And that’s just picking the right spots.
Peter Dennehy:
Yes.
Dean Wehrli:
Awesome. Well, thank you, Peter. This has been very insightful as I expected it to be. I appreciate you coming on.
Peter Dennehy:
I’m happy to do it. Thanks for having me.
