Congratulations to the skillful management teams behind the top 50 master-planned communities, which sold at least 360 new homes per community during 2019. Together, the top 50 masterplans sold more than 31,000 new homes in 2019, reflecting a 13% increase from 2018. The Southwest region leads the 2019 ranking, capturing 30% of the top 50 spots and over 9,000 new home sales.
During 2019, the John Burns Real Estate Consulting team:
- Visited or worked with many of these successful masterplans
- Wrote about the appeal of water amenities and the introduction of build-for-rent homes in masterplans
- Photographed and analyzed 12 masterplans as part of our DesignLens™ monthly newsletter and searchable database, which includes curated coverage of 60 great masterplans
- Captured the insights of the top masterplan developers at our Housing Design Summit, an invitation-only event for executives at development, home building, building products, industrial design, architecture, and other companies interested in profitably developing the most innovative and desirable homes and communities in the country. Our next event is scheduled for February 20–21, 2020.
Strong Sales Improvement, Varying by Region
Following a sluggish 4Q18 characterized by slow sales and notably weaker pricing year over year, new home sales began improving in May and June of 2019. Our proprietary monthly builder survey confirms that sales gained velocity in the fourth quarter, when the industry typically sees seasonal slowing associated with the holidays. As of November 2019, average sales rates increased by a whopping 38% from one-year prior in our survey. Lower mortgage rates, continued wage growth, incentives and price reductions, and an expanded supply of new homes offered at attainable price points contributed to a strong finish to 2019.
- 41% of builders surveyed identified stronger sales than expected as their biggest surprise of 2019.
- However, 12% of survey participants expressed surprise that sales remain flat to slower. Numerous Southern California builders report continued slowness despite lower rates and price cuts.
- Phoenix builders achieved steady sales through the usually slower summer months as buyers braved high temperatures to shop for new homes. For much of 2019, Phoenix was the only top 30 housing market we rated as Strong, acknowledging the sales and pricing environment.
Robust Sales to First-Time Buyers
Builders targeting entry buyers experienced the strongest sales improvement in 2019. They report higher average sales rates, which we expect from this business model that harnesses higher volume to manage and allocate costs. Builder commentary confirms our conclusion that traffic numbers remain relatively low, but the prospect quality supports sales conversions.
- Move-up builders report sales improvement this year but not in every housing market. We recently upgraded our Austin, Tampa, and Orlando ratings to Strong, acknowledging good sales traction across price points and buyer segments.
- Builders describe 55+ buyers as lacking urgency, leading to fluctuations in sales. These buyers aren’t always motivated by low mortgage rates (many don’t have mortgages) or a change in family composition. Some housing markets with a significant 55+ buyer pool, such as Phoenix, Charlotte, and Charleston, have many communities targeting the same prospects. Patient 55+ buyers seek out the best execution and value.
Southwest, Texas, and Florida Masterplans Lead Sales Growth
More Southwest masterplans ranked in the top 50 this year, as in-migration from California augmented strong local demand. Texas accounts for the 2nd-highest share of top 50 masterplans at 28%, flat from 2018. Florida’s 20% share slipped slightly from 2018.
- Although the 14 Texas masterplans claim more top 50 slots, Florida’s 10 ranked masterplans achieved higher velocity, approaching 9,000 new home sales in 2019.
- Several historic top performers in Texas didn’t achieve top 50 rankings this year. The Woodlands, Riverstone, and Wildwood in Houston and Alamo Ranch in San Antonio have shown long-term appeal with years of strong sales but are winding down now, with 2019 sales slipping below the top 50 threshold.
- Three of the five largest masterplans nationally, each exceeding 1,000 sales in 2019, are located in Florida: The Villages in central Florida and Lakewood Ranch and West Villages operating in Sarasota.
- Phoenix leads the Southwest metros with 7 of 15 masterplans, led by Eastmark with over 1,000 sales.
- Austin is on the rise with 5 masterplans, of which 4 are making their debut on our top 50 ranking: Sonterra, Carmel, Sunfield, and Santa Rita Ranch.
Execution Matters
Master-planned communities continue to dominate the new home sales scene in many Sunbelt metropolitan areas, achieving sales and pricing premiums for offering a well-thought-out, highly desirable lifestyle to homeowners in all life stages. For decades, our team has been helping developers maximize sales by segmenting the community by life stage, price range, lot size, and a lifestyle built around the amenities and programming suitable for the local market.
Positioning for Success
For help maximizing sales and price in 2020, please contact our local consulting leaders or Ken Perlman, our consulting principal who is chair of the ULI Residential Neighborhood Council and has become (in our opinion) the national expert on successful masterplan segmentation and amenity programs. He works closely with our local leadership.
For more information on the master-planned community (MPC) rankings, please contact Jody Kahn or Devyn Bachman, who passionately lead our summaries of market conditions by metropolitan statistical area (MSA) for all of our clients.
