An update to RCLCO’s January publication of the Top-Selling Master-Planned Communities of 2019 and “Best of the Decade”, showing where the market has been, and where it is going.
By Gregg Logan and Karl Pischke
Total new home sales among communities tracked in both RCLCO’s 2019 mid-year survey and 2020 mid-year survey are up over 16%, despite the economic impacts of COVID-19. The 50 Top-Selling Master-Planned Communities (MPC) in the country sold almost 7% more homes than the communities that made up last year’s Top 50 list (note that those communities that comprise the Top 50 changes from year to year). This puts the Top-50 communities on track to be nearly 10% higher than 2019’s year- end Top-50 list.
Every year since 1994, RCLCO has conducted a bi-annual national survey identifying top-selling MPCs through a rigorous search of communities in each state. RCLCO reports total year-end sales among the Top-50 communities at the beginning of each new year, as well as publishes this mid-year report each July. As part of this update, RCLCO also examined the ways in which the top-selling communities are realizing strong sales despite the coronavirus crisis and what that might mean for sales in the second half of the year.
Retiree-oriented The Villages (The Villages, FL) claimed the top spot in RCLCO’s ranking of the top-sellers, followed by Lakewood Ranch (Sarasota, FL), which is the top-selling multigenerational community in the country. Wellen Park (formerly West Villages) in Venice, FL claimed the third overall spot. The top- five are rounded out by Summerlin (Las Vegas, NV) in the fourth-place spot and Daybreak (Salt Lake City, UT) in fifth place after an impressive 40% increase in its sales compared to this time last year.
Despite continuing concerns about the increase in coronavirus cases as states have rushed to re-open, MPC developers are generally optimistic about the balance of the year. MPCs have historically performed better than other new residential communities in times of economic hardship, and year-to-date MPC sales have performed stronger than the market overall. We believe this is a “flight to quality” and perhaps a “flight to safety” wherein MPC’s are perceived as a better, safer investment as well as place to live.
How the pandemic impacts the economy and real estate for the balance of the year remains uncertain, but it has been refreshing to see that among the top-selling communities, motivated buyers were back in the market by mid-April and have largely remained. The fact that MPCs have been able to grow their market share in tough times also bodes well for the rest of the year and beyond.
Moving forward, there are two important factors that may ultimately play a role in MPC sales for the second half of 2020:
- The first wave of COVID-19 lockdowns had an impact on lot takedowns by builders. While developers generally continued with development efforts that were already underway, some did pause on new investments until the impacts on sales could become clear. These hesitations, coupled with the fact that months’ supply of new homes remains at a low of just 5.6 months, indicate that there may be some instances of insufficient lot inventory in some places to keep up with new home demand.
- Housing attainability, and the ability to provide a diversity of product at a variety of price points, remains a critical issue that will continue to be important for master-planned communities to address. A potential scarcity in new home inventory may only serve to exacerbate this problem, as it keeps pressure on prices.
There are of course other considerations for evaluating prospects for the housing market over the balance of the year, such as the impact of political and social unrest leading into the November election, potential increases in bankruptcies and layoffs without Congress and the White House agreeing on further federal stimulus funding, lenders implementing more stringent lending standards potentially stifling demand, etc. As always, RCLCO will be carefully monitoring the market and how these trends will impact the market for master-planned communities.
Gregg Logan is a managing director of RCLCO Real Estate Advisors, a consulting firm offering real estate economics, investment strategy, asset management, management consulting, and legal support services. Logan leads the Orlando, Florida office, managing engagements for developers, landowners, investors, and public sector entities seeking strategic development, investment, and/or planning advice regarding their real estate.
Karl Pischke is a vice president of RCLCO Real Estate Advisors, a consulting firm offering real estate economics, investment strategy, asset management, management consulting, and legal support services. Based out of the Orlando, Florida office, Pischke focuses on providing strategic and actionable guidance for MPC developers, landowners, investors, and other entities seeking advice regarding their real estate.
Learn more at rclco.com.