The Top-Selling Masterplanned Communities of 2020

 RCLCO dives into data uncovered from its latest report

By Gregg Logan and Karl Pischke 

The 50 top-selling master-planned communities in 2020 experienced total sales about 20% higher than in 2019, and communities in this year’s Top-50 report, for which sales data was available in 2019, had an average increase in sales of 40% in 2020! Sales within the top-10 MPCs were over 12% higher than their 2019 counterparts. The Villages, with 2,452 home sales, is once again ranked as the top-selling community in the country. 

Florida and Texas together account for about 63% of total sales among the 50 top-selling communities. Florida continues to dominate the top five of the list, with The Villages, Lakewood Ranch, and Wellen Park in the first, second, and fourth spots, respectively. Among metropolitan areas, the Houston-The Woodlands-Sugar Land, TX MSA ranks as the top-selling area, both in terms of total communities within the Top-50 (eight MPCs), as well as total sales with over 5,000 homes sold among the 50 top-selling MPCs. Additionally, communities in this year’s Top-50 report for which sales data was available in 2019 had an average increase in sales of 40% in 2020.

Looking back on a year with many challenges due to the health crisis and the economic fallout, the strong housing market, and strong performance of master-planned community development, are bright spots.”

The COVID-19 Pandemic and 2020 Master-Planned Community Sales

RCLCO asked top-selling developers to share their perspective on what has been driving strong sales, including their assessment of the impact of COVID-19. While COVID-19 seems to have resulted in an acceleration of purchase decisions for some households already in the market, as well as influencing, to some extent, the type of purchases being made, it does not appear to have been the primary motivation for purchasing a new home, or the primary reason for moving from urban areas to the suburbs. In fact, many purchases have been from suburb to suburb or suburb to suburban master-planned community.

According to Peter Dennehy, Vice President of Customer and Market Research for Newland, a survey of their buyers and prospects conducted for the first nine months of the year gives further insight into what was on home shoppers’ minds during the time of a pandemic.

Key findings indicate that the COVID-19 pandemic influenced about 30% of buyers to purchase a home, but most cited it was not their primary motivation. Demographically, buyers in Newland’s survey included 37% couples with children at home, and 18% couples with no children (not including empty nesters with grown children, which made up 37% of buyers). While Millennials represented only 25% of their buyers just 4-5 years ago, they are now the largest category of new buyers. Of the family buyers, nearly 50% had children under the age of five, and nearly 34% were making the transition from renting to ownership. This is further confirmation that demographic shifts are a significant factor driving new home sales.

Cameron Jackson, Director of Marketing for Daybreak Communities (Salt Lake City, Utah), reports that Daybreak experienced nearly double its usual volume of out-of-state buyers during the summer months of 2020. Many of these buyers happened to be relocating from denser urban areas like the San Francisco Bay area and Orange County. However, at the same time, Daybreak’s most dense product lines (including apartments, condominiums, and townhomes) remained hugely popular and continued to experience high demand, which would not be expected if escaping from density was a motivating factor for these buyers. The desire for affordable single-family homes has been a stronger motivation, given that the Bay area and Orange County are two of the most expensive housing markets in the U.S.

Interviewed for this Advisory, Garilyn Bourgeois, Director of Marketing for Brookfield Properties, speaking about their Eastmark community said that “COVID-19 has increased the desire for newer, better, and bigger spaces. However, it is the low interest rates that have provided the opportunity for many buyers, and the historically low levels of resale inventory which has accelerated urgency, and increased demand for new homes.”

Although demographic tailwinds, low interest rates, and low levels of resale inventory all appear to have played larger roles in driving new home demand, COVID-19 has been a factor in two important ways: it has accelerated the purchase plans for households already in the market for a new home, particularly among households nearing retirement and Influenced the type, size, and neighborhood orientations of the new homes being sought.

Looking back on a year with many challenges due to the health crisis and the economic fallout, the strong housing market, and strong performance of master-planned community development, are bright spots. If interest rates remain low, and the increasing availability of COVID-19 vaccines can limit the need for future lockdowns and longer term reduce the need for social distancing, the outlook for MPCs remains excellent.

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Gregg Logan is a managing director of RCLCO Real Estate Advisors. Karl Pischke is a vice president of RCLCO Real Estate Advisors.