COMMUNITY AND RESORT
January 4, 2017
The Top-Selling Master-Planned Communities of 2016
By Todd LaRue, Managing Director, and Brian Martin, Vice President
Home sales at the nation’s 20 top-selling master-planned communities (MPCs) surpassed 2015 totals by 6%, with 20% of communities experiencing more than 40% growth in sales. Texas, Florida, and California continue to be hot markets and accounted for 60% of the 20 top-selling communities with each state containing four of the top-selling MPCs. Orange County, California’s Irvine Ranch sold 1,989 homes in 2016, marking the first time in 14 years that The Villages (Ocala, Florida) did not top our rankings.
Every year since 1994, RCLCO has conducted a national survey identifying the top-selling MPCs. We recently surveyed MPCs throughout the country to establish the 50 top-selling communities for 2016.
MPCs that achieved increases in sales generally credit successful market segmentation—the targeting of various age, income, and household segments with appropriately priced and designed residential product types and lifestyle amenities. Developers of communities that experienced slower sales typically cited reduced lot inventories, upward pressure on prices, fewer moderately priced homes, and delays in home completions as the primary culprits. Communities generally anticipate 2017 lot and home sales to continue at a similar pace to 2016, with continued job growth as the strongest driver of home demand.
One of the most prevalent features of the top-selling MPCs is the inclusion of mixed-use districts, which tend to be heavily food-oriented and typically include other convenience retail and services supportive of daily living. Another common attribute of the most successful communities is the availability of various healthy community features, including fitness classes, active lifestyle activities, and easily accessible parks and multiuse or dedicated paths and trails that offer a variety of experiences depending upon fitness level, use (biking, walking, running, hiking), and proximity to nature. A few of these MPCs also include a local farm-to-table component that capitalizes on the strong interest in healthy locally grown food, which serves as a means to bring community residents together and establishes a distinct community culture.
In terms of age segmentation, MPCs are targeting Millennials and active adults/empty nesters in roughly equal numbers, both with their product offerings and in their marketing efforts. Lakewood Ranch (Sarasota, Florida) is adding more urban and attached products specifically to increase their share of Millennials by offering both a lifestyle and price point attractive to this generation. Eleven of the 20 top-selling communities have active adult community components. Methods of outreach vary, with the active adult component advertised through traditional media channels, while marketing to Millennials uses social media along with internet advertising in Millennial-targeted channels. Of course, Gen Xrs continue to account for a large share of MPC buyers.
Active street scene, Lakewood Ranch Main Street.
Multigenerational products are also being offered at several MPCs to meet an increase in demand for home types suitable for several generations living under the same roof. Inspirada (Las Vegas, Nevada) offers multigenerational homes within their Bella Verdi neighborhood to accommodate the increasing number of Millennials living at home in addition to grandparents living with their children. Verrado (Phoenix, Arizona) also offers multigenerational homes that feature multiple master suites.
Single-family detached and attached rental products are also beginning to gain traction in some MPCs. Examples include the BB Living Luxury Rental Communities at Verrado and Vistancia (both in the Phoenix market), and the planned single-family rentals to be constructed around the elementary school at Tehaleh (Bonney Lake, WA) in 2017. These rental products attract a wide range of consumers, from families ready to move out of an apartment who cannot yet afford to purchase a home, to downsizing empty nesters who like the low-maintenance option of renting but still desire the MPC setting. In addition to single-family and attached rental products, traditional multifamily rentals are a big part of MPCs, with 50% of our top-20 list offering apartments within their community. By having a variety of rental residential products, these MPCs are able to offer the MPC lifestyle that is attainable to renters, some of whom will ultimately convert to buyers within the community, while also diversifying the look and feel of residential neighborhoods. Furthermore, developers are able to accelerate land sales and add a source of recurring income for those who self-develop, own, and operate the units, such as Tavistock in Lake Nona (Orlando, Florida).
BB Living at Verrado
MPCs continue to creatively diversify their amenity offerings to attract buyers and retain residents. Excellent examples include:
Eastmark's Orange Monster
The chart below summarizes our list of the 20 top-selling communities for 2016, including a comparison with their 2015 new home sales. (We will be publishing our list of the 50 top-selling communities on our website within the next few days.) Irvine Ranch was the top-selling MPC in the country in 2016 with 1,989 sales, taking the top spot from The Villages which has garnered the number one ranking for the past 14 years. The reduced sales volume at The Villages is consistent with the trend line they have experienced over the last several years as they approach build-out. Another consistent star performer, Nocatee, remains in third place, with 973 sales, which is approximately 12% below last year’s performance, but is attributed primarily to lack of home and lot inventory rather than a reduction in demand.
20 Top-Selling MPCs in 2016
*Chart has been revised since original publishing on January 4th
Overall, the 20 top-selling communities sold 6% more homes in 2016 than in 2015, with 13,732 sales this year compared to 12,975 last year. Lakewood Ranch, Inspirada, Rancho Mission Viejo, and Great Park Neighborhoods all experienced annual growth in sales by more than 40% over 2015.
Although the oil and gas sector continues to contribute to uncertainty in the Houston market, pricing and sales volume remain fairly consistent in the top-selling MPCs over 2015, which may be a surprise to those outside of Houston. Although Houston’s economy is still largely energy-dependent, the downstream oil and gas industry is helping to mitigate the large job losses incurred in the exploration and production, or upstream, side of the business. However, multi-billion dollar downstream projects are approaching completion as we head into 2017, which will likely result in further job losses in the construction industry. A bright spot in the Houston economy is the health services sector, which is growing rapidly as Houston’s population continues to increase, though incomes associated with these jobs and other locally serving industries are significantly lower than the jobs lost in the energy industry. With that said, the energy industry is largely believed to be past the worst of this oil cycle, and strong population growth has supported impressive new home sales in Houston, with two Houston communities ranking in the top-20 (Riverstone and Aliana), and seven other communities in the top-50: Bridgeland, Cross Creek Ranch, Wildwood at Northpointe, Miramesa, Woodforest, Sienna Plantation, and Towne Lake.
Looking back, Houston was among the first cities to emerge from the economic downturn and occupied eight of the top-20 in 2012 and nine of the top-20 in 2013, but as other markets across the country recovered more recently (or delivered an abundance of new product in supply-constrained Southern California), MPCs elsewhere began eclipsing the performance of many of Houston’s MPCs. Other than communities that are built out or approaching build-out, Houston’s top-selling communities that were previously represented in the top-20 have maintained sales velocities slightly lower than 2016 despite the economic downturn. Riverstone is the only top-selling Houston community that has experienced a precipitous decline in sales, though this can be attributed to declining inventories at more affordable price points as the community focuses on higher price points in its last remaining development parcels. These top-selling communities in the region continue to be successful with either sophisticated segmentation strategies or an emphasis on more attainably priced products in this environment of more moderate job growth.
Interesting new products and services are emerging from the Houston market. Rise Development Company, developer of two newly launched MPCs (Cane Island and Meridiana), has created air-conditioned “street pantries” attached to each custom home in the estate neighborhoods. The air-conditioned street pantry is code operated, and allows temperature-sensitive packages, laundry, and food to be delivered and kept safe. The same developer has partnered with local farms to deliver fresh produce to the community, a service that is in line with the overarching theme of promoting a healthier living environment.
Aliana, Houston, TX
In the Dallas market, both Westridge and Paloma Creek are in our top-20 list and turned in strong performances for 2016 by offering a variety of more affordably priced products in one of the nation’s most rapidly appreciating housing markets. In addition, four other Dallas communities made our top-50 list: Phillips Creek Ranch, Harvest, Light Farms, and Craig Ranch. These communities are increasingly catering to Millennial buyers, many of whom already live in suburban areas or desire to live in a suburb when they make their next move according to the just-released ULI and RCLCO report titled Housing in the Evolving American Suburb. Since Millennials are increasingly raising families, MPCs that offer family-friendly amenities, as well as attractive price points for more price-conscious buyers, are garnering larger market shares in an area that has experienced a 40% price increase in the past four years. In this escalating-price environment, developers and builders are focused on building higher-density, for-sale products that allow communities to hit price points where the market is deep while also offering a low-maintenance lifestyle for buyers seeking less yard upkeep.
Florida has continued to see strong growth in new home sales in 2016, with communities such as The Villages, Nocatee, Lakewood Ranch, and Lake Nona remaining among the top-selling communities in the country and in our top-20 list for 2016. An additional seven Florida MPCs reached our top-50 list: Summerlake, Ave Maria, Tradition, Bartram Park, Waterset, Viera, and FishHawk Ranch.
Relocating retirees account for a large share of new home sales statewide, as the much-anticipated wave of retiring Baby Boomers has arrived in force. This is true not only of retiree-only developments such as The Villages, but also at Nocatee, Lakewood Ranch, Tradition, FishHawk Ranch, and Ave Maria, which feature active adult communities as part of the larger master plan. Although Florida’s population growth overall is below the peak of the early 2000s, its age 65+ population growth is as strong as it has ever been. Florida remains the top retirement destination nationally, capturing 20% of Americans aged 65 to 74 who moved out of state for retirement last year. Tourism continues to play a strong role in boosting the state’s economy, with over 57 million tourists visiting the Sunshine State in the first half of 2016.
Lake Nona Country Club was the first village of the multi-village MPC that is one of the top-selling in Florida and the nation.
In addition, Florida continued to experience strong, but fluctuating, foreign investment in 2016, though the election and talk of restrictions on immigration raised concerns. It is too early to gauge long-term effects, but foreign investors seem to still believe the U.S. is a good place to invest, and South Americans in particular are expected to continue to be a force in the market. However, they were somewhat less prominent in 2016 due to economic challenges at home, which have resulted in slowing sales in markets most dependent on that segment, such as Miami.
To read more about the Florida housing market, please click here to read our Third Quarter Florida Housing Market Update.
Las Vegas appears to be well on its way to recovering from the Great Recession. Both Summerlin and Inspirada made our top-20 list. Inspirada experienced an impressive 45% increase in new home sales for 2016, and the addition of new villages and mixed-use areas helped Summerlin increase its sales by 28% over 2015. Three other Las Vegas communities achieved our top-50 list: Mountain’s Edge, Providence, and Cadence.
In Phoenix, Eastmark, Verrado, and Vistancia made our top-20 list. Eastmark’s prime location in the center of East Mesa’s gateway corridor, one of the fastest-growing and economically strongest areas of Phoenix, contributes to its success. Entering its fourth year of sales, Eastmark has around 2,000 residents, and will soon be introducing two new types of home options in early 2017—higher-density single-family housing and large-lot gated neighborhoods—which will help to attract new market audiences. Approximately 50% of Verrado’s sales are to out-of-state buyers, with 80% of those coming from California. In addition, approximately 25% of Verrado’s total sales are at Victory at Verrado, their active adult community. Many of Vistancia’s residents rebuy within the community, whether to move up or to downsize, because they enjoy the community feel and amenities offered by Vistancia.
Summerlin provides for a healthy lifestyle with its network of walking, jogging, and biking trails.
Irvine Ranch in Orange County has finally achieved first place on our top-20 list, with 1,989 new home sales in 2016, an increase of 19% over 2015. In addition, three other Southern California MPCs made our top-20 list: Great Park Neighborhoods, Rancho Mission Viejo, and Baker Ranch. Great Park Neighborhoods experienced an 88% increase in sales from 2015, driven by strong sales to foreign buyers from Asia, and expects sales to increase even more in 2017 as its new urban community, which contains a commercial district including hotels, shops, and restaurants, comes to fruition. Rancho Mission Viejo experienced a 52% increase in sales in 2016 and attributes its growth to increased sales of 55+ products priced under $600,000. Their newest neighborhood, Esencia, integrates 55+ households into an all-ages community while still dedicating specific amenities for only the 55+ households to use. Both Great Park Neighborhoods and Rancho Mission Viejo expressed concern that a potential rise in mortgage interest rates and increasingly higher CFD fees may adversely affect affordability for entry-level buyers.
New home sales in the Denver area continued to increase in 2016, with many communities attributing their success to strong growth in high-wage employment within Colorado’s tech core. Stapleton has once again earned a spot on our top-20 list, with 471 new home sales for 2016. This is actually 29% fewer sales than in 2015, but the drop in sales was caused by a limited home supply and delay in lot deliveries rather than weaker demand. Stapleton continues to drive sales with its dynamic and diverse product line, which includes an active adult component and small lots designed for affordability.
50 Top-Selling MPCs in 2016
* = estimate
To be included in our ranking, MPCs must have a number of features. True MPCs are developed from a comprehensive plan by a master developer, and incorporate a variety of housing types, sizes, and prices, with shared common space, amenities, and a vital public realm. The best examples of MPCs are developed with a strong vision and comprehensive plan that guide development and unify the community through distinctive signage, wayfinding, entry features, landscaping, and architectural/design standards. Beyond the built environment, MPCs differentiate themselves from typical suburban subdivisions in that they provide a means for interaction among neighbors in the sense of the word “community.” They foster an environment within which generations can live better in terms of housing and the community environment, and many offer educational opportunities, neighborhood shopping and services, and even employment centers to complement the residential neighborhoods. Although rooted in a vision, the most resilient MPCs have flexible master plans that are environmentally sensitive, market responsive, and nurture the lifestyles of their residents.
Given the above criteria, we do not include the collective sales of multiple, separate communities that are unified only through marketing efforts rather than a preconceived community vision, nor do we include communities that are a collection of subdivisions that have few unifying elements other than consistent signage and name.
The ranking of 2016’s 50 top-selling communities is based on total home sales as reported by each individual community. We will be publishing an in-depth RCLCO Advisory based on interviews with developers of several of the top-performing communities to highlight and provide analysis of their critical success factors and strategies for success in 2016, and how they plan to continue succeeding in 2017. Key community investments, product innovation, marketing tactics, new business lines, and builder relationships are among the many topics our interviews will explore.
RCLCO provides real estate economics and market analysis, strategic planning, management consulting, litigation support, fiscal and economic impact analysis, investment analysis, portfolio structuring, and monitoring services to real estate investors, developers, home builders, financial institutions, and public agencies. Our real estate consultants help clients make the best decisions about real estate investment, repositioning, planning, and development.
Disclaimer: Reasonable efforts have been made to ensure that the data contained in this Advisory reflect accurate and timely information, and the data is believed to be reliable and comprehensive. The Advisory is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort and general knowledge of the industry. This Advisory contains opinions that represent our view of reasonable expectations at this particular time, but our opinions are not offered as predictions or assurances that particular events will occur.