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COMMUNITY AND RESORT

January 4, 2018

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The Villages is Back on Top: The Top-Selling Master-Planned Communities of 2017

By Todd LaRue, Managing Director; Gregg Logan, Managing Director; and Karl Pischke, Senior Associate

Top-Selling Master-Planned Communities Mid-Year 2017

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With their release of sales numbers this morning at 9am, The Villages in Central Florida’s 2,231 sales puts them squarely in the top spot once again. California’s Irvine Ranch, with sales of 1,814 comes in at second place, followed by Florida’s Lakewood Ranch, with 1,206 total sales. Overall, home sales at the nation’s 50 top-selling master-planned communities (MPCs) surpassed 2016 totals by over 17%, with more than 28,000 new home sales.

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 2017.

Texas, Florida, and California continue to be the largest MPC markets, dominating the field with 68% of the total sales volume of the 50 top-selling communities. Texas leads once again with 15 communities on the top-50 list, more than any other state. Florida captured 28% of MPC new home sales among the top 50 MPCs, the most of any state, with 10 Florida MPCs making the top-50 list.

MPCs that achieved increases in sales credit their market segmentation strategies: targeting various age, income, and household segments with appropriately priced and designed residential product types and lifestyle amenities. Communities that experienced slower sales in 2017 compared with previous years report that the challenge of maintaining sufficient lot inventory, along with upward pressures on prices made it challenging to keep up the pace. Having an adequate supply of moderately priced homes targeting the largest market audiences remains key to realizing strong sales. In addition, some communities in Florida and Texas cited the uncommonly active hurricane season as a key factor in reduced home sales, with damages and delays associated with Hurricanes Harvey, Irma, and Maria leading to some buyers delaying their plans, including particular hesitance on the part of potential out-of-state buyers.

Community developers are generally optimistic in their outlooks for 2018, expecting lot and home sales to continue at a similar, if not stronger, pace compared to 2017, and anticipating that job growth in particular will continue to be one of the strongest drivers of new home demand in 2018. The top-selling community, The Villages, continues to capitalize on the current wave of baby boomer retirement, which is also a factor for a number of other top-selling communities that prominently feature active adult villages as part of their overall offering.

Growing the housing market also depends substantially on the industry’s ability to reach younger households who have yet to join the ranks of homeowners. Households under age 45 represent less than a third of total homeowners. Householders age 65 and older represent almost a third of all owners, with 78% of 65+ households owning rather than renting. Homeownership rates declined among all household age ranges following the great recession, but the largest declines were among those age 35 to 44. The number of homeowners fell by nearly eight million between 2006 and 2015, but the rate of homeownership for householders age 65 and over changed very little.

The chart above shows RCLCO’s 50 top-selling communities for 2017, including their location, developer, and a comparison with their 2016 new home sales. The Villages was the top-selling MPC in the country in 2017 with 2,231 sales, recapturing the top spot from Irvine Ranch, which had previously taken over the top-selling title from The Villages in 2016.

 

Florida

Florida In Florida, MPCs generally reported strong sales across various buyer segments and product types. In particular, many communities noted a large number of entry-level buyers who cited rising rental costs and a desire to own rather than rent as primary motivators for homeownership. Many Florida communities also cited investor buyers as an important market segment in 2017. A notable decrease in new home sales was reported from foreign buyers, which developers believe resulted from a variety of factors, including changes in the political climate and the prolonged impact of 2017 hurricane season.

In addition to the top-selling community, The Villages, Florida placed another three communities in the top 10, with Lakewood Ranch third, West Villages fifth, and Nocatee seventh. Lakewood Ranch in Sarasota has made regular appearances near the top of the list for several years, benefiting from high-quality schools, a location adjacent to I-75, great recreational amenities, and the inclusion of a substantial employment center and numerous retail and entertainment options. West Villages, located several miles south of Lakewood Ranch in the Venice area, sold nearly 1,000 homes in 2017, primarily targeting a more mature demographic of retiree buyers. In addition to high-quality recreational amenities, West Villages is in the early stages of developing a town center that will feature shopping, restaurants, hospitality, and office space—features likely to drive continued strong sales in the future. Nocatee, the strongest performer in the Jacksonville area, finished the year with nearly 900 sales.

The Villages, Florida

The Villages, Florida

SOURCE: www.thevillages.com

Many communities reported fewer sales during the run-up to Hurricane Irma in the midst of widespread press coverage of the impending storm. After Irma, traffic at many sales offices remained low for a period of several weeks as locals focused on clean-up and out-of-state buyers were deterred by reports of continued power outages and lengthy recovery efforts. Some communities also reported an increase in the number of Puerto Rican buyers after Hurricane Maria struck the island. An estimated 168,000 Puerto Ricans have left Puerto Rico for Florida since the hurricane, and nearly half have arrived in the greater Orlando area. Many are also resettling in Tampa, Ft. Lauderdale, and the West Palm Beach areas. While many initially share housing with relatives who are already in Florida, the impact on both the existing and new home market is growing.

In the Tampa area, a number of new master-planned communities have sprung up in southern Pasco County over the past two to three years, such as Bexley and Starkey Ranch, and the area has experienced consistent growth since then. The area attracts a mix of buyers, including retirees relocating from the Midwest and Northeast, and much of the housing product directed towards retirees is age-targeted, with one-level, maintenance-free homes. Families with children also make up a large segment of the buyer pool in Pasco County, and communities that combine accessibility to employment centers, affordability, and attractive community amenities are performing well. Many of the communities in Pasco County feature town centers that offer shopping, dining, entertainment, and employment opportunities. Recently opened Epperson includes the first Crystal Lagoon in the country, a 7.5-acre recreational water amenity that has had a strong positive impact on both sales and prices since it was first announced. Metro Development Group says that the lagoon is now full, and residents will soon be able to enjoy swimming, kayaking, and paddle boarding or simply relax on “the beach.”

 

Texas

Texas Sales in Texas MPCs have continued at a strong pace through the second half of 2017. The primary markets of Houston and Dallas, followed by Austin, feature most of the top-selling MPCs in the state. In fact, the Houston MSA has the largest number of MPCs on the top-50 list, with 10 top-selling communities. The second-largest market in Texas, Dallas, features four top-selling communities. Relatively good land availability and robust employment growth continue to drive demand for large-scale MPCs in Texas. Close-in large-scale sites accessible to major transportation infrastructure in high-job-growth markets has proved harder to find in many other areas, and Texas continues to lead in that respect. Southwest Houston continues to account for the highest concentration of top-selling communities in the region, with Fort Bend County accounting for four of Houston’s top-10 communities. Cypress, a suburb northwest of Houston, also has a large number of top-performing communities, including Bridgeland, Canyon Gate, and Towne Lake. These communities attribute such strong sales to job growth, along with their experiential amenities and event programming, including community socials and fitness events. Despite significant flooding due to Hurricane Harvey in many areas to the direct west and south of central Houston, newer large-scale MPCs avoided the worst of the flooding, and sales in the northwest and southwest suburbs have remained particularly strong. As the Houston region rebuilds in the wake of Hurricane Harvey and employment growth continues to recover to historical norms, it is likely that these top-selling communities will continue to achieve success.

Bridgeland; Cypress, Texas

Bridgeland; Cypress, Texas

SOURCE: www.bridgeland.com

In Dallas, the most rapid employment and household growth is occurring to the north along the Dallas North Tollway and Highway 75, into municipalities such as Frisco, Prosper, and McKinney. The large number of major corporate consolidations and relocations to North Dallas over the past few years, including Toyota, Liberty Mutual, and JP Morgan Chase, has significantly increased land and home prices in the region. This is driving many developers and builders to experiment with high-density detached and attached products, once only found in more urban infill areas of the Metroplex, to maintain relatively affordable price points in well-located suburban MPCs. Communities proximate to major regional employment nodes and with access to high-performing schools continue to be the top-selling communities in the region. Westridge and Paloma Creek continue to lead the Dallas new home market by offering homes at attractive price points in desirable North Dallas locations, while communities such as Phillips Creek Ranch have been able to maintain healthy sales velocities despite relatively high price increases by incorporating sophisticated segmentation strategies and focusing on fostering community and desirable lifestyle amenities.

With its concentration of technology-related employment and relatively high share of employment in the city core, many Austin residents continue to face affordability concerns. Given more recent employment growth in north Austin—particularly the ongoing emergence of the Domain as a major employment core—communities in northern Austin suburbs such as Georgetown, Round Rock, and Leander continue to achieve strong sales velocities. Communities such as Siena that offer high-quality amenities and homes at attainable prices are leading sales in Austin.

 

West

West Irvine Ranch continues to reign as the top-selling community in California, but moved down to number two on RCLCO’s national top-50 list with 1,814 new home sales in 2017. This represents a 9% decrease from 2016 new home sales. In addition to Irvine Ranch, seven other California MPCs made our top-50 list, including Great Park Neighborhoods, Rancho Mission Viejo, and Baker Ranch. Growth in these communities has been driven largely by increased foreign investment and new home purchases from Asian (primarily Chinese) buyers. Great Park Neighborhoods experienced a 41% increase over 2016 and attributes its success to an influx of foreign buyers as well as the opening of a new neighborhood, Parasol Park. Rancho Mission Viejo experienced a 30% increase in sales over 2016, driven by a strong push from 55+ buyers, offering both age-targeted and age-qualified housing options, as well as benefitting from relatively low interest rates. Other communities surveyed in California attributed recent success to increased purchases from young families and move-up buyers.

The Denver market remains robust, and home prices continued to increase in 2017 due to supply constraints and strong employment growth in the area. Stapleton took the top spot in Colorado for the third consecutive year, with 758 sales, a 61% increase over 2016. Leyden Rock also experienced significant growth, with a 46% jump over prior year. Survey respondents that saw lower sales attribute the year-over-year decreases to declining builder inventory and land availability.

Irvine Ranch; Irvine, California

Irvine Ranch; Irvine, California

SOURCE: www.villagesofirvine.com

The Las Vegas area had a strong 2017, though new home sales remain lower than pre-recession levels. The primary drivers of performance in the area include strong economic growth across the board in Nevada as well as a significant number of buyers who are relocating from higher-priced California. Summerlin continues to dominate sales in the area with 1,052 new homes sold in 2017, representing a 37% increase over 2016.

Arizona continues to be an active market for MPCs, particularly within the Phoenix MSA. Rapid employment growth with corporate campus development, and relocating retirees, have brought significant household growth to the greater Phoenix area. Specifically, the Eastmark, Verrado, Estrella, and Vistancia communities continue to grow and outperform their previous 2016 sales figures. Eastmark celebrated its fifth anniversary with the highest sales, and highest year-over-year sales increase, in the greater Phoenix marketplace in 2017, with over 900 new homes sold. Eastmark’s prime location in the East Valley, and recent economic development on Mesa’s Elliot Road Tech corridor, contribute to its success. Eastmark anticipates further growth in 2018 with the opening of 12 new neighborhoods.

Daybreak maintained a consistent sales pace in 2017 and remains the top-selling community in the state of Utah, despite achieving significant premiums on a price-per-square-foot basis over competitive communities. Daybreak’s opening of the Highland Park neighborhood will likely help support strong sales in 2018.

 


 

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.

 


 

Article and research prepared by Todd LaRue, Managing Director; Gregg Logan, Managing Director; and Karl Pischke, Senior Associate.

Additional research support was provided by Len Bogorad, Cameron Pawelek, Morgan Zollinger, Faisal Alsuhaibani, Sevan Douzdijian, Dana Schoewe, and Carter Smith.

RCLCO’s mission is to help clients make strategic, effective, and enduring decisions about real estate. We proudly celebrate more than 50 years of providing the best minds in real estate with cutting-edge analytics, actionable advice, and the highest level of customer service. Our work includes market, economic, financial, and impact analyses; investment portfolio strategy and implementation; entity-level strategic planning; and management consulting.

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.

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