Why Master Plan Communities Will Continue To Work For Builders To 203010 December, 2019 / Articles
It’s among the most important new things builders awakened to in the past decade’s housing recovery.
A new-home purchase–for the buyer–is not simply a transaction.
If builders want to succeed these days, they realize that. A new-home purchase is not a one-time deal, but rather a compact with a family, a couple, an individual.
That compact–builders have grown to realize–starts as an opportunity to engage with a person well before the actual purchase, at the start of a “buyer’s journey.” The understanding that forms between home builder and buyer continues–in the buyer’s mind–in three distinct stages, or value milestones, from that moment of engagement:
- The buying process experience
- The ownership experience
- The exit–or selling experience
Taken together, these experiences, comprise the holistic value a builder’s customer seeks when he or she begins the journey. That value, in other words, has a “present” that starts well before the transaction and continues through the time they choose to capture the later valuation in the property in a sale to another buyer.
For four-plus decades or so, master planned communities have served as both a predictability valve and marketing engine for builders. MPCs, when they work, give builders a manageable dashboard into their future. Builders trade on some of their land profits in the property sales, and in return, gain both lot pricing visiblity and customer magnetism. At the threshold of a new decade–as millennials gain the wherewithal and reach critical “biological clock” life-stages, as Generation X reaches peak career earnings, and as the enormous Baby Boom–that predictability and partnership assurance remain an oasis in a desert of uncertainty and casino-like odds of success.
These days, MPCs–like this one, Wander, from Oakwood Homes in Saratoga Springs, Utah–offer builders that predictability because they offer customers the same thing vis a vis those three key value milestones mentioned above–the purchase, the ownership, and the exit. Wander–planned at 1,600 homes in 350 acres–offers 5 different home collections, 7 parks, 14 miles of walking and biking trails, a natural warm springs for paddle boarding, etc., a mile-long waterfront promenade, community pools, a clubhouse, 3 new places of worship, and a new elementary school.
Ali Wolf, senior economist for BUILDER sibling company Meyers Research, has this to say about the underlying resilience of the master planned community business and community development model:
“Buyers can appreciate the vision of a community when it’s already developed. They don’t have to guess how the community will live when they can see kids playing in the yard and people lounging by the pool. That has created a unique challenge for developers who are constantly working to create their “why” when a community is in early stages. This push to capture the imagination of buyers has led to creativity and innovation from those involved in master plans, which helps propel the wider housing industry forward.
“Furthermore, larger plots of land with a longer build-out period allow master plan developers to experiment with product. I’ve chatted with developers who have okayed a product from a builder to later find out that it wasn’t received by the market. Refining floorplans and elevations to ensure the integrity of the community also helps push ideas for product development for homes outside of master plans.”
Now, home lot prices are already at record levels and–given the latest broad economic readings on the strength of the current U.S. recovery cycle–not likely to recede in value anytime soon. So, it’s more critical than ever–especially in light of the fact that builders have deliberately weaned themselves from large “owned” lot pipelines, with huge capital, insurance, and other carrying costs.
That’s why it’s important news that builders, investors, and developers can access immediate, precise, real-time, granular data on MPCs and their performance as a decision-support solution, and Hanleywood’s Metrostudy and Meyers Research today unveil such a tool as part of Meyers’ innovative Zonda platform.
Here’s the low-down on the new Master Plan Community Report product:
Today Meyers Research, the housing industry’s leading provider of new home construction data, backed by Zonda and Metrostudy announces the launch of its Master Plan Community Report, the latest product available on its data-driven app. The Report provides real-time data featuring more than one thousand master planned communities with nearly 4,400 new home projects across the country. Statistical reports for the news media, with national and regional data, will be available regularly during 2020 featuring unique attributes of the Report.
As the leader in new home data, Zonda and Metrostudy, have the most comprehensive information available in the new home construction and residential real estate industry. The company’s newest report tracks contract sales, new home pricing, amenity and land details of master plan communities across the country. The interactive app, allows the user to access information for any master plan community within minutes. The Report contains active, sold out and upcoming master plan communities. Clients can filter by state, metro, city or down to the ZIP code level to obtain relevant details for any new home community. New and updated information is loaded to the system on a daily basis allowing users to confidently search for the best-selling projects, top builders, or review community amenities. If a user is interested in researching the builders that are part of a community, current product segmentation, or the number of remaining homes, all of that is available in the Master Plan Community Report.
Specific data points that are in the Report include:
- More than 1,080 Master Plan Communities
- 4,395 projects within those Master Plans
- 843 Master Plans that are actively selling homes
- Total number of homes available for sale: 1.7 million
- Total dollar value of the available properties: $8.5 trillion
As consumer interests are changing, buyer demands for different amenities are being reflected in master plan communities. The current research available through the Master Plan Community Report indicates the number one, most sought-after amenity is no longer golf courses. Now, the trend is towards buyers who are demanding other amenities to suit their lifestyle such as parks, trails and playgrounds.
Nearly 50 different amenities are tracked within the Report. Here is a sample of amenities that buyers put at the top of their “must have” features for their next home community:
The following are percentages of some of the top amenities that are found in master planned communities today (all of these and more are tracked in the Report):
- Parks – 78%
- Pools – 73%
- Trails – 71%
- Playgrounds – 57%
- Schools (either elementary, middle or high schools) – 38%
- Fitness Facilities – 36%
- Athletic Fields – 36%
- Golf courses – 23%
- Gated Communities – 14%
“We have been gathering master plan data for many years because of the unique appeal that these communities have for buyers,” said Tim Sullivan, Senior Managing Principal at Meyers Research. “Making our research available to our clients, in real time, differentiates us from our competitors. We want to give clients insight into the most important data so they can quickly and easily identify product types, land availability and community attributes that they are looking for.”
Builders, developers, and investors can save, email or print reports or users can earmark favorites for quick access. Because the app is connected directly to the proprietary Zonda, Metrostudy database, the user can refresh their search anytime they need to see updated results.
“We understood that our clients needed real-time data about the communities that they were tracking,” said Lorry Lynn, EVP of Product. “Consolidating all of the pertinent information in one place provides confidence for builders, developers or investors that need to track and target the best projects to grow their portfolio.”
For builders and their developer and capital investor partners, smart land decisions in times of economic uncertainty and cost pressure are a non-negotiable. Meyers’ Ali Wolf notes:
“The affordability problems in Los Angeles, San Jose, New York, and Washington, DC have benefitted the more inland metros as buyers look for relief. The shift inland from buyers has put upward pressure on those markets, creating their own relative affordability problems. As the US population grows and Americans become increasingly mobile, new hot spots in the country are sure follow. Just look at the South and how much that region has transformed throughout this cycle.
“As buyers consider new locations compared to traditional employment hubs, entertainment, lifestyle, healthcare, companies, and housing need to keep up (or better yet, stay ahead!). Irvine, a master planned community in California where I live, became incorporated just 48 years ago and lands as the 84th largest city in the United States. I think we’ll be amazed by where some of the new master plans are developed across the country over the next 10 years that will change local dynamics and help some metros rise in terms of desirability.
With MPCs, builders get predictability, and home buyers get what they want too: a compact that assures them value, not just when they buy, but as they own, and when and if they choose to sell.