New Home Insights Podcast Episode 73 Transcript | John Burns Real Estate Consulting

Episode 73: Building the Perfect Place One Home at a Time

 

Transcript

Dean Wehrli:

Welcome to the new Home Insights podcast. That’s the John Burns Real Estate Consulting podcast about the US housing market. I’m your host, Dean Wehrli.

Master plans are often the backbone of residential housing supply, especially in those fast-growing markets. With great respect to all of our friends in Texas and Arizona and the Carolinas and everywhere else in Florida building really great master plans, for a very long time the shape of master plans has been set in Orange County, California. One of the developers that has been doing that and bringing a lot of innovation into master plans for decades has been the Rancho Mission Viejo Company. So today we’re going to talk to Kris Maher. She’s the Senior Vice President at the Rancho Mission Viejo Company. We’re going to cover some key ingredients that what makes master plans great. But we’re also going to dig into some nuance, some strategy, about how you turn just a parcel into a place. And then we’re going to talk about not just the near future of great master plans, but we’re going to stretch Kris’s crystal ball and talk about maybe some little more mid-future of what’s going to make a great master plan. Kris, how are you doing?

Kris Maher:

I’m great. Thank you very much for having me. I didn’t realize I was going to need my crystal ball today though, so I’ll do my best.

Dean Wehrli:

Don’t worry about it. Everybody comes on the show and needs to have their crystal ball ready. But in your case, longer than most, for sure. Which I think will be fun. It’ll be fun. Because I don’t know the answers for those at all, so I’m waiting.

So why don’t you first, let’s do this, briefly give us a little bit of background on you, and then also what you do and what Rancho Mission Viejo Company has done and does.

Kris Maher:

I’ll start with Rancho Mission Viejo Company. So we’ve been master developers of communities for over 60 years now. We’re family owned. We build in one location, in South Orange County. So that gives us a real deep foothold with our buyers who are with us for years and years, buy from community to community over the years. And it really makes that a legacy play for the family and for the communities that we build. It’s very, very important to us.

A little bit about me is, I was lucky enough to know that I wanted to be an architect from the time I was 16. So I went down that path, became an architect, worked for architectural firms in the early part of my community, moved on to a couple of home builders, and then I finally got into the development side when Rancho Mission Viejo reached out to me 20 years ago now. So I’ve worked with the company for 20 years. I’m on the community development side. I oversee all the front-end planning; all the parks and amenities, the marketing program, all the fun stuff, all the real fun stuff that we get to do.

Dean Wehrli:

That is the fun stuff, honestly, that is, the creative side.

Kris Maher:

Yes.

Dean Wehrli:

So, let’s start with that idea of what makes a master plan great. But let’s do that in a visual tour. Let’s drive through, or better yet, let’s bike through, more sustainable.

Kris Maher:

Are we on E-bikes? We’re sustainable over here. Let’s be on e-bikes.

Dean Wehrli:

Oh, no, no, no. Let’s do e-scooters.

Kris Maher:

Cool.

Dean Wehrli:

I kind of want to get one, my wife is having none of that.

So you’re entering the master plan; you start with that monumentation. What are you trying to do there? What are you doing to brand or connect with your buyers, right there at the entry?

Kris Maher:

Well, you really have to start and think about the theming and the visuals that you want to create. And for us here at Rancho Mission Viejo, because our villages are not contiguous, we really have to have a layered impact to our monumentation. Meaning, as you’re entering the community, we have to add the large scale monuments that say, Rancho Mission Viejo, and set the tone. And they take on more of a ranch theme, because you really are entering a working ranch. And then as we develop the villages further from that, the villages tend to take on different characters depending on where they are. If they’re a little bit closer in, we go a little bit more, I would say not, we never really get away from our ranch roots, but we go to something that might be a little bit more current and modern, but always with the same material. So you really have to think about your overall theming and visioning as you’re creating your monumentation program.

Dean Wehrli:

But you’re never going to do something that looks sort of ultra-modern. You’re not going to go for that. Logan’s Run science fiction font or something like that.

Kris Maher:

Probably not. But for us, we definitely have pushed the boundaries a little bit more. As we moved into our latest village of Rienda, we built smaller, more attainable homes. So we knew we were attracting millennials, and even some Gen Zers; a lot of first-time buyers. So we really tried to get a little bit more current with our monumentation in Rienda. So we do think about all that.

Dean Wehrli:

Okay. Okay, so let’s e-bike. Or I’m sorry, let’s scooter, let’s continue.

We’ve checked out your monumentation. We’re now scootering over to the first neighborhood. Does that have to be the “right neighborhood”? Does that have to brand or make a statement about the overall master plan right away? The product, the architecture?

Kris Maher:

I think what you’re trying to accomplish with your first neighborhood is you’re trying to figure out who your buyer is. You always want to know who your buyer is, you want to understand your market. And once you understand that, you can put the proper blend of neighborhoods, different segmentations on the ground, with appropriate architectural styles for the size of the home and for where you are in the community. Meaning, are you doing a lot of attached, are you doing more larger single-family detached? You really have to start to think about what your styles, what your architectural themes are going to be.

Dean Wehrli:

So now, okay, we’re leaving, we’re on our scooters. And maybe we have our three kids on their smaller scooters behind us, like goslings, but we want to go to our amenity center.

Kris Maher:

Yes.

Dean Wehrli:

We want to, I don’t know, maybe we want to swim or maybe we want to lift because we’re trying to stay fit. Do you want that to be the very central, or do you sometimes want to disperse your amenities throughout or both? How do you think about that?

Kris Maher:

The way we would think about that and anyone should think about that, is really you have to think about the scale of your community. So if you’re building a couple hundred homes, you’re probably going to have a smaller amenity, more centrally located. If you build at the scale that we do, thousands of homes across multiple villages, you’re going to want to have significant amenities, but then you’re going to want to reach out into the neighborhoods and put smaller plunge pools, parks, trails. So that boils down to what the scale of your community is. And it’s different for every community. It’s different for us as we move from village to village.

Dean Wehrli:

But generally speaking, the bigger your community is, the more likely you want to disperse some of those.

Kris Maher:

Absolutely.

Dean Wehrli:

Would you still always have though, that core big central amenity that everybody’s going to on the weekends, or what have you?

Kris Maher:

We choose to do that. We always build a large splashy amenity, but then you have to realize that that’s not going to be for everyone. Especially on a weekend when there’s a lot of kids and it’s pretty crazy. You’re still going to want to put those little plunge pools out on the edges, on the fringes. So there’s something for everyone. And as you know, we also do 55 plus neighborhoods, and so they absolutely need their own pool and spa.

Dean Wehrli:

Yeah, for sure. For sure.

So now let’s think about the next neighborhood, or the rest of the neighborhoods. What is your ideal product segmentation; the different kinds of homes you have, different price points. Do you want to be as varied as possible or do you really want to focus on those couple of key segments that you think are absolutely the backbone of your demand?

Kris Maher:

The best thing to do is to try to capture as much of the market as you can. So once you understand who your buyer is and who you’re going after, those are the homes you want to put on the ground. But you want to capture; so if you want to have starter homes that say, in our current village of Rienda, we have a one bedroom, one bath condominium at 725 square feet with a one car garage. But we got up as high as 2,400 square feet in the single family detached. And then we have everything in between. We have duplexes, we have high density detached, we got up to the single-family detached, but we tried to cast our net quite wide to capture as much of the market.

What we didn’t get are move up buyers. Because when you top out at about 2,400, you’re not going to get a lot of move up buyers. And we’re not getting any 55 plus. So as we look to the next phase of a development, that’s what we’re going to go after.

Dean Wehrli:

I’m glad you added that, context because that 2,400 seems a little small to top out at, but you’re specifically going for that part of the market. You’re not going for that second move up executive part.

How big historically at Rancho have you gone with your other master plans, where some neighborhoods were aimed at those second move up our executive buyers?

Kris Maher:

We’ve gotten up into 3,000 square foot homes, which was an interesting idea at the time. Didn’t work out so well for us. But we have gone into that. And in a future phase coming up, we also, we’ve gone to multi-gen homes, and so those are getting up to 3,600 square feet. I have a little bit of blood pressure over that because that’s just a hugely expensive home right now. And the timing of when we put it on the ground, which we don’t know right now, that gives me a little concern.

Dean Wehrli:

For some context for our people; we have a national audience. For some context, remember this is Orange County, so a 3,000 plus square foot home is a big chunk of change. So it is tougher to get really, really big in a market like that.

Kris Maher:

It’s a big chunk of change.

Dean Wehrli:

Yeah.

Do you always have or really look to have some rental component, like some apartment complex there? Are you also jumping on board and thinking about having build to rent neighborhoods at your master plans?

Kris Maher:

We absolutely. We build a lot of apartments and we try to appeal to different market segments. We’ve done 55 plus apartments, we’ve done market rate apartments. We’ve recently done more apartment town homes, and that was our response to build to rent. Build to rent, as a model, doesn’t work here in South Orange County. Our land basis is just too high. We’ve looked at it a number of times over the years, and it just doesn’t pencil right now. Maybe someday.

Dean Wehrli:

Okay. Yeah. Again, Orange County, very, very high home prices. That makes total sense.

Kris Maher:

Yeah.

Dean Wehrli:

How do you deal with, let’s say, a not ideal adjacent use or surrounding use, like railroad tracks or autobody shop. Or worse, a Chuck E Cheese, the worst possible adjacent use. Do you think about buffers? What’s the best way to deal with that?

Kris Maher:

Well, fortunately at Ranch Mission Viejo, really our only nasty use are cell towers, which people tend not to like. Although they’re a necessary.

Kris Maher:

Cell towers, which people tend not to like, although they’re a necessary evil, right?

Dean Wehrli:

Yeah.

Kris Maher:

But I have worked on projects next to railroad tracks with oil wells, backing up to busy roads, and the best thing you can do is try to turn your back to those elements as best you can. You have to understand that you may have to price your way around it. If you have a competing community that doesn’t have those types of issues, you’re going to have to consider how you’re pricing to attract a buyer that says, “You know what? I can deal with that at that price.”

Dean Wehrli:

Would you think though about, I don’t know, having a linear park or doing something like that to sort of buffer from the, especially if it’s a noisy surrounding use or adjacent use?

Kris Maher:

Yeah, that’s an option. You just have to figure out is that obstacle going to impact the value of the linear park then? Are people going to want to use the linear park? So you just, it’s trade-offs.

Dean Wehrli:

Okay.

Kris Maher:

It’s about trade-offs.

Dean Wehrli:

Okay. And by the way, Chuck E. Cheese lawyer, I was just kidding, just comment. So what have you done that didn’t work? And if it didn’t work and you realized it didn’t work, what did you do to fix it?

Kris Maher:

We’ve done a number of things that hasn’t worked over the years, both on the product side and on the amenity side. One thing we did recently is we built a 55+ plunge pool amenity, and we didn’t put a spa in. And the residents started moving in. They were very really upset about not having a spa. And we kept saying, “Oh, hold on, hold on. We’re going to be building a big spa at what we’re calling the Hilltop Club,” which is a massive amenity that was coming on board in a year or so. So we kept pushing back on saying, “No, no, you’ll be happy. Just wait, just wait.” Because the Hilltop Club was a huge intergenerational clubhouse. Well, we all know what happens when you open a spa at a market rate amenity. It’s all the kids. And so it did not solve our problem at all.

We had to go back in and retrofit a spa in at their actual exclusive clubhouse. And then, this is kind of funny, for some reason we built a casting pond, don’t know why, never got used. And one day a friend of mine sends me some pictures of his dog in a pond. I was like, “Where is that?” He said, “Oh, it’s in the casting pond.” I said, “You’re not supposed to have dogs in there.” But a light went off in my head and I said, “Why not? Why wouldn’t we allow dogs in there? That’s a great idea.”

So we modified it by putting the dog waste bags in the space. We stopped calling it the casting pond, we rebranded it as the pond. We took the no dogs allowed sign off, and now, if people pick up on it, they go in there and they can let their dog splash around.

Dean Wehrli:

So you now have a dog pond.

Kris Maher:

Now we have a dog pond.

Dean Wehrli:

That’s a good solution.

Kris Maher:

And then on the product side, in the last phase of Ascencia we had a lot of neighborhoods selling at the same time. And so we ended up putting a product on the ground, large single family detached home, single level living, up to 3,200 square feet. I think the lots were 80 feet wide by 95 feet deep, and it just wasn’t the right product in the right location. It was across the street from a linear park. A bunch of the homes faced onto a zip line. The homes on the back edge had a nice view over a sports park and those sold well, but in this whole phase of Ascencia that these got put in, it was all very small homes, more affordable.

So these large-scale homes, very expensive, just felt like an outlier. So we worked with the builder, we agreed that it was a problem. We cut the lots in half. We went from 80 feet wide to 40 feet wide, put two-story single-family homes on the ground, real family homes, and they just sold hot cakes. So luckily, we were in a position where we could just very simply cut the lots in half and that worked out really well.

Dean Wehrli:

Yeah. Is it like that sometimes though, where it’s not just the overall product segmentation, but also almost like how do you blend your neighborhoods, one to the next? You’re always thinking about that?

Kris Maher:

It really is, because you think about it, everything around those homes was going to be significantly less. So how is someone, if they wanted to resell it, get a comp? It’s going to impact their ability. So yeah, it can be challenging.

Dean Wehrli:

Especially if you have the age qualified next to a very family oriented product. Have you thought about moats, an old fashioned castle moat?

Kris Maher:

Moats and alligators?

Dean Wehrli:

Drawbridge maybe? Absolutely.

Kris Maher:

A troll.

Dean Wehrli:

Yes, bring alligators to California. That would go very well with fishing game.

Kris Maher:

Yeah.

Dean Wehrli:

One thing that I heard did work was this kind of this children’s pen by a pool-

Kris Maher:

Yeah.

Dean Wehrli:

… Where I heard that was huge.

Kris Maher:

It was sort of an afterthought add-in to a design. We were building a very large lagoon, it’s a half-acre water lagoon, and we know that parents don’t always really want to watch their kids, right? They want to be able to sit back and maybe have their glass of wine and not tend to their kids every second. So we thought, “What can we do to enhance the parents’ experience where they don’t have to really worry about their kids around this huge lagoon?”

So we built a little fenced-in area, and the fence is probably about three feet tall, it’s wrought iron. And we threw all these foam toys in there, and it was amazing. When we had our grand opening, I could not believe the number of kids who made a bee-line for that little space, hitting each other with the foam pieces. We had Adirondack chairs for the parents, so the parents are all just sitting back on their phones, the kids are having a great time. It was the most popular space that we had built. And I still, those things you just don’t expect.

Dean Wehrli:

Wow. On their third glass of wine. I like that. That’s not a bad idea.

Kris Maher:

Exactly.

Dean Wehrli:

It’s like the puppy bowl.

Kris Maher:

The puppy bowl.

Dean Wehrli:

Have fun guys. Okay, so let’s switch over. Let’s talk about that difference, the kind of difference that a master plan can make. Let’s start with the most obvious thing is this price. How do you calculate, or what do you think is that premium of a master plan versus that same house in a standalone neighborhood?

Kris Maher:

We actually looked into that a number of years ago, probably about three years ago at this point in time, because we wanted to know. And really, we wanted to know, it was as we were planning Rianda, and just thinking about amenities and how expensive they are to build, how much it is for the HOA dues, how it burdens the HOA dues because of the ongoing maintenance. And so you really have to make sure that you’re getting your value out of amenities and not making it difficult for the homeowner in terms of increased HOAs, making it difficult on the master developer in terms of the construction costs and the amount of work that goes into putting amenities on the ground.

So we wanted to answer that question. And what we discovered is that depending on the level of amenitization, there’s a 3 to 8 percent retail lift in pricing. And so that’s a big deal. I mean, if you can obtain that by amenitizing, and you can choose your level of amenitization, but that’s significant.

Dean Wehrli:

And my guess is, in other markets, Orange County is a relatively cohesive environment, especially your part of Orange County and South County. I wonder if it’s a little more in some places where the surrounding, the metro areas is a little less cohesive. Does that make sense? You heighten that impact.

Kris Maher:

Absolutely.

Dean Wehrli:

Kris, what is do you think the premium that you see for master plans is based on? Is it purely the amenities or also kind of the cohesive environment it promises? Or even kind of the liked demographics among residents there? Is it all those things or other things?

Kris Maher:

I think, yeah, I think it’s probably all those things. There’s no doubt that you will pay more for a home in a master plan community. But with that said, versus a resale home, new homes have all the technology. I have to cobble my house together to figure technology out. But if you’re buying a new home, it’s all there and it works perfectly. And so yeah, I do believe it’s all that. It’s location, it’s the lifestyle, it’s the ambiance of a new community, all the new amenities. And I’ve moved into new communities twice, and there is nothing like moving into a neighborhood and you’re all on the same page and everybody’s so excited, and it’s just a really, really cool experience just having that… You’re instant friends with everyone and that’s what makes it so wonderful, I think. And you can’t put a price on that.

Dean Wehrli:

Yeah. Is there a type? A buyer type that really tends to accentuate that master plan appeal versus is it demographics, for instance, or a segment of the buyer, of the home buyers?

Kris Maher:

I can’t say that there’s one buyer segment versus another that is not drawn to a master plan. We sell to first time buyers, we sell to families, we sell to parents, grandparents. And that’s one thing that we see is a lot of times, we’ve seen where the kids will move into our community and now their parents are visiting to see their grandkids, and the next thing we know, the parents are buying or vice versa.

Dean Wehrli:

Yeah.

Kris Maher:

So I think that there are certain personality types-

Dean Wehrli:

Yeah.

Kris Maher:

That shouldn’t live in a master plan community, but unfortunately-

Dean Wehrli:

That should not live in a master plan?

Kris Maher:

… Sometimes they buy there.

Dean Wehrli:

Yeah. Okay. That’s what I thought you said.

Kris Maher:

But no, I think it’s across all segments. If you design it properly, there’s something for everyone.

Dean Wehrli:

Yeah. The curmudgeon, right, that you kids stay off my lawn. Maybe not the best for master plans.

Kris Maher:

Yes.

Dean Wehrli:

Especially at diverse-

Kris Maher:

And they show up at the HOA meetings too.

Dean Wehrli:

… Of course-

Kris Maher:

A lot.

Dean Wehrli:

… They do. Yes. Fun, fun, fun times. Let’s talk about the market, let’s talk about demographics. There are, let’s first talk about where sort of master plans. There are some infill, for lack of a better term, master plans like Playa Vista in Los Angeles area comes to mind. A great master plan.

Kris Maher:

Yes.

Dean Wehrli:

But most master plans are kind of creatures of suburbia. Should they be? Do they have to be? Do you think master plans can work anywhere?

Kris Maher:

I think master plans can work anywhere. Obviously, if you’re looking at more of an infill location, you’ll be at a much smaller scale more than likely. But I think it can still work anywhere. Not in a very urban area, I don’t see that, obviously. But for sure, creating a lifestyle, creating a community, that can happen anywhere.

Dean Wehrli:

Yeah. Do you think it’s just a function of land and land prices that you have master plans tend to be in suburbia or even exurbia?

Kris Maher:

I think that’s true, yes.

Dean Wehrli:

Yeah. Would you… Okay. We’re in a market now that is trending downward in terms of price in most markets in the country, especially in the Western US. I mean, are you thinking now a little more about apartments because they are at typically less onerous household income kind of appeal there? Are you thinking about different products, maybe densifying? Anything like that be as a reaction to the market?

Kris Maher:

Well, if we’re talking about the current conditions today, and we’re not talking about say 2008, we wouldn’t be able to pivot quickly enough to respond to the market conditions. You have to have confidence in what you’ve done. You really have to consider where you’re going to find your buyers. If anything, in a down market, we really push on the marketing side. We always tend to stay very close to our neighborhood builders. We meet with them constantly. If someone isn’t doing that, you should be talking to them to just make sure. We’re successful if they’re successful, so we are very close to our neighborhood builders. We look at different ways to find buyers. We recently went to what’s called out of home with all the digital displays at car charging stations, airports, fitness centers. That’s actually been yielding some pretty good results for us.

It’s not really that bad today. We’ve all got spoiled over the last two years. Right now, sales are consistent with what we were seeing in 2019, wasn’t bad, but we just got so spoiled. There was place for the pricing to come down a little bit, and that’s okay. I don’t think that’s a problem.

Really, one of the biggest challenges as I look out trying to attract buyers, I heard some statistics the other day, 92% of the mortgages in the United States are 5% or less. Of that, 49% are 3.5% percent or less. How are you going to get someone to leave their low mortgage and to say, “okay yeah, I’m really excited about a 7% mortgage. Yeah, that sounds like a good idea to me.” They have to consider buying a less home than they probably wanted to, but there’s always going to be those lifestyle changes that’s going to force someone into the new home market in or into a home market. It’s going to be marriage. It’s going to be a child. There’s any number of things that can happen. There are buyers out there. You just have to go find them.

Dean Wehrli:

Do you think about that? Do you think, okay, let’s think about those not locked in buyer segments. Like you said, an expanding family or a divorce situation, a split family, or relocations. Will you literally think about, okay, let’s design some products specifically for those more likely buyer types here in the near term? Or do you have to think too far ahead to deal with that?

Kris Maher:

For us, we have to think so far ahead. Right now today, if I said, okay, this down market, I need to design product. I need to rethink some of the things I’m doing. It’s two years before I can get it on the ground. Then we already suspect at the end of 2024, 2025, things should be getting better. As far as the interest rates it’s going to get to a point where they will come down. Will they ever be sub 3% again? Who knows? Probably not, but they may get down to 5% and you can refinance or they get to 4.5% and you can refinance. There are always going to be those options out there in the future.

Dean Wehrli:

It’s almost as if you strategically, not ignore, but strategically weight less very, very current market factors in a master plan because you do have that longtime horizon.

Kris Maher:

Correct. Correct. Like I said before, you have to be confident in what you’ve put on the ground and what you’re thinking about putting on the ground.

Dean Wehrli:

And what the fundamental demand factors are in your location, not what’s just right now, especially when we have…

Kris Maher:

Yeah, and who your buyer is. Who’s going to come into your community and want to buy your homes.

Dean Wehrli:

Okay. Let’s talk about some age-qualified. Do you doing that now at Rienda you are about to start some 55 plus? Do I have that right?

Kris Maher:

We are. We have two 55-plus neighborhoods opening in December. It’s part of our Gavilan branded 55-plus. They’ll have their own exclusive amenity with a plunge pool and a spa. Of course, you’re not going to not put a spa in right?

Dean Wehrli:

Now, you’re not. For sure.

Kris Maher:

Yeah, now you’re not. There’s about 145 of those, 145 homes there. What we’re really looking at right now is we have a very large consolidated Gavilan Ridge. It’s called Gavilan Ridge area that we’re looking at. It’s over 600 homes. Right now, I think it will open in 2025. I don’t know for sure, but that’s what I’m looking at. One thing we do is we do a lot of research. We do a lot, a lot of research. We spend a lot of money on research. Looking ahead to Gavilan Ridge, we know that it’s going to be Gen Xers. Gen Xers are 57 as of this year, so they are going to be our buyer and the younger boomers, we know that.

Dean Wehrli:

You’re still looking at the last part of the boomers, but you are now, for sure, thinking the older gen Xers.

Kris Maher:

Correct. We are really looking at the leading edge gen Xers and the younger boomers as our Gavalon Ridge buyer. What we’re doing to understand them as a buyer, we just recently completed a series of focus groups. We did six different focus groups with both younger boomers and older gen Xers to ask them, really, what does a 55-plus community look like to you?

As we know, gen X had completely different experiences going through their life stages than the boomers did. We need to understand, are they ready to consider a deed restricted home? Do they still have kids living at home? What do they want in terms of amenity or a lifestyle? Single level living. Are they okay with bedrooms up and the master down? These are all of the things we’re trying to figure out. The initial research showed that without a doubt, the most important things to those two groups are pools and spas, trails, and indoor fitness. Our next step in terms of this research is putting together some concepts internally and then going back out and taking their temperature to say, well, what do you think about this, and try to elicit some reactions that way to really try to hone in on what they’re looking for and what would prompt them to purchase a home in a 55-plus community.

Dean Wehrli:

Kris, let me ask you this. How do you account for changes, at least in an age qualified community, to your residents? That is to say, when you first sell it, your residents are going to be of a certain age. As that age qualified community ages, they’re going to be of an older age in general. Do you account for that? Do you think about that? Do you try to maintain some kind of flexibility to account for that?

Kris Maher:

I think that we always design clubhouses with maximum flexibility, but as our buyers age and age out, younger buyers come in. You always do end up with a refresh, I guess. At the end of the day, a well designed clubhouse is a well designed clubhouse. Really what I’ve seen, and I think this is really interesting, is the way the residents choose to activate the spaces themselves. Right now we have a total of 60 resident led clubs and 50 of those are 55-plus. They’re very, very active in terms of the clubs. I think there’s four or five pickleball clubs. I think there’s three or four bocce clubs. There’s book clubs. There’s travel clubs. There’s dinner clubs. I mean, every kind of club you can think of. Maybe they’re not going to get in the pool and swim laps, but they still are going to get the connection with their neighbors and friends via the clubs. You make sure that you have great spaces to host the clubs.

Dean Wehrli:

I guarantee you there’s a wine tasting club. Am I right?

Kris Maher:

Probably a couple of them.

Dean Wehrli:

I was going to say for age qualified and for not so much too. I’m sure.

Kris Maher:

There’s a red wine club and the white wine club.

Dean Wehrli:

I bet. That’s not a bad idea. Okay. Now Kris, we’re going to delve into your future ball. You’re very bright, future looking, future crystal ball. Let’s talk about master plans in the, I don’t know, at least five, maybe even 10 year future. Are you meeting regularly internally, or also with some outside consultants to just try to constantly be at the forefront of what’s next? Is that a central part of your job?

Kris Maher:

Absolutely. We are actually a very small team internally, and we use a lot of consultants. We use consultants from all over the United States because we can be pretty isolated here in South Orange County. We rely on our consultants to be our eyes and ears around the country at the different master plans to bring us ideas. We also have I’ll call it a creative think tank for lack of a better term. We have a group that we call the Creative Collective. The Creative Collective was put together to do exactly that. That forward thinking, that lookout to what’s next, what should we be focusing on? What’s going to be relevant? What do we not need to do anymore? It really is an amazing group who over the years, we’ve had an uncanny ability to really come up with some very unique ideas for Rancho Mission Viejo.

Dean Wehrli:

Do you have a sign on the wall that says it’s about the spa stupid?

Kris Maher:

I took that one down now. I learned that.

Dean Wehrli:

That’s internalized completely. Okay, now we’re stretching out. We’re going five, 10 years. What do you think is going to be the must-have master plan? Not just amenities, but whatever factor you can think of that is maybe a little different than is true today?

Kris Maher:

I have a good one.

Dean Wehrli:

Okay.

Kris Maher:

Unmanned aircraft for commuting.

I actually think Lake Nona is looking at that. Of course, where is technology going to go? That’s going to be interesting. Where is the whole work from home going to go? Those are the things that I think about. The autonomous vehicles, we really haven’t gotten into that yet. Again, Lake Nona has it. We talk about it all the time. What does that mean for planning? What does any of these things mean for planning? One thing, over the years, our parking requirements have been so onerous and so Draconian and the whole notion of autonomous cars, it really changes that dialogue significantly. Then how we can plan things. It’ll be interesting as we move forward.

Dean Wehrli:

My gut says be careful on those. I’ve been hearing some things that the unmanned cars are probably further away than we think they are. Remember that for a little while there, in urban areas, they thought, well, everybody’s just going to Uber everywhere, and they stopped doing parking and that that’s not true. But who knows? Hovercraft, you might have hovercraft stations. Let’s hope, right? The Gen X was raised when they were very small on those film strips that showed hovercraft in the far off 1980s or 90s or whatever. Who knows?

Kris Maher:

I remember that.

Dean Wehrli:

How about any COVID era lessons? Indoor-outdoor, everything has to be indoor-outdoor…

Dean Wehrli:

Lessons, indoor/outdoor, everything has to be indoor/outdoor or everything has to be outdoor even. What COVID era new feature might really have some legs and last into the far-off future?

Kris Maher:

I think that COVID really taught us that our homes can be a lot more than we’ve asked them to be in the past. And I think there’s certain things that families are looking for now. I don’t think that many people go to the movies anymore. I think we all learn that, hey, you know what? Sitting in your house with your wine out of your refrigerator and you can make popcorn and you can re-see a scene if you need to or get up and use the restroom. And the whole being able to work out at home. So many things came out during COVID that just taught us different ways to look at our homes and use our homes. So I think a lot of that is going to stick with us. And I know we have a very high percentage of residents that still are working from home.

I think that we tend to have a lot of business people, a lot of white collar and I think they have more of an ability to work from home. So we’ve really been thinking about our technology and pumping up our technology that we’re including in the community. We’re bringing internet to more locations. So if people want to get out and work remotely within the community, they have the ability to do that. I think one thing that I’m finding a little interesting right now is I was really surprised when COVID hit and our builders, our home builders ability to pivot so quickly and to figure out how to still sell their homes in the middle of this crazy thing that was going on around us. And we had unbelievable sales here during that time. We sold out a lot sooner than we had been planning on, but now I’m sort of starting to see the builders are shifting back a little bit.

I thought it was so unique how they managed to turn to keyless entries and get people into model homes at any time instead of having someone sitting in a sales center from 10 to five when the vast majority of their buyers were probably at work at that time. But now I see it shifting back a little bit and I’m kind of disappointed in that. I really thought that the builders would grab the success that they saw during COVID and figure out how to improve that as we go forward instead of going backward. So that’s a little disappointing to me.

Dean Wehrli:

I totally agree with that. I think that having it be 10 to 5 I think is just nuts. That makes no sense whatsoever. But also going hundred percent virtual, I’m not sure that’s smart. I think people do eventually at some point when they get really serious want to talk to someone face to face. So having almost a hybrid model where you can go virtual, but you can also talk to someone and where maybe your sales agent leaves at five or six o’clock, but you still have appointments till nine o’clock, something like that, hopefully we’ll see. Do you think you still have the experiential kinds of public gatherings? Okay, so in the COVID era, those public things kind of went away or certainly were lessened. You mentioned movies, people don’t go to movies anymore, but might they go to a drive-in, drive-in over the lake kind of a thing where they gather with all their friends and it becomes kind of an experience?

Kris Maher:

Absolutely. We do a lot of large-scale events through Ranch Life, which is our lifestyle brand. And we did what we call Westfest a month or so ago and it was hugely attended. So those types of branded events where it can really bring the community together, still very, very popular and we will continue to do those and probably expand on them.

Dean Wehrli:

Here’s a kind of pet question of mine because I’m just kind of waiting for… We talked a little minute ago about dispersal versus central amenities. For some reason, I think that I see amenities becoming much more dispersed and almost always dispersed and shifting away from that big central amenity. Am I just completely wrong?

Kris Maher:

It just depends. Like I said, the more amenities you build, the more you drive your HOA costs. And that is something that you really need to stay on top of because at some point the higher the HOA is, it’s an impediment to absorption. And so it’s very fine equation that you just have to work through. And again, it depends on the scale of the community.

Dean Wehrli:

How far out are we going to see master plans. They’re already kind of in the excerpts. I mean, are we going to see rural master plans as land becomes more scarce? Well master plans just keep pushing out further and further in, again, this 5, 10, 15-year time period?

Kris Maher:

I’m going to answer for California and I’m going to have to say no. There’s already been some communities that have been up against it in terms of trying to develop. So I can’t speak for other parts of the country, but I think in California that’s probably a no.

Dean Wehrli:

Yeah, the antagonism toward “sprawl” becomes a pretty big impediment towards exurb.

Kris Maher:

And just the wildfire situation. It’s a problem.

Dean Wehrli:

That’s a good point. Do you see though more densification in master plans getting away from larger detached homes as a whole and becoming more and more dense?

Kris Maher:

We already do that and I think the competitors, our competitors in the Orange County market do that. I don’t think I can get any… Right now, I have a condo project that’s 30 units to the acre. It’s literally an apartment that’s for sale. So I don’t think I can get any more dense than I have. I know in other markets they’re always talking about how to get more attainable homes, get more dense because they’re, they haven’t been building that way. But that’s sort of been on our… What am I trying to say? That’s sort of been in our wheelhouse for quite a while.

Dean Wehrli:

Okay. Yeah, it is amazing how… I know it took a couple decades at least, but it really, or maybe less than that actually, but it really went from the planners and the cities telling you, no, no, no, that’s too dense. You’ve got to build homes just like the homes next to you too. Oh no, you need to have high rises in your suburban master plan. It’s flipped quite a bit.

Kris Maher:

Correct.

Dean Wehrli:

You guys introduced something… The intranet at Ladera Ranch, one of your masterplans. That was pretty cutting edge at the time. What is the next big tech thing in a master plan? Will we have almost like smart master plans the way we have smart homes?

Kris Maher:

I think so, and as I said before, with the amount of people that we have still doing work from home, we have already kicked off a tech initiative. As a matter of fact, my next meeting here is our monthly technology ketchup. We have a consultant that we work with. We look at ways to, first of all, bring different providers into the community. We’ve run a shadow conduit now so that our homeowners have an option of going with someone else. We really think that a lot of it’s got to be about choice and because with choice there’s definitely more options and different ideas.

Dean Wehrli:

Yeah. They’re not all going to put a chip in their head when you move into a master plan, we hope. Although you know. Okay. I’ll let you go then with last question. How do you predict the next pickleball? I mean the next hot thing that no one I think saw coming. Is there a way to predict that or just be super flexible and hope for the best?

Kris Maher:

You have to your ear to the ground. I mean, pickleball is just a phenomena and I’m pretty sure it started in the sixties though, up in Washington and we started hearing about it. We were doing a 55 plus tour a number of years ago and that’s when we started hearing about it. So what is it that’s great about pickleball? And I think that the recipe behind pickleball, which is easy to learn, doesn’t take a high level of fitness. It isn’t really expensive to put on the ground. That’s what makes it so popular. And I think that again, that’s the recipe. So if you can figure out what that is and I don’t know what it is. I wish I did.

Dean Wehrli:

That’s the thing.

Kris Maher:

I still don’t have enough pickleball on the ground yet.

Dean Wehrli:

I guess you just have to keep your… Like you said, keep your ear out. Just try to watch ESPN, the OCHO, for the weirdest new sport and travel around and see what’s starting to just catch on in its earliest stages. That’s going to be tough, but it’d be nice to be at the front of that when that next thing does come. Yeah. Kris, I really appreciate you coming on. This has been great.

Kris Maher:

Thank you.

Dean Wehrli:

I had a lesson in master plans.

Kris Maher:

Thank you very much. I appreciate it.

Dean Wehrli:

Absolutely. Thank you for listening to the New Home Insights podcast. I’m Dean Wehrli and we will see you again in a couple of weeks.


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