Properly Segmented Master Plan Advantages in a Slow Market

Properly Segmented Master Plan Advantages in a Slow Market


In a more competitive housing market, consumers believe in the advantages of master-planned communities (MPCs). In a recent survey by our New Home Trends Institute team, 95% of homeowners and single-family renters told us they expect homes in MPCs will hold their value as well as, if not better than others in a market downturn. While we haven’t statistically verified this, decades of experience leads us to believe this is true for the mature MPCs with completed amenities.

Master plans have several competitive advantages. Some of the most important are:

  • Safety
  • Lifestyle Opportunities
  • Resale Values

Safety

61% of homeowners and single-family renters agree MPCs are safer or have less crime than homes outside of master plans1. Homeowners determine “safety” primarily by the crime rates and surrounding location, and master plans are typically located away from higher traffic/higher crime areas2. They also often include amenities to keep residents safe. Toll Brothers’ Sterling Grove Master Plan in Surprise, Arizona has two manned gates and announced in 2021 that it would be installing security cameras with visitor license plate recognition at both gates. Our survey results show that homeowners believe security cameras enhance safety even more than gates2.

Window Standardization

Community programs that foster resident interaction also enhance a sense of safety and well-being among neighbors who know one another. During the pandemic, we wrote about how developers and residents supported one another by delivering food or supplies to those in need. Click here to read.

Lifestyle Opportunities

Nearly two-thirds of homeowners and single-family renters agree MPCs offer a superior lifestyle1. Developers of the best master plans make residents feel like they belong to the greater community, not just the home they purchased. We’ve seen community interactions happen both deliberately through planned events by dedicated lifestyle coordinators, and organically through the gathering of resident lifestyle groups with common interests. For example, at Pecan Square in Northlake, TX, residents enjoy concerts, square dancing, and watermelon eating contests in The Arena, movie nights and yoga on the lawn, and craft sessions and food & wine nights in the clubhouse.

Resale Values

Our New Home Trends Institute survey also found that 64% of homeowners and single-family renters agree homes in MPCs hold their resale values better1, which has also been our experience. Those safety and lifestyle opportunities, combined with unique and well-curated amenities and factors that often include convenient access to schools and shopping, are timeless elements that broaden the appeal of master-planned communities and expand the buyer pool. With the housing market slowdown clearly in effect, the prospect of better resale values can help improve the sense of security buyers have in their purchase. Home buyers will take their money wherever they see a good investment.

The Importance of Proper Segmentation

Having a master-planned community alone is not enough. We specialize in helping master-planned community owners maximize profits through effective segmentation. For example, years ago we pushed hard against a lot of initial resistance to include build-to-rent communities in master plans, and now many of our clients have included these communities with tremendous success. Here is a link to some of our past articles and podcasts on successfully developing new home rental communities, known as build-to-rent communities.

We have also been advising our clients not to get too aggressive/greedy by creating too much overlapping competition in the community, or to just sell the land to the highest bidder who won’t execute the community as envisioned.

Strategizing for 2023

We are already quite busy helping several master plan developers adjust to the new market conditions, which require addressing current overlapping segmentation or undesired builder execution, and re-segmenting the next phase of development to address reduced demand and affordability challenges in a higher interest rate world. We have plenty of successful master plan execution insight for free here.

Finally, our invitation-only New Home Trends Institute Master Plan Council has been a source of inspiration for us and our clients, with developers around the country able to share experiences and ideas as their community home sales and lot sales have slowed. This year we will be focusing on value engineering, maximizing the ROI on amenity spending, and re-segmenting for a more difficult sales environment. We may add a second council if there is enough interest, so please feel free to apply here or fill out this formfor a more specific request.


Anja Seng Anja Seng, Senior Research Analyst
Ken Perlman Ken Perlman, Managing Principal