Co-Authored by Devyn Bachman, Senior Research Analyst
Masterplan sales surged in 2017. The Villages, Irvine Ranch, Lakewood Ranch, and Summerlin all captured over 1,000 net homes sales in 2017. Sales in a number of western US communities swelled, while many communities in Florida and Texas captured fewer sales as they wind down or face more competition. Texas usually dominates the top 25 ranking, but only Riverstone in Houston and Paloma Creek in Dallas had enough sales this year.
We contacted 370 masterplans—many of whom we advise on market, segmentation, amenity, and marketing strategies—to arrive at our ranking. Together, the top 50 masterplans sold 28,329 homes, reflecting a 20% year-over-year increase from 2016. Their combined 2017 sales represent approximately 4.5% of all new home sales nationally.
We spotted several notable trends this year.
Regional Shifts in the Top 25
- California and Southwest masterplans together account for 56% of the 2017 top-selling communities, up from 48% one year ago.
- Southern California masterplans represent 24% of the top 25, rising from 16% in 2016.
- The Southwest’s market share jumped to 28% from 24% one year ago.
- Texas captures 8% of our 2017 top 25, dropping from 28% last year.
- Florida’s share rose to 28% from 20% in 2016.
Strong Phoenix and Las Vegas sales gains. The Summerlin and Inspirada masterplans in Las Vegas and Eastmark and Vistancia in Phoenix all report phenomenal 2017 sales that promoted them in this year’s ranking. We have been tracking the significant sales improvement in Phoenix and Las Vegas via our consulting assignments and monthly builder survey over the last 12–18 months. Developers and builders report improved demand across the full spectrum of buyer types and submarkets. Steady job growth supports demand, with a boost from retirees in Phoenix and Californians relocating to Las Vegas. Phoenix and Las Vegas are still gaining traction in their recoveries following their huge construction booms and busts.
Increased supply propels San Diego into the top 25. Multiple new communities opened in 2017 in the Otay Ranch masterplan offering a range of relatively affordable product in a supply-starved market. The new supply drove a whopping 254% increase to 563 sales in 2017, representing the highest growth rate among the top 25 communities. Some mature north side masterplans continue to sell well, but South County’s affordability remains a big draw. We rate San Diego as a Strong market given the brisk sales rates and impressive price appreciation in 2017.
Sarasota’s appeal. Sarasota retains two masterplans in the top 5, Lakewood Ranch and West Villages. Builders and consumers increasingly turn to Sarasota to benefit from affordability, compared to Naples and Fort Myers. Sarasota also offers a reasonable commute to Tampa, and local job growth is among the strongest in the country, near 4% annually. In addition, Sarasota provides cultural appeal for active adults and plenty of recreation for families, while builders zero in on a good reserve of fairly priced lots.
Hurricanes did not hold back Houston. Riverstone is the lone Houston masterplan to achieve a top 25 ranking this year, with another 9 Houston masterplans in the top 50. Last year, four Houston masterplans ranked in the top 25. Our Houston consulting team confirms that numerous masterplans are winding down after years of robust activity, and Hurricane Harvey was only a temporary distraction.
Some longtime top 50 masterplans are winding down. Several former top 25 masterplans have slipped in our list or dropped from our ranking as they sell out. The Villages remains in the top 5; however, Alamo Ranch, The Woodlands, Aliana, and Sienna Plantation fell in the rankings. Other mature masterplans did not make our ranking this year, including The Meadows in Denver, Valencia in Los Angeles, and Mountain House in Stockton.
More builders and more amenities pay off. Masterplans want to appeal to a multitude of buyer groups, sometimes combining as many as 10 competing builders with varied product and price points. Proper product segmentation leads to strong sales thanks to housing communities that are differentiated. Summerlin in Las Vegas is one of the best segmentation examples, with homes priced from the mid $300Ks to $2M+, attracting a wide variety of local and out-of-state buyers. Willowsford in Washington, DC, is a perfect example of the benefits of segmentation. This year NVR entered the community, bringing additional product and price diversity. As a result, 2017 sales increased dramatically over 2016.
Soaring first-time buyer demand. Increased first-time buyer demand has become a national trend in the last 12–18 months, keeping our consultants busy helping builder and developer clients offer more attainable housing choices. Builders in Paloma Creek and WestShore are offering attainably priced product in locations just outside the most popular submarkets. Paloma Creek is capturing buyers priced out of the highly desirable Frisco submarket in Dallas, while WestShore is turning downtown Sacramento renters into homeowners. The result is strong homes sales for both masterplans.
Unique amenities win builders extra sales. Developers are investing less capital and relying on creativity to differentiate their communities. For example, Rancho Mission Viejo features a family gathering spot called “the Campout,” which is aptly named for its resemblance to an outdoor campground. We held our company dinner at the Campout this summer. Baker Ranch listened to buyers who increasingly consider their pets as family members, including the “Barker Ranch” dog park in their masterplan. These popular amenities reflect a major shift from the reliance on resort-style pools and 18-hole golf courses that developers used to include to provide the lifestyle elements. For more examples of innovative amenities, you can view the following articles on our website:
We anticipate that the shift away from resort-size pools will reverse itself in 2018, as a number of communities with Crystal Lagoons are currently under construction.
Developers struggled to maintain lot supplies in 2017. Once again, regulatory delays, lack of developed lots, and labor shortages held back sales. Longer waits for permits and inspections, weather delaying sitework, and surprisingly common utility delays can push lot releases into the following year, causing swings in masterplans’ sales. For example, Stapleton in Denver jumped in our top 50 rating after opening a new section in 2017.