Builders See Growth in Master Communities

May 12, 2014

Houston boasted the most housing starts in the nation last year, and one-third of those starts were in master planned communities (MPC), a growing sector for the homebuilding industry.

In the U.S., the top 50 master planned communities captured 5.4 percent of new-home sales in 2013 – a 12 percent increase over 2012, according to John Burns Real Estate Consulting. One-third of the top 50 master planned communities are in Texas alone.

With MPCs, builders carefully plan out the residential development, often with a mix of housing types, recreational amenities, retail, and employment centers.

MPCs have been growing in demand nationwide. Among the top 20 MCPs, the average pricing of homes in these developments has increased 16 percent over the past year, and by more than 24 percent in the past two years, according to Metrostudy.

“Historically, we’ve found that during a recession, home values in master planned communities have held up better because of thoughtful planning that includes mixed-use development with jobs, retail, and professional services,” says David Jarvis, Metrostudy’s regional director in the Houston market.

Builders with Johnson Development, which has opened up some of the nation’s best-selling MCPs in the past year, say that the MCPs nowadays are different from two decades ago. They’ve moved beyond just family-oriented housing to accommodate broader demographic needs.

“Family units are changing, so you want a broad array of housing types and price points in one community,” says W. Douglas Goff, COO of Johnson Development. “We call this vertical integration, with family housing on various lot sizes to town homes and zero-lot-line patio homes that young professionals, single parents, and move-down empty-nesters are interested in because they’re low maintenance.”

Source: “Master Minds,” Builder (May 8, 2014) and “5% Capture Rate for Top 50 Master-Planned Communities,” John Burns Real Estate Consulting

Read more

5 Start-up Homebuilders to Watch