As with every other industry, in 2020 residential real estate has been tested by the COVID pandemic. From securing the raw land to marketing the property, master-planned community developers have had to recalibrate almost every aspect of their business.
For those developers who are now flourishing, it is obvious that even with all of the upheaval caused by forces beyond their control, the “basics” of master-planned community development remain true.
Master-Planned Communities Versus Other Suburban Developments
Part of what has enabled master-planned communities (MPCs) to overcome these troubled economic times is related to the “C” in their description. Community is a driving force.
According to several industry sources , “The best examples of MPCs are developed with a strong vision and comprehensive plan that guide development and unify the community through distinctive signage, wayfinding, entry features, landscaping, and architectural/design standards. These communities differentiate themselves from typical suburban subdivisions in that they provide a means for interaction among neighbors in the sense of the word ‘community.’”
This sense of community is particularly important to the younger homebuyers. Rather than the sleepy suburbs” that their parents and grandparents wanted, these under-40- year-olds would rather socialize with friends and neighbors around the luxury amenities afforded by most master-planned communities.
How’s the Weather?
Homebuyers have made a simple choice between cold and wet or warm and sunny most of the year. It is no coincidence that Texas and Florida combined account for 61 percent of total sales among the 50 top-selling communities.
Texas leads all other States in terms of total MPCs represented on the list with 20 MPCs among the ranks of this mid-year’s top-sellers, up from 11 this time last year. Texas is experiencing significant migration from high tax states such as California, according to several industry reports.
Changing the Marketing Experience Was Also Critical
After starting strong in January 2020, residential real estate sales came to a screeching halt in March. According to this article , “Consumer fears along with State and local stay-at-home orders and quarantine measures took a toll on physical traffic to sales offices in March and early April, causing sales to fall substantially at most MPC’s and in the market overall. However, sales in the last two weeks of April rebounded and the trend continued into May and June.”
The industry has seen online traffic increase across the board even as physical traffic has returned, and those MPCs with more advanced tech features such as virtual tours, community apps and other online tools to facilitate home sales had the most success during the slower period.
Since the onset of the COVID virus, homebuyers have remained hesitant to join in large-scale social gathers. This has made digital/virtual sales and well as other community activities important. The execution of virtual sales, marketing, and community amenity components have helped both to encourage new home sales as well as to sustain the sense of community.
The Flight to Quality and Safety
Historically low mortgage interest rates and the option for employees to work from home and therefore live almost anywhere they want, have enhanced the popularity of master-planned communities. This will likely continue after COVID is just a bad memory.
According to several sources, MPCs have historically performed better than other new residential communities in times of economic hardship. So far in 2020, MPC sales have performed stronger than the market overall, and this is consistent with historical trends.
This is historically proven by the “Great Recession” 2007 – 2009, (also known as the “subprime mortgage crisis”) which severely impacted overall new home sales. During this period, the top MPCs saw their market share increase. Many investors believe this is a “flight to quality” and perhaps a “flight to safety” where master-planned communities are perceived as a better, safer investment as well as a great place to live.
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