The Top-Selling Master-Planned Communities of 2022

Every year since 1994, RCLCO has conducted a national survey identifying the top-selling master-planned communities (MPCs) through a rigorous search of high-performing communities in each state. This initiative exists not only as a way to commend the most successful communities in the country, but also as a tool for monitoring the overall health of the for-sale housing industry, and a means of highlighting the trends affecting communities large and small. This process also serves as a mechanism through which to learn development best practices and pass along lessons gleaned from the MPCs that have pioneered their way into the top ranks. In this publication for 2022, we have surveyed MPCs throughout the country to update the rankings of The Top-Selling Master-Planned Communities of Mid-2022.

The chart above summarizes RCLCO’s list of the 50 top-selling communities of 2022, including a comparison with their home sales in 2021 where applicable. Sales among the Top-50 communities declined by 20% in 2022 compared to the strong sales pace set in 2021, with developers citing the increase in mortgage rates and affordability challenges as being the primary culprit. The Villages, an active adult community in Central Florida, is once again the top-selling community in the country with 3,923 sales in 2022, representing a 2% decline from the record pace set in 2021. Sarasota, Florida’s Lakewood Ranch claims the top spot among all-ages communities, with 1,846 sales. While still a decline from last year’s sales pace, activity at Lakewood Ranch remains elevated from 2019 and pre-pandemic levels. Silverleaf, a Hutson Companies community near Jacksonville, Florida, has earned the third-place spot with 1,034 sales in 2022, an 11% increase over 2021. Southwest Florida’s Babcock Ranch ranked within the Top-5 for the first time with a 31% increase in sales, despite impacts related to Hurricane Ian affecting other communities in the region. According to Tom Hoban, President and Chief Investment Officer, “Babcock Ranch’s steady rise in the rankings results from homebuyers being attracted by our focus on fun, wellness and an appreciation for the environment as the nation’s first solar new town.” Six of the top 11 best-selling communities in the country are in Florida.

Top-Selling Master-Planned Communities of  2022

In our Mid-Year 2022 Update issue of RCLCO’s Top-Selling Master-Planned Communities Report, we reported that sales among Top-Selling communities continued to decline, a trend which had largely begun in the second half of 2021. At the time of the Mid-Year publication, mortgage rates had risen to 5.7%, and prolonged market softness for the remainder of the year was expected, with mortgage rates likely to remain in the 6%+/- range. As 2022 comes to an end, we have seen mortgage rates increase by an additional 1% since RCLCO’s mid-year update, reaching above 7% in October. This has contributed to the further cooling of an already frosty housing market, resulting in a significant decline in homes sales in the second half of the year. In fact, the top-selling master-planned communities in the country sold 13% fewer homes in the second half of the year compared to the first, and 20% fewer homes in 2022 compared to 2021. Coincidently, new home sales consistently fell by about 18% in the last seven recessions.

An analysis of new homes sales within the broader U.S. housing market shows a clear inflection point which began in March 2022 as mortgage rates reached 4% for the first time since 2019. The steepest decline in single-family home sales began in September 2022, as mortgage rates began approaching 7% for the first time in nearly 20 years.

In addition to rising interest rates and their inverse correlation to new home sales, the overall affordability of new housing product continues to be a barrier to stronger MPC sales activity. In each of the last twelve months, as shown in the chart below, new home prices have ranged from 10% to 30% higher than the previous year. In an effort to combat the adverse impacts of a decreasing affordability, MPC developers have noted that their builders are beginning to introduce or otherwise focus on smaller product at more affordable price points. In addition, many builders are also offering incentives to entice buyers, including buying down interest rates or taking on additional closing costs.

Master-Planned Community Optimism

Sentiment among Master-Planned Community Developers is generally more pessimistic than it was at the close of 2021, with an expectation that sales in 2023 are likely to resemble the slower second half of 2022. Declines in mortgage interest rates are needed before a significant rebound in sales activity is likely. Unfortunately, despite recent fluctuations in mortgage rates, they’re not likely to fall substantially before the end of 2023, when they could potentially be back to the 5.5% to 6% range. The Federal Reserve has been increasing interest rates in its effort to check inflation, and that will likely continue to influence mortgage rates at least to mid-2023. That, along with inflation concerns, will continue to put pressure on mortgage rates. Assuming the Fed backs off on its rate increases by mid-year, mortgage rates may start slowly coming down.  Meanwhile, many community developers continue to express confidence in the long-term demand for single-family homes, despite near-term headwinds. Most believe that a significant difference in outcomes can be expected for Master-Planned Communities, as compared to the broader housing market. As reported previously in RCLCO’s Top-Selling Master-Planned Communities Report, MPCs have historically tended to increase their market share in times of economic uncertainty. As shown in the graph below, which compares sales in the Top-10 master-planned communities in the country to overall new single family home sales from 2001 to 2022, MPCs saw their market shares fall in the run-up to the Great Recession, only to see them significantly increase when overall sales in the market fell. Developers continue to feel optimistic that MPCs will represent a bastion of safety amid challenging economic periods to come, which will provide a level of insulation from broader market trends.

Market Outlook: Safety in Master-Planned Communities

Fannie Mae is forecasting significant declines in U.S. home sales in the first half of 2023, reaching their trough in the second quarter of the year before beginning to recover and eventually reaching Q2 2022 levels by late 2024.

High median new home prices and rising mortgage rates have contributed to the long-term trend of declining housing affordability, and recent declines in permitting, starts and new home sales. Nonetheless, the underlying demographic trends supporting long-term demand for new housing strongly indicate that permits, starts, and new home sales will likely rebound substantially following the stabilization of interest rates and further healing of supply chain issues. The developers of the top-selling communities surveyed at the end of 2022 generally tend to believe that the recent decline in new home sales is a short-term trend, and the long-term future for the housing industry, and especially for home sales in Master-Planned Communities, for which there is more underlying demand than supply, looks very positive. Although a slowing new home market is always a challenge to navigate, long term success in the MPC space depends in part on not over-reacting to short term trends. Those communities that continue to plan and position themselves for the next upturn, possibly by mid-2024, will be in a better position to capitalize on the positive long-term demographics in contrast to those that over correct.

The ranking of 2022’s 50 top-selling communities is based on total net new home sales as reported by each individual community. Preliminary sales numbers were provided by communities in early December and pro-rated in order to arrive at estimated year-end sales, with final sales figures provided during the first week of January, and in some cases being updated periodically throughout the month. To be included in our ranking, MPCs must have a number of features. True MPCs are developed from a comprehensive plan by a master developer, and incorporate a variety of housing types, sizes, and prices, with shared common space, amenities, and a vital public realm. 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. Beyond the built environment, MPCs differentiate themselves from typical suburban subdivisions in that they provide a means for interaction among neighbors in the sense of the word “community.” They foster an environment within which generations can live better in terms of housing and the community environment, and many offer educational opportunities, neighborhood shopping and services, and even employment centers to complement the residential neighborhoods. Although rooted in a vision, the most resilient MPCs have flexible master plans that are environmentally sensitive, market responsive, and nurture the lifestyles of their residents.

Given the above criteria, we do not include the collective sales of multiple, separate communities that are unified only through marketing efforts rather than a preconceived community vision, nor do we include communities that are a collection of subdivisions that have few unifying elements other than consistent signage and name.

Article and research prepared by Gregg Logan, Managing Director, and Karl Pischke, Principal. Additional research support was provided by Maggie Henderson, Nikita Shetty, Sean Kluver, Shanren Brienan, and Thomas Phillips.

RCLCO provides real estate economics and market research services, strategic planning, and management consulting to real estate developers, investors, financial institutions, home builders, public agencies, and anchor institutions. Client’s turn to us for trusted, unbiased third party recommendations regarding highest and best use, product definition, market positioning/pricing, and absorption potential for any proposed development concept, site, or product type. Interested in learning more about RCLCO’s Master-Planned Community Services? Please visit us at www.rclco.com/master-planned-communities-services/.

Disclaimer: Reasonable efforts have been made to ensure that the data contained in this Advisory reflect accurate and timely information, and the data is believed to be reliable and comprehensive. The Advisory is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort and general knowledge of the industry. This Advisory contains opinions that represent our view of reasonable expectations at this particular time, but our opinions are not offered as predictions or assurances that particular events will occur.