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Are Affordable Master-Planned Communities the Next Big Building Move?

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Master Planned Communities

Are Affordable Master-Planned Communities the Next Big Building Move?


December 13, 2019
aerial view of a master planned community
Aerial view of master-planned community and census-designated Ladera Ranch, South Orange County, California. Large-scale residential neighborhood By bonandbon

In real estate, amenities are now king. Potential homebuyers, especially younger ones, crave a community that incorporates commercial and recreational opportunities. Couple this with the fact that many Americans, from empty-nesters to small families, are ready to accept smaller homes in denser communities, and it results in an opening for builders to jump into affordable master-planned communities (MPCs). So why haven’t MPCs truly taken off yet for entry-level priced homes? The product is right, but the price is wrong, according to experts at Robert Charles Lesser & Co. They explain where MCPs must go from here to serve those looking for affordable options. 

During the current cycle, many master-planned communities (MPCs) have struggled to meet market demand for products at lower price points as well as for low-maintenance products that appeal to consumers’ lifestyles and/or life stages. Often, developers do not have entitlements that support the densities required to serve these customer bases, or the NIMBY syndrome is sufficiently pervasive to discourage them from pursuing such entitlements. Just as frequently, many community developers are resistant to delivering products that have not demonstrated market acceptance in a suburban context, such as smaller, more densely organized homes or even attached homes. But increasingly, community developers and builders are beginning to respond to the growing mismatch between the demographics of new households, the stated housing preferences of active homebuyers, and decreasing new home affordability by delivering product types that address not only more attainable price points but also concepts that reflect the lifestyles of an evolving customer base. In this article, we discuss how MPCs, which are meeting the demand for many buyers, are missing out on the market opportunity to better serve these market segments and enhance their market share; outline solutions for how MPCs can appeal to these segments (based on RCLCO consumer research, components of which were covered in a previous Advisory); identify key customer groups for such product types; and share examples of products that are successfully penetrating these markets.

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