Friday, July 30, 2010

Is the Era of the Master Planned Community Dead?

How, during these times, can you talk about Master Planned Communities or even think about starting one? Last week I received RCLCo’s (Robert Charles Lesser & Co.) Special Advisory spread on Trends from Top-Selling MPC’s, they listed the top selling communities from a survey of over 400. Of these ten, four were from Texas (all Houston), three from Arizona, two from Las Vegas and one from Utah. This I would not call a representative slice of the pie. While pointing out the growth in sales of some, there was little emphasis on the six communities that had drops of over 20% in sales over 2008 (which was a disaster of a year to start with). Statistically these numbers and communities are meaningless within the national residential market.

It is painfully obvious that these communities are in sunbelt areas. How many sales are to older/retired buyers is not mentioned. How many foreclosures sit empty in these same communities? Why are these communities even selling units (other than the expanding energy industry in Houston) is also hard to tease out. The residential industry is so deep in the tank that I am reminded of what my old boss told me in 1990, “the era of the master planned community is over.” It may have been, but then was reborn, took sick, took last rights, healed itself, and is now once again ill to the point of death (mourners are being summoned). Will there be resurgence? What will its form be if it miraculously recovers once again, and how can anyone afford to even considering developing master planned communities over 500 acres during the next ten years?

Over the next few weeks I will take out a murky crystal ball, wave a T-square over the thing and see what might appear. Trends, locations, styles, and markets are just a few of the issues to look at. I will also note some of the historical points made over seventy years ago just before and after WWII concerning MPC's of those times (somewhat similar).

A few questions to ponder:
What will the involvement of the existing community and city be in the process?

Will the feds, through energy and environment issues, take on an even greater role?

What will the impact be on the mid-market home builder, who often fleshed out the MPC?

Will we end up pricing ourselves out of our own housing market by do-good and feel-good issues, fees, regulations, materials costs, mortgage fears, and federal control of the housing market through Fannie and Freddie?

This is lot to chew over. I look forward to the challenge – stay tuned…….

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