What does the future hold for homes in master-planned communities?

Feeling uncertain has been this year’s only certainty. Mortgage rates are stubbornly high, weak conditions run deeper than a “vibecession,” and housing affordability is abysmal. Master-planned communities must persevere to sell and rent homes through these conditions and into the future.

At John Burns Research and Consulting, we create housing strategies for master-planned communities (MPCs), which include a range of housing types, multiple builders, consistent themes, and amenities. Each year, we rank the top 50 best-selling MPCs in the US. Clients ask us what they should build to maximize their residential opportunities.

The following 4 trends will define the future of housing in MPCs.

1. Affordability solutions:

We expect affordability to be challenging, and communities with solutions that stand out will tap a wellspring of demand. Our surveys revealed that 53% of developers are shifting to smaller lot sizes for detached homes to increase affordability. A small new home in Kyle Pointe impressed Jeff V. Brazel , who leads consulting in Las Vegas. It maximizes livability by eliminating hallways and incorporating indoor-outdoor living spaces on a compact lot. Our New Home Trends Institute profiled it in a piece titled “The Death of the Hallway.”

2. Rental home alternatives:

According to the National Association of Realtors, the median age of a first-time homebuyer is 38 years old. Like yesterday’s first-time homebuyers, today’s renters need space for kids and pets. Build-to-rent communities meet these needs. Our New Home Trends Institute found that 42% of developers include or are planning build-to-rent communities in their MPCs. Another 18% are considering build-to-rent. Developers benefit from rental neighborhoods, which create product segmentation, energize amenity spaces, generate future homebuyers, and increase land and lot sales.

Chelsea Scott, based in Denver, regularly evaluates build-to-rent for proposed communities in Colorado. She points to the Vella Terra rental neighborhood in Loveland’s Kinston MPC as a current example.

3. Multigenerational neighborhoods:

Master-planned communities will benefit as active parenting shifts to active grandparenting. Our New Home Trends Institute found that 45% of 55+ consumers live 30 minutes or less from their grandchildren (Ken Perlman shared this 55+ trend in June, along with a rocking summertime playlist.) This is particularly evident in cities like Houston, where cultures, rising childcare costs, and the steady draw of master-planned communities combine to make living near family desirable and practical.

Based in Houston, Jessica Newhouse highlights Bridgeland, where families with kids may buy a two-story home by Highland Homes, and grandparents may purchase single-story Duets by Beazer down the street.

4. Luxury segment:

We started by addressing affordability, but developers are not abandoning luxury housing in MPCs. Households born in the 1950s and 1960s hold roughly half of US wealth, totaling around $88 trillion. Some of these households sell their highly appreciated homes and purchase new primary and second homes with cash. Other sources of funds include sales of businesses and investments. New homes are a way for baby boomers to turn paper wealth into places for valuable memories.

Wealth and demographics provide strong tailwinds for luxury homes in master-planned communities. I recently toured the Dove Mountain community outside of Tucson, which has several neighborhoods of luxurious and customizable Ritz-Carlton-branded residences.

In markets across the US, home demand is concentrated at the barbells of the demographic spectrum. Opportunities exist among young couples and young families on one end and empty-nesters and retirees on the other. The most successful master-planned communities will create homes for these deep sources of demand.