Why is Houston Number 1 in MPCs?

HOUSTON – (By Dale King, Realty News Report) – Space City is beaming with pride after excelling in RCLCO’s just-released report on the “Top 50 Top-Selling Master-Planned Communities (MPCs) for Mid-Year 2023.”

An MPC is typically a large consistently themed development consisting of homes in a number of price ranges, schools, retail, churches, recreational facilities and trails.

Perhaps the most significant chart-topping achievement in the report is the fact that the Houston MSA is again the Number 1 performing metropolitan region, placing 14 MPCs in the Top 50 nationwide. That represents more than 5,000 sales, or nearly 26 percent of all MPC purchases among ranked master-planned communities.

The obvious follow-up question for Houston’s accomplishment is: How did they do it?

Three researchers from RCLCO addressed that issue during the firm’s monthly online seminar several days after the issuance of the mid-year MPC report. RCLCO Principal Karl Pischke offered a sports metaphor that seemed to nail that performance query with clarity and a bit of humor.

“Houston  certainly punches above its weight in new home sales generally,” he said during the 39-minute webinar. “That’s a big statement, considering they are already one of the largest new home markets in the country.”

He pointed out that Houston’s success “is driven by strong household and job growth. Even in spite of recent volatility in the energy market, they have seen record job growth over the past two or three years.”

Pischke said Houston’s housing environment is particularly attractive to development of MPCs “because of the availability of large tracts of land and the city’s support for public financing districts.”

“In Houston,” he also noted, “MPCs have seen an increase in overall sales in times of economic uncertainty.”

The RCLCO report said sales among the 50 top-selling master-planned communities in the country increased 8 percent during the first half of 2023 compared to the pace set by the top communities during the first half of 2022.

While the overall total is good, Pischke said some individual communities tallied “staggering numbers.” As an example, he pointed to Sunterra a community in the Northwest Houston/Katy area, which increased sales 49 percent. Sunterra is a Land Tejas/Starwood Capital development.

How did top sellers overcome from last year’s downward spiral? “Some introduced smaller products at lower price points,” said Pischke. In other cases, “builders are buying down interest rates, paying closing costs” and offering other incentives. The general consensus today is 5.5 percent mortgages are the sweet spot for overcoming buyer rejection. So builders compensate lenders to create special affordable mortgages in a tactic called mortgage buy-downs.

He noted that Lakewood Ranch in the Sarasota, Fla. area which ranked No. 2 in the Top 50, increased sales 20 percent over 2022 by introducing “three new entry-level villages and one luxury village.”

By creating smaller houses with below-market mortgages home builders can make headway with home buyers needing entry-level pricing.

The report shows that Florida and Texas continue to battle for the top two positions in the list of the Top 50 Top-Selling MPCs.  “Florida represented about 42 percent of sales among ranked communities,” said Pischke, “followed by Texas at nearly 38 percent.”


July 30, 2023 Realty News Report Copyright 2023

Rendering image: Bridgeland park. Courtesy The Howard Hughes Corp.

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