Patience, Please Resetting Expectations for Purchasing Homes in Today’s Market

by Kelly Godbey

You’ve heard it everywhere on the news — skyrocketing home prices and not enough homes on the market. What you may not have heard is how it affects master-planned communities. As editor of Ideal-Living magazine for over 20 years, I have never seen anything like this before. Demand has far surpassed supply in today’s market. So, how did we get here, and what can you expect as you are looking for your ideal home today? We’ve interviewed four of the leading experts in master-planned communities from each of the following — a smaller, newer development in one of the most popular destinations; an established 50-year-old resale-driven community in Georgia; one of the most prominent builders in Florida; and the #1 selling master-planned community in the United States. You can skip ahead and read what they have to say or read on here for a little more perspective.

How did we get here?

First, let’s start with acknowledging that the same thing is happening all over the country and the world. This boom is of epic proportions and like nothing before. Many of you remember the real estate boom that contributed to the great recession. Banks gave money to anyone with a pulse in that market, and investors were buying and flipping houses for a quick profit until the country was left holding the bag. Let me stress, that is not the case today. Although 87% of homebuyers finance their home purchase (that percent lessens with age), loans are now very well documented.

As we all know, it was near impossible to predict a global pandemic that shifts the mindset of people everywhere. People began to work from home and question what they wanted out of life. With so many people working from home, it allowed people to work from anywhere. There was a mass exodus from the cities, and people craved space and a new work/life balance. Many people even chose to retire a bit earlier than they would have initially.

As the frenzy began, builders and developers quickly sold their inventory. The demand frantically outpaced supply and caused bidding wars over properties. People were purchasing homes sight unseen and without home inspections. In addition, millennials were entering the real estate market for the first time. Multigenerational planned communities have also seen a surge in younger buyers, in addition to retirees. Millennial buyers from ages 22 to 40 make up the largest share of homebuyers at 37%, while baby boomers make up the largest share of home sellers at 43%.

In addition to increased demand came supply chain issues. Although lumber prices have since decreased somewhat, they had increased by almost 300%. The same supply crunch came in all forms from gasoline, to labor, to air conditioners, you name it, and the demand outpaced supply. Thankfully, we are seeing it start to mitigate.

Will This Market Last?

While the frenzy appears to have abated, demand is still extremely high, and inventory levels struggle to keep pace. As a nation, we have experienced 112 straight months of yearover-year gains. According to the National Association of Realtors (NAR), the median price (that’s half selling over and half selling under) in June rose to $363,300. That’s up 23.4% over the June 2020 median of $294,400.

According to Lawrence Yun, the NAR’s chief economist, “At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”

No one can predict the future, but it would appear that the real estate market will remain strong, and that as inventory increases, pricing should stabilize. The demand for planned amenity communities will remain strong.