No clusters

Ask Our Broker With Peter G. Miller

By Peter G. Miller
CTW Features

Question: We would like to buy a new home but not in a planned community. Why are new homes always clustered together?

Answer: The National Association of Home Builders (NAHB) says “six in ten new homes are built in community associations.”

According to data from the Census Bureau’s Survey of Construction, 59.8 percent of all homes started in 2016 were built within a community or homeowner’s association. The Census Bureau defines community or homeowner’s associations as “formal legal entities created to maintain common areas of a development and to enforce private deed restrictions; these organizations are usually created when the development is built, and membership is mandatory.”

From a builder’s perspective the construction of homes in planned communities makes a lot of sense. First, there are economies of scale when large numbers of homes are built in one place.

Second, it’s easier to sell new homes when buyers can see lots of choices at once.

Third, planned communities are popular so why not build what the public wants?

You can find new homes that are not part of planned communities, what are often identified as “infill” projects. The Federal Reserve Bank of St. Louis explains that infill housing is often seen as “new houses constructed on vacant, underused lots interspersed among older, existing properties in established urban neighborhoods. However, others broaden the definition to include major refurbishing or reuse of existing homes or buildings.”

Looking forward, we are likely to see more infill projects rather than less. As the Environmental Protection Administration (EPA) explains, population trends and preferences will increasingly favor infill development.

“Several trends point to a sustained increase in demand for infill development and a market opportunity for developers,” said the EPA in a 2014 report. “Consumer preferences for the amenities that infill locations offer are likely to grow as changing demographics affect the housing market. In the next 20 years, the needs and preferences of aging baby boomers, new households and single-person households will drive real estate market trends – and infill locations are likely to attract many of these people. As more people choose to live in infill neighborhoods, employers are following, and vice versa. Many corporations are moving to infill locations, in part because they recognize the competitive advantages of being closer to the central city.”

If your preference is to avoid a planned community there are a lot of choices out there. You can look for infill properties now being developed or – for the more adventurous – you can buy a property and build on it yourself. For details speak with local brokers who are active in the areas which are most attractive to you.

© CTW Features

Peter G. Miller is author of “The Common-Sense Mortgage,” (Kindle 2016). Have a question? Please write to peter@ctwfeatures.com.

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