Rapid price appreciation has opened up the opportunity for higher-density new home communities in secondary and tertiary Southern California markets.

Currently, some of the best performing new home projects in the more tertiary Inland Empire submarkets are non-conventional single-family detached and townhome communities.

More than ever, buyers are willing to sacrifice privacy, yard size, and driveways for new construction homes with private amenities at affordable price points.

Most Millennial and Gen Z households, many of which are forming families, simply cannot afford conventional single-family homes even in tertiary markets.

Below are some examples of successful non-conventional SFD and townhome communities in secondary (non-core) submarkets in the Inland Empire:

Non-Conventional Single-Family Detached:

Attached:

Key Factors for Higher-Density Communities

However, success is not guaranteed. Below are some key factors to consider when planning higher-density communities in outlying submarkets:

Keep price points below the FHA loan limit for attached homes

Most first-time buyers will have limited resources for a down payment and will require an FHA loan.

Keep HOA dues under $300 for both SFD and Attached

Buyers will be payment sensitive and keeping HOA dues as low as possible will boost pricing power. Larger communities can help reduce the per-home HOA cost.

Offer a robust amenity package

Amenities such as a pool, park, tot lot, and dog park are essential. Buyers considering higher-density homes will expect amenities in tertiary markets.

Proximate to retail amenities and freeways

Buyers are often willing to trade lot size for convenience. The Menifee Town Center master plan is a good example of higher density neighborhoods adjacent to a large shopping center and the I-215 freeway.

Include workspaces in floor plans to accommodate telecommuting

Post-COVID, more people are working from home and the desire for an office or designated workspace has never been higher. Although this trend may subside somewhat as the economy continues to open, this trend is no going away.

Consider building value-oriented homes similar to D.R. Horton's Express product

Buyers are often willing to accept a relatively low spec level in order to afford a new home.

Maximize bedroom counts

Post-COVID, buyers are willing to pay a premium for higher bedroom counts, even if it means sacrificing some of the common area living space.

Work with housing advocates (BIA, etc.) to continue to educate municipalities about the need for high-density housing to solve emerging affordability challenges.