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Lennar explores other housing options as market constricts

Mortgage standards keep first-time shoppers on sidelines

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Due to a drought in first-time homebuyers, Lennar (LEN) is considering expanding into building single-family homes for rent, an article in the Wall Street Journal said.

Lennar CEO Stuart Miller said on the homebuilder’s quarterly conference call that he does not anticipate mortgage-qualification standards to ease soon enough to bring first-time homebuyers off the sidelines.

“We think it’s going to be a slow, at-the-margin adjustment that’s going to take place over time,” Miller said on the call. “On the negative side, it means it’s going to be really difficult to really liberate the first-time buyer and get them back into the market.”

As a result, Miller explained that if potential buyers choose to rent instead, Lennar would have to potentially take action. Which in this case means Lennar is studying whether to start building single-family homes for them to rent in addition to the apartments it already constructs.

“They’d be well-equipped to do this,” said John Burns, CEO of housing consulting and research firm John Burns Real Estate Consulting Inc. “But I don’t think it’s going to be a huge business for them over the next two or three years.”

Last year, another article in the Wall Street Journal said that the company announced it would start expanding into multifamily rental housing, capitalizing on rising rents and growing demand for apartments.

The homebuilder reported a second-quarter revenue of $1.82 billion on Thursday, up from $1.43 billion a year earlier, beating analyst expectations of $1.68 billion.

Source: WSJ
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