The talk of re-bound, recovery and strength in the real estate market is growing and now we have further evidence from one of Miami’s own. Miami-based Lennar Corporation, the largest U.S. homebuilder by market value, reported last month that not only did it exceed analysts’ expectations for its fiscal fourth quarter, it crushed them- citing a revenue jump of 42% from last year’s fourth quarter. Better yet, Lennar’s 2012 saw elevated revenue of 33% over 2011.
Lennar’s growing sales revenue undoubtedly demonstrates the power of an opportune trifecta:
(i) a market’s desire for new homes;
(ii) shrinking supply of existing homes; and
(iii) record-low interest rates.
The desire and demand for new homes is exemplified in Lennar’s reports of voluminous new orders and contract backlog (representative of future sales) which increased 32% (to 3,983 homes) and soared 87% (to 4,053 homes), respectively.
CEO Stuart Miller confidently stated: “2012 was a turnaround year.”
Charting New Territory in Multi-Family Sector
On the heels of such a robust fourth-quarter, Lennar also announced that it will enter into the multi-family sector to offer options to renters unable to obtain new loans. Even with the pivot in the market, lending standards are still strict and renters who lost their homes in foreclosure need housing. The benefit of these new renter-relationships is that it helps identify possible future buyers from its own pool of renters. Construction will start in 2013 on 3,000 apartments and will cost more than $500 million. Projecting forward, Mr. Miller says Lennar plans nationwide multifamily development of more than $1 billion in the next three years. Partners in this endeavor include Prudential Real Estate Investors and the Carlyle Group.
Lennar has always been a leading force in development and we anticipate these rising revenues and new sector prospects to encourage their continued growth and superiority in the real estate market.