Ken Zener: Right, so absorptions, there’s community size risk which is duration. But how do you think broadly about the margin differential, when you introduce the pace historically, you talk about a 300 basis point spread I believe for margins you want to achieve develop. And the reason I’m asking is if you could just reaffirm that range and how it plays out with finished lots. Because if you can buy finished lots structurally, I wonder if there’s something that you might be more open to depending on how the environment is given your high land positions today.
Eric Lipar: Yes. No we’re more open to it. First of all you’re correct. It’s a big thing. And we’ve used 300 basis points in our history as a guide and I think that’s still a reasonable guide. I think the biggest objective that we’re always cognizant about is when you’re doing developments and putting lots on the ground for the purposes of the home building, you need to make sure you’re capturing the development profit as well as the homebuilding profit for taking on that risk and spending the upfront capital. What we’re talking about on this call, the ability to buy finished lots is just a market component. For the last 20 years, if we could go out and buy all finished lots, we’d be open minded to that. There just wasn’t a lot available.
Most of the developers can sell finished lots to smaller private builders at higher margins for the developers, so it’s really competitive and we had the balance sheet and we’re comfortable developing so we thought that’s where the opportunity was for us. That’s just a dynamic that’s happening in the market as we’re seeing more finished lot opportunities that we can buy get into closings quicker. And the prices for those finished lots, I won’t say they’re distressed pricing or coming down but they’re prices that are very realistic at today’s pricing. We can make a good margin on them and we think we should buy them and get in there start selling and closing houses.
Ken Zener: Good. I appreciate that. I think it’s a fascinating part of the industry. Last question here Chuck. Could you give us confidence obviously, you’ve recovered your margins. Gross margins ran 21%, 21%, 22% and then they popped up, which is great. There’s some vacillation here in the quarter, wholesale, obviously rates. But could you give us maybe some clarity about obviously input costs have gone down, but was this really a function i.e. your price stability as opposed to your incentives is what it sounds like you’re talking about. Because I’m just trying to get a sense of this level rates do go up, what keeps us from going backwards again? You’ve talked about the pace, but I’m just trying to get a sense of clarity. If it’s just market firm pricing is what it sounds like to you, but that could go away if that were the case. Thank you.
Eric Lipar: Yeah. I mean he mentioned in the call…
Charles Merdian: Yeah. I can take the input costs Ken. Really is that I think our philosophy hasn’t changed in terms of how we think of the input costs. I think our lot costs as a percentage of our average sales price has been pretty consistent. Its kind of running in that 18% to 20% range from a lot cost basis. So development costs overall, we’ve done a great job of budgeting through either contingency or through our estimates to make sure that we’re getting the most appropriate standard lot cost that’s going to flow through the financials. So I think on the land side, we feel like we have a pretty good visibility to where we’re going to sit there. The house costs can fluctuate and certainly, that’s a timing piece as well. So our starts from the second quarter and into the third or what’s going to come through in the fourth quarter and even into the first quarter, and we’ve seen nominal movement between house costs really slightly up to slightly down in most of our markets.
