Alex Barron: Okay. That makes sense. Very helpful. I also wanted to ask about your build time. You know, to what extent that’s, kind of come back to normal. If I recall, I think pre-pandemic, you guys were building houses in something like 63 days or some number like that. So, I’m just curious to what extent, you know, your build time has gone back to normal because I guess that obviously makes the €“ whatever your backlog is less relevant because you guys are able to kind of go from order to closing pretty quickly. So, I was curious if you could help us out on that. And also, I’m not sure if you gave the starts number for the quarter or if I missed it.
Charles Merdian: Yeah. This is Charles again, I think, you know, we saw our build times, you know, nationwide increase by 30 days last year. I would say that, you know, the shorter build times that you mentioned, you know, 60 days or so, there’s a few markets where we can accomplish that. But it really depends on the area of the country. It’s a pretty wide range. We’re also €“ our Terrata product will take a little bit longer build time than the traditional LGI product as well, but I would say, you know, build times are coming in slightly. I would not say necessarily dramatically, but the way we’re handling that is just managing starts in a way so that we can project our deliveries of our completed houses that may just be a little bit further out.
So, whether it’s putting more permits in the queue to be ready to start, and then we can adjust very quickly. So, that is one thing that we’ve done historically very well, is be able to adjust to conditions in a pretty quick time frame. And then fourth quarter starts were around 650 €“ starts for the quarter.
Alex Barron: Okay. So, what’s the total number of homes under construction then, whether they’re sold or not sold?
Charles Merdian: Yeah. So, we had just €“ 3,300 total, which includes our information centers. So, we had about 1,900 completed houses to end the quarter and about 1,300 in work-in progress.
Alex Barron: Okay. Very helpful. Best of luck, guys. Thank you.
Charles Merdian: You’re welcome.
Operator: Thank you. Please standby for our next question. We have a follow-up from the line of Truman Patterson with Wolfe Research. Your line is open.
Truman Patterson: Hey, guys. Just wanted to follow up on Alex’s question regarding interest expense. Is there any way, you know, given the movement in short-term rates, is there an annual dollar amount that’s actually getting capitalized or incurred in 2023 you could help us out with? And then could you, you know, just discuss capital allocation priorities in 2023 between, you know, share buyback, debt reduction, reinvesting in the company?
Charles Merdian: Yeah, sure, Truman. So, I don’t have an annual estimate in front of me. But, you know, it’s going to vary since we manage the business through the revolving credit facility. So, it’s really going to be dependent on how much we have outstanding at any one point in time. We’re running about just a little bit north of 6% right now on the revolving credit facility. And then we have the high yield notes at 4%. And so, you know, that’ll €“ if you assume in your balance sheet model, kind of a similar level of debt, then you can, kind of back into that way. And then can you repeat the second part of the question?
Truman Patterson: Just capital allocation priorities.
Charles Merdian: Yeah. So, great question. So, you know, similar to what we’ve talked about in the past, we obviously mentioned in our scripted comments that we’re focused on bringing on our new communities. We mentioned, you know, our community count guidance for this year, but then we also mentioned we expect community count to increase in 2024 by 20% to 30% as well. So, I think the primary focus is working through our lots that are currently under development. About a third of our lots that are not already allocated to finished or to houses are currently under development. So, that’s the main priority. We also, as Eric mentioned, want to make sure that we’ve got some dry powder ready to go to take advantage of finished lot opportunities, and we’re starting to see that as well.
So, those opportunities are likely to be most beneficial in places where development timeline is taking a little bit longer or, in some cases, where we’re gapping out in our submarket. So, you know, ideally, the best opportunities are those that we can use those to fill in. If our next community isn’t coming for a little bit further out, we can take advantage of that finished line opportunity to backfill, not unlike what we used to do several years ago. And then, you know, we have share repurchases as a consideration. I think our stance right now is that that is more opportunistic as we continue to kind of focus on liquidity and where we’re currently allocating dollars to land development and acquisitions. But certainly, opportunistic from that standpoint and maintaining our debt-to-capital ratio in the general area of 40% where we landed for the end of the year.
Truman Patterson: Okay. Thank you. And then you all have reduced pricing of, you know, 10% to 15% from peak levels. And I imagine with, you know, some mortgage rate paydowns, you all might be able to reduce a monthly mortgage payment by, I don’t know, 20% or greater, right, from peak levels. So, I’m hoping to understand across your either a specific metro or just, kind of nationwide, could you discuss the mortgage payment for one of your homes versus, you know, an equivalent rent payment? Because clearly, you know, rents have been a little bit stickier, maybe a little bit of softening, but not to the same degree.
