Pulte is largely on the same track as D.R. Horton’s with its company motto of “Homeowner for Life.” This adage signifies Pulte’s business goals of serving the demand for first-time homeowners and walking them up to the homebuilder’s signature communities and eventually up to an estate-size home. It also focuses on retirement communities via its Del Webb unit. Pulte, which is still being hounded by the negative effects of the subprime mortgage crisis that fueled the housing bust some years back, is likewise seeking greater profitability with its efforts to increase gross margins, leverage overhead costs, and accelerate inventory build-up.
Beyond stock analysts’ buy ratings
The directions being pursued by D.R. Horton and Pulte have earned buy ratings on the companies’ shares from not a few analysts who likewise considered Lennar as a worthy component to a Wall Street investment portfolio. Given a choice among the three, however, Lennar appears as the solid choice up to the long haul. The stellar earnings results it delivered were fueled not only by improvements in its core competency in homebuilding but also by increased operating leverage and opportunistic land acquisitions.
Much promise is likewise looming in the near-term horizon for the multifamily construction platform that Lennar is now focusing on. One component of this thrust is renters’ options for those prospective home buyers who cannot yet meet the current loan rules. Its renter relationships also help Lennar identify potential home buyers. Lennar’s multifamily home focus also addresses the housing preference of the “echo boomers,” the estimated 80 million offspring of the baby boomers. What this market segment wants, pundits say, are modest homes or apartments requiring less car use or commute and close to play and work, communities that the Lennar now wants to be iconic of.
The article US Builders Jockey for Position on Home Market Upsurge originally appeared on Fool.com and is written by Arturo Cuevas.
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