January 11th, 2010 by Michael Oliver

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National homebuilder Lennar posted their first quarterly profit in over 2 years as the signs real estate markets nationwide are getting much better then a lot of even experts realize. Lennar is the nations 3rd largest builder, having operations across the country and also having major exposure in some of the worst hit areas by the real estate downturn. Lennar earned $35.6 million, or 19 cents a share, for the quarter ended Nov. 30, compared to a loss of $811 million, or $5.12 a share, in the same period a year earlier. It marked Lennar’s first quarterly profit in two years. For a homebuilder to have a profit is quite unexpected by most as the new home industry has been dealing with the worst real estate depression since the Great Depression.

I think this speaks volumes for the real estate industry as the market is getting better. In my experience homes are selling faster and the buyers are asking less of sellers then was typical 2 years ago when it seemed every buyer and seller was a world apart in terms of what each wanted. Lennar generally builds in the lower price range which unsurprising is the best selling segment of the market as the first time home buyer tax credit has pushed additional demand into the market.

Lennar build what’s called “EI” homes. The “EI” stands for Everything Included and their home building niche and marketing stance i thats by buying a Lennar you will get a plush comfortable home with many luxury options included for a lower price then anyone else can provide a similar home for. For the most part this is very true and many buyers that were looking to upgrade their new homes do choose Lennar homes for the good value they represent. I think Lennar will continue to do go well as the market further recovers. I also expect the other large national builders such as Richmond American Homes (MCD), KB Home, DR, Horton, and Pulte Homes to also benefit in the fact the new home industry is much better then it has been in years. All of these builders have re-engineered their homes to maximize profit and cut waste so going forward all of these builders profits should be much higher then they otherwise would be due to the “survival”  mentality they have all had to take to get through this current real estate cycle.

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