Lennar Corp Class A (LEN)

[PennyP1cker]

In Las Vegas, a market dominated by public builders—the eight biggest builders there in 2016 were publics who controlled 75.4% of the market share, according to BUILDER’s Local Leaders data—American West Homes founder Larry Canarelli says the land competition is fierce. For those in the area who aren’t a public or large private builder, like American West, there aren’t many lots to go around. “The little guy, he is caught by wherever he can find between a 2.5- and 5-acre piece,” Canarelli says. “If the little guy finds a piece in North Las Vegas that he can put 12 houses on and he can buy it cheap, he’s gotta buy it. Because that’s all he can get.

“It’s not like it used to be where there would be 20-acre pieces that you could put 100 homesites on and maybe put a little community park in,” he adds. “Those pieces don’t exist now.”

As most high school juniors can tell you, when inventory is low and demand is high, prices rise. The June HMI survey also found that 81% of builders said the price of developed A lots was somewhat to substantially higher than it was the year prior. In comparison, 74% said the same was true with respect to B lots, and for C lots it was 65%.

Shrinking lot supply and rising land prices make business complicated for any builder. But for those at companies without large development teams or sizable capital backings, finding and buying land is even more of a reason to lose sleep. (Builder Magazine Feb 5, 2018)