Le Shot heard around the world
Tomorrow morning Lennar reports earnings. It is the first HB to give a full perspective on the Spring selling season. Analysts have tempered their expectations guiding clients that revenues will be down a whopping 62% to approximately 1.1 Billion dollars.
Basically, analysts are expecting Lennar to deliver practically all of its backlog that it started the quarter. Are you fricken kidding me? Not only that, how low will Lennar's backlog be going forward?
As I have tried to explain in my zillions of posts, as more and more foreclosures hit the market, the ability of new builders to sell homes will become extremely difficult.
First, a lot of the foreclosures arise out of recent home sales concentrated in areas where new builders build......who the heck wants to buy a home in a community located in the epicenter of foreclosureville.
Second, prices are now dropping at record rates and show now signs of abating. With forclosures being priced at half off, it is simply becoming impossible for a new builder to match on price....especially in light of the recent run up in material costs.
Lennar reports in the morning.....will it be the biggest miss of any homebuilder in the last two years.............I guess we shall see.