Lennar Corporation (NYSE:LEN) is about to release earnings. Ponder this Bear Case Scenario.
Raw land and finished lot prices will create an unsustainable cost pressure. Labour and building materials are also increasing. New home price expansion is set to collapse. There will be nowhere to hide with this cost problem.
There is still a huge overhang of distressed properties and resale’s. Not to mention investors will still try to unload.
Mortgage interest rates are still at historically low rates. They can only go one way and that will hurt the business all across the board.
Household formation and middle class propensity to own is declining. Working people also prefer to live close to work and are not ready to put up with ridiculous commuting issues.
George Gutowski writes from a caveat emptor perspective.