Volume Builder Lennar Pulls out of Reserve at Southpark Meadows Project in Austin

National volume home builder, Lennar, may be on the brinks of financial failure. According to sources, they posted a loss of $514 million in the third quarter.

Bad news on the local front is that they're already pulling out of what seemed like successful projects. We previously reported their upcoming Reserve at Southpark Meadows Subdivision in South Austin, but it looks like they've already sold all of their lots to another builder.

The selling of the lots is good news to residents because it at least shows the Reserve at Southpark Meadows will move forward. Originally, home prices were to start in the 280s-300s.

THE TIMELINE OF LENNAR'S QUARTERLY PROFIT WOES

• March 2007 Lennar posted a 73% decline in profits.The builder said net income sank to $68.6 million, or 43 cents a share in the first quarter ended Feb. 28. Revenue dived 14 percent to $2.8 billion.
• June 2007. Lennar had second-quarter loss of $244.2 million, or $1.55 per share, from a profit of $324.7 million, or $2.00 per share a year ago.
• September 2007. Lennar lost $514 million in the third quarter,compared to earnings of $206.7 million a year earlier. Revenue for the quarter fell 44% to $2.3 billion.

On the national level, it looks like Lennar is not pulling out of some of their projects in Florida, but Texas may be a different story. It seems the reason for their woes are the same as other lenders...aggressive lending practices in the sub-prime loan market. Oops.

Read our previous post on the Reserve at Southpark Meadows. Also take a look at our Austin Real Estate Update in case you missed it.

Comments

[Toby]

So would now be a good time to buy existing Lennar inventory in Austin? They seem to be offering deep discounts - is that seasonal or more than that?

[Dee Copeland]

Hi Toby,

I think the volume builders are hurting. One of the recent posts (October) was about builders treating agents and buyers nicely recently. They were getting pretty cocky there for a while, but now the ones who were not so nice are offering incentives and being flexible if you can get a loan.

Most builders are nice most times, by the way.

[Scottsdale az real estate]

So, I probably shouldn't purchase any Lennar stock? ;)

[Dee Copeland]

Ha! Well...I'm no Kramer, but I think a few choices can happen here. If Lennar's executive board remains strong and steady, their stock could be a great buy in the long term.

The truth is that they've been around forever and the market is scheduled for a comeback in 2008 nationwide. If Lennar can hold on through the rocky times and clean up their act, new stockholders could reap the rewards. On the downside, it can be a gameble