Atlanta's housing bust has attracted, not scared off, the nation’s third-largest home builder.
Lennar Corp.'s move into the Atlanta market, announced Monday, makes perfect sense, according to analysts and industry insiders.
While officials of the Miami-based company declined comment on its business strategy beyond a news release, others said Lennar could buy partially finished lots for pennies on the dollar, complete the construction and sell homes for significant profits.
The number of distressed and half-built communities in Atlanta make it a good choice for the builder, said Jay McCanless, a senior home building analyst for FNT Equity Capital Markets.
"There are plenty of finished lots for builders to pick and choose from,” McCanless said. “The other thing is this move, which may seem a little weird based on the sales pace in Atlanta, may be the thing for them because they can come in and buy a couple of neighborhoods, assess the market and not have to spend very much to do it.”
The move has grabbed the attention of those in the Atlanta building and real estate communities.
"I think they’re going to take it really slow for a couple of years and then in 2012 be ready to bust lose,” said John Wieland, chief executive of John Wieland Homes and Neighborhoods.
Wieland said the national company’s market entry doesn’t pose much of a threat to locally based builders because many of them are out of business.
“That makes Atlanta a great opportunity for them,” he said of Lennar.
In the company release, Sam Sparks, Lennar’s southeast region president, said the company has been interested in entering this market for some time.
“Our company has been able to capitalize on well-positioned land ideal for community development and we believe this is the right time to establish a very strong brand presence in this market,” Sparks said.
The builder currently operates in 16 states, including Florida and the Carolinas. Georgia will be the company’s 17th state, according to the release.
Todd Jones, who previously worked for Centex Homes, has been hired as Lennar’s Atlanta division president. Dallas-based Centex Homes and Michigan's Pulte Homes, the nation’s largest home builder, announced a merger late last year.
Pulte and Texas-based D.R. Horton, the second-largest home builder in the country, both have a sizable presence in metro Atlanta.
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