Lennar Corp., one of the nation’s largest home builders, is “considering” a move to build homes earmarked for renters if first-time home buyers continue to be reluctant, said Stuart Miller, the builder’s chief executive, in a quarterly conference call.
Miller says he doesn’t expect mortgage qualification standards to ease enough anytime soon – at least not enough to pull first-time homebuyers off the sidelines. As such, he says Lennar is eyeing the home rental market as a way to ramp up business until they do. The builder is studying whether it should begin to build single-family homes to rent, in addition to the apartments it already builds.
If first-timers remain unable to buy, then “single family development for rent might become a part of our portfolio going forward,” Miller told investors during the call.
Only a few builders have constructed homes exclusively for renting. The single-family rental trend has mostly been driven the last few years by big investors, such as Blackstone Group LP and Colony Capital, which buy existing single-family homes to rent them out.
Some housing analysts don’t believe this will become a trend of big builders taking their business into constructing single-family homes for rent.
“The opportunity is pretty significant in for-sale,” Ivy Zelman, CEO of Zelman & Associates, a housing market consulting and research firm, told The Wall Street Journal. “I think that’s where they’ll remain, where they have the expertise. It’s a completely different business managing tenants.”
Source: “As Home Sales Remain Restrained, Big Builder Eyes Home-Rental Market,” The Wall Street Journal (June 26, 2014)