Land Deals Help Builders Stay Alive
In Indio, a small city east of Los Angeles, the supply of foreclosed houses for sale is plentiful. Even so, work crews are finishing a batch of new homes for Lennar Corp.</br></br>While the recession wiped out many small builders, mortgage lenders and homeowners, the nation's biggest builders have hung on, in part through favorable land deals, loan agreements and tax strategies.</br></br>Now, the worst appears to be over for most of them. Nationwide, new-home sales are showing signs of bottoming out. The stocks of the big home builders have rebounded from their November lows, and some have bolstered their cash and borrowing ability. Lennar and Toll Brothers Inc. each sold $400 million of bonds in April, and Ryland Group Inc. sold $230 million worth, a sign that some investors think these companies will make it.</br></br>A look at how Lennar navigated the worst housing crisis in decades reveals that timely land deals have been critical to its survival.</br></br>"Land can humble you," says Emile Haddad, Lennar's chief investment officer. "On the surface it looks like the simplest real-estate asset, but it's really the most complicated."