Lennar owns 11,000 lots right now.
A year ago they owned 30,000. In 2018 they owned 174,000.
They are delivering 20,000 homes per quarter.
That math only works if somebody else is carrying the land. And somebody else is. Forestar. Millrose. Institutional land bankers. Third-party lot developers. The builders have spent the last five years engineering a system where other people hold the dirt until the builder is ready to build on it.
The chart attached is the one the investment community watches. What it tells a land developer is different from what it tells a stock analyst.
It tells you that the largest homebuilders in America have permanently and deliberately created demand for what an independent lot developer produces. Not temporarily. Not as a cycle play. Structurally. Their own ROE targets and shareholder presentations make going back to owning raw land financially unattractive. That door is not reopening.
Horton at 77% controlled. Lennar at 98%. PulteGroup at 56% and targeting 70%. Smith Douglas at 97% since day one.
The industry reorganized itself around the assumption that someone else would produce finished lots. If you are in the business of producing finished lots, that is the most useful sentence in this post.
