StreetInsider.com – More Insider Buying At Homebuilder Lennar (LEN)

October 31, 2008 1:46 PM EDT

Homebuilder Lennar Corporation (NYSE: LEN) sees more insider buying. Director Kirk Landon disclosed today he bought 20,000 Class B shares on 10/29 at $4.24.

A few days ago, two other Lennar executives, the CFO and another Director, disclosed purchases.

Lennar Class A shares are up 10% today to $7.73. The 52-week range is $5.52 to $22.73.

via StreetInsider.com – More Insider Buying At Homebuilder Lennar (LEN)

What does this mean for Lennar? Are they in trouble or are they taking advantage of the drop in its stock price seeing a potential “light at the end of the tunnel”?

Lennar’s “Smart” Promotion

 Smart Cars for Not-So-Smart Homebuyers

My favorite company logo. Doesn't black and red just give you the warm and fuzzies?

I have to say, I’ve been biting my lip on this one. Then again, since Lennar revealed their true colors (right) I’ve been dumbfounded by the advertising and marketing strategies coming from Zimmerman (their ad agency). It’s easy to be in awe of such a reputable agency with a great track record and knowing that it all started with a USF grad, but since Lennar took on such an intimidating look, the only words I’ve been able to conjure up are: huh?! That’s certainly a post for another day.

Ah, the smart car. It’s no secret that as Americans we’re becoming more environmentally aware and proactive (I just bought an SUV) thanks to the fear of gas prices, the economy, and the impending warming of the globe (earth?). As much as there’s a wealth of information online, I didn’t feel that it was necessary to find out the results of Lennar’s notorious “Mustang” promotion at the crest of the downturn for this post. Seeing some of the gimmicks that have been put out there over the past few years, I’m seriously starting to question the Builder’s assumption of the intelligence of their buyers. Back to the subject: The smart car is culturally relevant, hip, and full of buzz right now. There you go, first impression made. Now the fun part:

Applicant must reserve loan funds and value of car will lower the amount that can be loaned on a home.

- In other words, I have to buy a smaller house than the one I want for the smaller car I’m supposed to get for “free”? Isn’t one of our major challenges right now getting approval for financing? I’m sure adding a car to their DTI ratio will help. “Mr. Homebuyer, if you’d like, you can pass on the smart car to be able to qualify for the home you actually wanted.” Really? Ok then, I guess. How convenient. I thought we were trying to get them to buy a home, not a car?!

**CONSUMER NOTICE: NO PURCHASE NECESSARY TO ENTER OR WIN. PURCHASE WILL NOT INCREASE YOUR CHANCES OF WINNING.

- I think I’ll take my chances with Fantasy 5. At least I can pay the taxes off with the winnings. OH! Maybe… that’s what I can use my FTHB tax credit for! To pay the taxes on the not-so-smart car… I knew that’d be good for something!

This is what happens when you let the patients (ad agency) take over the asylum. From their “shouting” radio ads, to even their newspaper and online ads, I’m starting to wonder if Lennar is planning on joining the Automotive industry as well. The evidence is right there in black… and red.

 

Click on the image for a larger version. Your thoughts?

The $7500 first-time home buyer tax credit/loan/debt. Thank you, Washington!

Much Ado About Nothing, as always.

Thanks to the most popular overpaid politicians in Washington D.C., the home building industry had a glimmer of hope (for now) thanks to the recent housing bill that was passed granting first-time home buyers a $7500 tax credit. This of course is only a bit of Novocaine on the impending root canal that is the end of Down Payment Assistance. Needless to say, being a FTHB myself, I was pretty excited… at first.

First, let’s take a look at this from the Builder or Realtor perspective. The biggest challenge right now for FTHBs is qualifying for a loan. Unless the buyer has a near spotless record and above average credit score, trying to qualify them is a much fun as watching a reality show on VH1. Another challenge for FTHBs is that they (we) are a generation of debt dependants. They have multiple credit cards, cars they can’t afford, loans they haven’t paid off, etc. In other words, this new generation doesn’t have a very good concept of how to save money. Helloooo? Deposit? Down Payment? Closing costs? A $7500 tax credit is useless if you can’t get them in the home to begin with.

To sum it up, this $7500 FTHB tax credit is no more than a great builder scheme incentive that they didn’t have to come up with or pay for.

From a FTHB’s perspective: again, pretty exciting at first! Then I remembered the one thing I learned in my first career (different industry). Credit=Debt=Bad. I do have to give credit praise to the NAHB for putting together a pretty easy-to-read/understand website. This gracious $7500 tax credit (not deduction, as the website clearly states) is a no-interest loan that is to be paid back over 15 years. 15 years? I didn’t plan on staying in my 2 bedroom townhome for 15 years. You mean I have to pay back the unpaid amount if I sell it? Well fortunately for those FTHBs that have lost 5 or 10 (15) years worth of equity in the past 2 years are forgiven. For those like me who got a great deal and have not seen a price reduction in my community since I purchased my home, this does nothing other than prolong the inevitable. I either pay my taxes upfront, or pay it over a 15-year period.

I’m not denying the fact that this is will be a great benefit for some, but it only feeds the demon that is the debt which serves as the foundation of this country’s economy. Debt is bad, mmm-kay?

Question: Have you actually generated any buyers or moved any fence-sitters because of this? NAHB, Centex, KB, and Lennar think so.

NAHB: Federal Housing Tax Credit

NAHB: Builders Finding Strong Home Buyer Interest in Tax Credit