LGI buckles down on entry-level as market shifts to target first-time buyers
Houston-based LGI Homes is anticipating new development growth of 24% in 2016, the fastest of any publicly-traded homebuilding company in the U.S., per The Wall Street Journal, citing data from John Burns Real Estate Consulting, in Irvine, CA.
The company targets the entry-level segment. Its average home sales price is $197,450, compared to $290,400 and $362,000 for larger national builders like D.R. Horton and Lennar, respectively, that target a wider swath of the market.
LGI ranked No. 15 on Builder magazine's 2016 ranking of U.S. homebuilders by revenue. D.R. Horton topped the list and Lennar followed in the No. 2 slot.
The market potential for first-time buyers is great. A report this week from real estate listing website Zillow noted that nearly half of people purchasing homes today are first-time buyers. Millennials, between the ages of 18 and 34, take a 42% share of homes purchased today, according to the report, which polled more than 13,000 individuals who are currently buying, selling or renting property via the website.
It'll likely be larger builders that return to the entry-level segment first, after backing off when that group mostly stopped buying during the recession, as their scale can counter the high regulatory costs of new construction, Robert Dietz, chief economist at the National Association of Home Builders, told Construction Dive earlier this month.
Single-family housing starts as well as building permits were up 11.9% and 8.5% year-over-year, respectively, in September, according to data released by the Commerce Department on Wednesday, as the housing market's drawn out recovery continues.
- The Wall Street Journal Texas Builder Aggressively Markets Starter Homes
- ConstructionDive Zillow: Millennial homebuyers aren't so different after all
Follow Hallie Busta on Twitter