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The housing market forecast: A chat with Stuart Miller

November 8, 2023

The housing market forecast: A chat with Stuart Miller

Stuart Miller

Executive Chairman & Co-CEO of Lennar Corporation

Stuart Miller discusses the state of the housing market, innovations in homebuilding, and the growing need for affordable housing.

I recently had a chance to chat with Stuart Miller, the executive chairman and co-CEO of Lennar Corporation, one of the largest home builders in the United States. Stuart has spent over 35 years with Lennar, serving as CEO from 1997 until he assumed his current role in 2018. In addition to his work at Lennar Corporation, he has worked as a past chairman at both the Joint Center for Housing Studies Policy Advisory Board for Harvard University and the University of Miami Board of Trustees, where he still serves on the Executive Committee. He is also currently the chairman of the Miami Dolphins Foundation.

Stuart’s humble beginnings

Stuart has a much different backstory than most of today's CEOs. Although in his bio, I mentioned that he has been working for Lennar for 35 years, that's a bit of an understatement, as he has worked his way up in the company starting by mowing lawns for Lennar when he was just 12 years old. Throughout his tenure at Lennar, he's performed practically every single role, so he's grown to know the company like the back of his hand.

Innovators in the home building space

With several affordable housing startups building modular or 3D-printed homes beginning to crop up, many would think that legacy home builders like Lennar might feel pressured. However, some of these startups are having a hard time staying afloat, especially as interest rates rise, even though seemingly endless amounts of VC and private equity money were poured into them.

Stuart revealed that Lennar regularly has the opportunity to invest in these companies. However, Lennar has often passed on these investments because these startups often have too broad a focus in an incredibly difficult industry. Lennar does try to make as many strategic investments as possible because, as Stuart notes, both Lennar and the other large home builders simply cannot keep up with the current demand for new construction.

The growing housing supply shortage

In a normal single-family market, roughly 10 percent of the supply comes from new construction. Today, however, roughly a third of the housing supply comes from new construction, indicating how few existing homes are hitting the market. Given the fact that interest rates are at a multi-decade high, very few people want to move to a different home. When you combine this with the fact that there is already a considerable housing shortage in the United States, Stuart believes that this is where home builders have to step in, as they have a few additional levers they can pull to make homes more affordable. Builders can ramp up production, get buyers into ARMs with more favorable rates/terms, or buy down fixed-rate mortgages.

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