Paul Romanowski: Yeah, Rafe, in our forward guide, we’ve got relative stability right now in materials and labor. So but we are still seeing some components go up slightly. So I think a very low single-digit percentage increase is generally the expectation there and our lot costs are a little bit higher than that, still low single-digits, but probably more in that 3% to 4% range. And in terms of just new land, that’s deal by deal specific, market by market specific. I think in general, we’ve seen land prices kind of settle out here over the last little while, not as much inflation, but the long-term trend is still up over time. This industry still has a shortage of lot availability. And so I think that’s going to continue to be a constrained situation. And so in that situation, we would not expect to see land prices come down.
Rafe Jadrosich: Thank you. That’s very helpful. And then on the further rate buydowns, the forward commitments that you all have, how long do those go out? Are those months, are those weeks? So the recent move in rates, it hasn’t impacted the rates that you are offering yet. When will that start to be kind of offered to the homebuyer? Like how long of forward commitment do you have?
Bill Wheat: We generally don’t go out too terribly far in terms of the volume of forward commitments that we go with. We have various levels based upon anticipated demand of how much we’ll buy for a given expiration date, which can vary from 60 days to 90 days out. But we’re not going to look to fulfill all of our existing sales expectations with any one given a hedge or any one given build or forward and we’ll continually sort of reprice to market so that we’re offering incentives that are within as Paul said before, I think a point to a point and a half of market when that is the incentive that we feel is the most effective at driving appropriate pace and margin for the returns at a given community.
Rafe Jadrosich: Thank you. That’s helpful.
Operator: Thank you. Your next question is coming from Alex Barron from Housing Research Center. Alex, your line is live. Please go ahead.
Alex Barron: Yeah, thanks guys and great job in the quarter. Yeah, I was just curious around land development costs. I mean, you guys are developing, I mean using a lot more land options and stuff, but are land development costs expected to impact margin for you guys in the near term or do you feel that’s going to be more absorbed by whoever is developing the land for you?
Paul Romanowski: Hey, Alex, we haven’t seen much reduction in land development costs either from materials or labor. You know, we still have significant demand out there for the labor and those that are putting lots in the ground, not just in what we’re doing and other builders are doing, but you have infrastructure improvements throughout the country that are keeping demand up for materials and labor. So that’s kind of baked into what we look at in terms of our increase in lot price over time. So we don’t — we’d love to see some reduction, but we don’t expect to see it in the near term.
Alex Barron: Got it. And I guess you already touched a bit on the rental business, but I was just curious if the margins we saw this quarter, do you expect that’s going to be sort of more what they’re going to look like in the future or not necessarily?
Bill Wheat: It’s going to be largely rate dependent in the capital markets as to the execution on those. I think at this point, our expectation is that it’s going to be somewhat consistent with where we are today, but there is opportunity for some volatility around that too, especially within quarters within one quarter to the next because these are some chunky transactions. There are large individual transactions. And our multi-family platform is not yet to the scale where they’re producing a significant number of multi-family communities delivering every quarter to the marketplace. So there’s a relatively small number, they can be chunky and there’s opportunity for volatility. Our expectation is somewhere in the range we’re in today.
Alex Barron: Got it. Okay. Well, good luck. Thanks.
Paul Romanowski: Thank you.
Bill Wheat: Thank you.
Operator: Thank you. The final question this morning is coming from Jay McCanless from Wedbush. Jay, your line is live. Please go ahead.
Jay McCanless: Thanks. Good morning, everyone. So on that rental guidance you talked about for 3Q, is that guidance based on projects that already have financing in place? Or is that just the schedule of what you think might close during the quarter?
Paul Romanowski: It’s a mix of both.
Jay McCanless: Okay. And then the other question I had is, I don’t want to make too much of this if it’s not a big deal, but it does seem like you’re going from maybe an aggressive selling pace during the COVID years now to trying to gain market share leadership through more communities. I guess, how far along do you think you are in that transition? And I think kind of to Su’s question also, what is that ultimately going to mean for SG&A going forward if you are starting to staff up and bring more people on to support a larger organization?
Jessica Hansen: Yeah. I wouldn’t say, Jay, that it has anything to do with us trying to push more pace during COVID, it’s all tied to our lot position. And so we’ve been building our lot position up, but not all of those lots were ready to go. And so we knew the communities were coming. And obviously, the market was extremely hot for a period of time. So we were able to drive additional absorption where we had the lots available. We don’t have that same kind of strong demand, less affordability challenged environment today. And at the same time, our lots are getting finished and the communities are ready to go. So we’re bringing them online and it happens to be good timing that we have the communities ready to go when we’re not able to drive incremental absorption further in our existing communities.
