LGI Homes, Inc. (NASDAQ:LGIH) Q4 2022 Earnings Call Transcript

Eric Lipar: Yeah. Truman, this is Eric. I mean, it varies, you know, by community, obviously, where the sales price is, and the amount of incentives is community by community as well, but generally speaking, if we pick a standard community entry-level across the country, one of the metrics we’ve been using is for a monthly payment that somebody has to qualify with their taxes and insurance and everything all in, kind of pre-pandemic, that number is about $1,800 a month, and you need to make about 5,400 a month to qualify for that mortgage, about 3x the payment. At the peak, which should be about Q4, this past quarter, that number with prices still elevated and interest rates getting to seven, that got up to about $2,800 a month, which meant you had to make $8,400 a month.

So, 5,400 to 8,400 is a big dollar amount. Interest rates spiked back up last week, but generally, in the 6.5 range where we’ve, kind of been averaging 6.25 to 6.50 over the first eight weeks of the year. We take about 2,400 a month apples to apples. So, that’s best better. And, you know, that $400 a month decrease through mortgages and pricing up its peak, we believe it has made a difference in our business. That is certainly higher than most people can rent a single family for or an apartment, but that’s always been the case, but that spread is probably more elevated. We’ve got some of the national stuff that you have access to, but it’s more elevated than normal, the difference between renting and ownership.

Truman Patterson: Okay. Got you. Thank you.

Eric Lipar: You’re welcome.

Operator: Thank you. At this time, I’m not showing any further questions. I would now like to turn the call back over to Eric Lipar for closing remarks.

Eric Lipar: Thank you, everyone, for participating on the call and for your interest in LGI Homes. We look forward to sharing our achievements throughout the year. Have a great day.

Operator: Ladies and gentlemen, thank you for your participating in today’s conference. You may now disconnect.