Ken Zener: On the new side, tied to capital or on the…
David Mandarich: New side, and we are in a different time today, because if you think about, we are competing for home sales with other builders, but what’s interesting is you have so many people that are on the sidelines, because they have a mortgage rate under 4. And so you got a lot of people having 16 houses, they are living at home. So and as you well know, the new home builders are now picking up a bigger percentage of home sales that was kind of filled by the re-sales.
Ken Zener: Yes. I think there is a lot of parallels, some of them are good and unfortunately, some of them are bad. I am going to circle back now to the start question. This will be my last one. Because even if you are holding – well, your inventory units, let’s get this right, were down 15%, year-over-year, so about 5,300 if you back out bottles and such. And if you start what you have orders for, do you think your orders are going to be up sequentially? That would be very odd, I guess. But given – yes, so anyways, your inventory units are poised to be up nicely year-over-year, call it, 4,500, maybe even 5,000 units and if inventory using your 20-10-10 example, if you close out at about 5,000 units based on your start decision that would imply up to 10,000 units next year.
Could you talk to why that logic applying your 20-10-10 would not be appropriate, or what would be wrong with that simplistic approach to your inventory, as the forward indicator next year? Thank you.
David Mandarich: It’s a loaded question for sure. With a lot of a lot of facts, but I think I know where you are going with it. And that we – really, if you look at inventory, right, yes, when you look at our starting inventory, I think we calculate over time, it’s been a 2:1 ratio closings versus that starting inventory excluding models. So, if we do end up in that north of 5,000 number to end, the year, Senate gives us the opportunity for a higher unit volume year in 2024. Of course, that depends on making sure that the cycle times are continuing to improve, they don’t revert back that we have all the land necessary. And I think we have done a lot of good activity to get there. So, your line of thinking certainly makes sense, when backed up by cycle times that are improving inventory that’s turning faster, more generally speaking.
Ken Zener: Yes, I just think it’s – I mean builders don’t know about the back half of ‘23. But you certainly know about, I mean ‘24, but you certainly know the front half of ‘24. And that inventory unit is pretty impressive what the implications are. Thank you.
David Mandarich: Thank you.
Operator: And I will proceed with a question from Alex Barron from Housing Research Center. Alex, please go ahead.
Alex Barron: Yes. Thank you. Yes, I was curious if you guys happen to have the statistics for what your average buyer looks like in terms of average income, average FICO, average down payment, and what the average interest rate is, either in your recent closings or in your backlog?
David Mandarich: I think the average FICO was 744, the average down-payment or I guess that backwards, the average LTV was 82%. And the most recent interest rates, so for those closings that occurred in Q3, we were at about 6% for our mortgage company. I am not sure if I have the income number handy.
Alex Barron: Okay. Maybe we can touch offline. Yes. Because the income would be interesting to know, just to see, relatively speaking, because it’s one thing to think the average household is buying a home. It’s another if it’s the upper quintile buying the home these days, so I will just be curious to know what your average household income that’s buying, actually is.
David Mandarich: Just for one point of reference was about 42%. So, that is in line with what it’s been in prior periods.
Alex Barron: Got it. And in terms of rate buy down or forward commitment, roughly what are you guys advertising and how many of the people buying are actually going for a rate buy down rather than some other type of incentives?
David Mandarich: Right now we are at 5.75% on government and 5.99% on conventional. And I would say the vast majority of the buyers are using rate to some degree or closing cost incentives to either get their payment down or to get their initial cost to close down. But as you can tell from the 6% average in Q3, not everybody is getting all the way down to 5.75% or, or 5.99%.
Alex Barron: Right. Okay. Thanks so much and best of luck.
David Mandarich: Thank you.
Operator: And this concludes our question-and-answer session. I would like to turn the conference back over to Bob Martin for any closing remarks.
Bob Martin: Thank you to everyone for being on the call. We look forward to speaking with you again after the release of our Q4 earnings.
Operator: And the conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
