Homebuilders are targeting millennials — but it will hit their margins

A contractor works on the basement of a home under construction in the Toll Brothers Regency

During the Great Recession, investors bought hundreds of thousands of “starter homes” and instead of selling them when prices recovered, they turned them into single-family rentals.

By Diana Olick | CNBC

The largest generation is finally starting to buy houses. The trouble is, there aren’t enough houses for sale to feed their appetite, at least not enough they can afford.

Enter the nation’s recovering homebuilders. They may want to play to this great big audience, but doing that will hurt their bottom lines.

“Since the recovery has really been at the middle end of the market, home prices have gone up and land prices have followed,” said Megan McGrath, managing director at MKM Partners. “So it is very, very hard to make a good profit at a lower price point these days.”

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