What changed in this filing

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Item 1A. Risk Factors

2023-01-26 compared with 2022-01-28 · 93 added, 88 removed, 222 unchanged (45% of the section changed)

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Demand for our homes is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, consumer confidence, housing demand, availability of financing for home buyers, availability and prices of new homes compared to existing inventory, and demographic trends.

These factors, in particular consumer confidence, can be significantly adversely affected by a variety of factors beyond our control.

Negative publicity could negatively impact our reputation, which could cause our revenues or results of operations to decline.

These factors can be significantly adversely affected by a variety of factors beyond our control.

Currently, potential purchasers of our homes are being affected by inflation and increased interest rates, both of which increase what homebuyers have to pay for new homes.

Negative publicity could hurt our reputation, which could cause our revenues or results of operations to decline.

Our business success is dependent upon the reputation of the Lennar brand and its association with quality and integrity.

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Unfavorable media or investor and analyst reports related to our industry, company, brand, marketing, personnel, operations, business performance, or prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy.

Furthermore, the speed at which negative publicity is disseminated has

increased dramatically through the use of electronic communication, including social media outlets, websites and other digital platforms.

We could be subject to knowingly false statements made for the purpose of impairing our reputation.

These statements, even if totally untrue, can spread rapidly through the use of electronic communication, including social media outlets, websites and other digital platforms.

Our success in maintaining and enhancing our brand depends on our ability to adapt to this rapidly changing media environment.

Adverse publicity or negative commentary from media outlets could damage our reputation and reduce the demand for our homes, which would adversely affect our business.

An announced spin off of some of our businesses may not achieve its goals.

We have announced our intention to transfer some of our non-core businesses into a newly formed company and to distribute at least most of the stock of that company to our stockholders.

Our hope is that doing that will result in the combined market value of our stock and the stock of the new company exceeding what the market value of our stock would be if we continued to conduct the businesses that we will transfer to the new company.

However, there is no assurance that that will occur.

Among other things, making the new company a self-standing entity will lose some synergies the businesses it will own currently benefit from.

Therefore, it is possible that after the separation, the combined market value of our stock and the stock of the new company will be less, not more, than what the market value of our stock would be if we did not move some of our non-core businesses into a new company

Our business strategies for our homebuilding and mortgage finance businesses may not increase our value.

We cannot assure you that our strategies for our core homebuilding and mortgage finance businesses, and any related initiatives or actions, will be successful.

Principal among our current strategies is continuing to reduce our inventory of land we own (i.e., to become a land lighter company).

We cannot provide any assurance that this strategy, or other strategies we will follow, will increase our value.

Principal among our current strategies is continuing to reduce the inventory of land we own (i.e., to become a land lighter company), and to control a greater portion of the land we expect to use through options or other contractual arrangements.

We cannot provide assurance that this strategy, or other strategies we will follow, will increase our value.

It is possible that the land lighter or other strategies will reduce, rather than increase, the value and profitability of our core businesses.

A downturn in the homebuilding market could adversely affect our operations.

We saw the homebuilding industry stall from mid-March through April of 2020 as a result of the COVID-19 pandemic.

However, after that, demand for new homes grew steadily through the remainder of 2020 and throughout 2021.

While the homebuilding industry only paused for a relatively brief period in 2020, a prior economic downturn in 2007-2010 severely affected for more than two years both the number of homes we could sell and the prices for which we could sell them.

That required us to write down the carrying value of our land inventory and write off costs of land purchase options.

It is possible that another downturn resulting from a health pandemic or other factors would result in a decline in demand for new homes for a significant period which would negatively impact our business, results of operations and financial condition.

Supply shortages and continuing cost increases could adversely affect our operations.

During fiscal 2021, we experienced a significantly stressed supply of both labor and materials, and we expect this to continue well into fiscal 2022.

The time it takes to build a home has increased as a result of supply issues, which has led to delayed home deliveries.

In addition, the costs of construction materials and other components of homes, lumber in particular, and the costs of labor have been rising.

We have been actively managing our sales pace so we do not sell homes until construction is ready to start, in order to avoid the possibility of costs increasing after we have committed to the prices at which we will sell homes.

While we will continue to focus on cost controls, we may not be able to maintain our current level of direct construction costs as a percentage of average sales price.

We continue to operate in a labor constrained market and we cannot predict future inflationary pressures or increases in tariffs on imported building materials.

Any inability to pass on future increased costs to homebuyers would put downward pressure on our operating margins in 2022 and subsequent years.

An increase in mortgage interest rates could reduce potential buyers’ ability or desire to obtain financing with which to buy homes.

Mortgage rates are very low as compared to most historical periods.

However, they could increase in the future, particularly if the Federal Reserve Board raises its benchmark rate.

A continuing downturn in the homebuilding market could adversely affect our operations.

During fiscal 2022, the housing market weakened in response to the Federal Reserve’s aggressive increase in interest rates in an effort to curtail inflation.

A number of our markets experienced significant market softening that required us to make substantial price reductions.

It is possible that a continued downturn could result in a further decline in demand for new homes with resulting write downs in the carrying value of our land inventory and write offs of costs of land purchase options we decide not to exercise.

Supply shortages and inflation could adversely affect our profitability.

In an inflationary environment, we may be precluded from raising home prices enough to keep up with the rate of inflation, which could reduce our profit margins.

Moreover, in an inflationary environment, our cost of capital, labor and materials can increase and the purchasing power of our cash resources can decline, which can have an adverse impact on our business or financial results.

During fiscal 2022, we experienced increased costs of materials and labor caused both by supply shortages and inflation.

We were able to maintain satisfactory margins by applying stringent cost controls and by raising prices.

However, declining demand for new homes as the year progressed is requiring us to reduce, rather than increase, prices.

On the other hand, it is beginning to relieve supply shortages.

We are taking steps that we expect will enable us to maintain acceptable operating margins despite the inability to raise prices.

However it is possible that those steps will not be successful, and that the combination of inflation and reduced demand for new homes will adversely affect our profitability

Further increase in mortgage interest rates could reduce potential buyers’ ability or desire to obtain financing with which to buy homes.

Housing has been considerably impacted by the more than doubling of mortgage interest rates in 2022, and the Federal Reserve Board has said it intends to continue to increase its benchmark interest rate in 2023.

When interest rates increase, the cost of owning a new home increases, which usually reduces the number of potential buyers who can afford, or are willing, to purchase homes we build.

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Although we have reduced our exposure to costs of that type, a certain amount of exposure is inherent in our homebuilding business.

If market conditions were to deteriorate significantly in the future, we could again be required to make significant write-downs of the carrying value of our land inventory and costs relating to land purchase options.

Our results of operations and financial condition may be adversely affected by public health issues, including the COVID-19 pandemic, and resulting governmental actions.

If market conditions were to deteriorate significantly in the future, we could again be required to make significant write-downs of the carrying value of our land inventory and incur costs relating to decisions not to exercise land purchase options.

Our results of operations and financial condition may be adversely affected by public health issues, and resulting governmental actions.

The United States has experienced, and may experience in the future, outbreaks of contagious diseases that affect public health and public perception of health risk.

The COVID-19 pandemic caused the shutdown of large portions of our national economy.

With the exception of a period in March and April of 2020, the COVID-19 pandemic and its effects on the economy has not adversely affected our home sales.

However, this may not continue to be the case.

The extent to which COVID-19 impacts our results will depend on future developments, which cannot be predicted, including new information which may emerge concerning the continuing severity of COVID-19, whether there are additional outbreaks of COVID-19 or other contagious diseases, and the actions taken to contain them or their impact.

If COVID-19 continues to cause, or another contagious disease causes, significant negative impacts to economic conditions or consumer confidence, our results of operations, financial condition and cash flows could be materially adversely impacted.

With the exception of a period in March and April of 2020, the COVID-19 pandemic and its effects on the economy did not adversely affect our home sales.

However, this may not be the case with any future public health issues.

The extent to which public health issues impact our results will depend on future developments, which cannot be predicted.

If a contagious disease causes significant negative impacts to economic conditions or consumer confidence, our results of operations, financial condition and cash flows could be materially adversely impacted.

Operational Risks

Homebuilding, mortgage lending and multifamily rentals are very competitive industries, and competitive conditions could adversely affect our business or financial results.

Homebuilding, mortgage lending and home rentals are very competitive industries, and competitive conditions could adversely affect our business or financial results.

Homebuilding .

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Multifamily .

Our multifamily rental business competes with other multifamily apartment developers and operators at locations across the U.S.

Our multifamily rental business competes with other developers and operators of multifamily apartment communities at locations across the U.S.

where we have investments in multifamily rental properties.

We also compete in securing partners, equity capital and debt financing, and we compete for tenants with the large supply of already existing or newly built rental apartments, as well as with sellers of homes.

These competitive conditions could negatively impact the ability of the ventures in which we are participating to find renters for the apartments they are building or the prices for which those apartments can be rented.

These competitive conditions could negatively impact the ability of the funds and ventures we manage to find renters for the apartments they are building or the prices for which those apartments can be rented.

Single Family Home Rentals .

In each region where our funds offer single family homes for rent, there will be competition for residents with other owners of residential real estate (whether for-rent or for-sale).

In addition, in seeking investors to acquire interests in funds we form, we will be competing with a wide variety of investment opportunities, related both to real estate and to a variety of other investment products.

Also, in seeking to acquire single family homes that our funds can hold as rental properties, our funds will be competing with other persons who plan to hold them as rental properties as well as persons who might want to purchase those homes to live in them.

We may be subject to costs of warranty and liability claims in excess of the insurance coverage we can purchase.

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Additionally, the cost of insurance has increased significantly in recent years.

Also, the coverage offered and the availability of general liability insurance for construction defects are currently limited and policies that can be obtained often include exclusions based upon past losses those insurers suffered as a result of use of defective products in homes we and many other homebuilders built.

Also, the coverage offered and the availability of general liability insurance for construction defects is currently limited and policies that can be obtained often include exclusions based upon past losses those insurers suffered as a result of use of defective materials in homes we and many other homebuilders built.

As a result, an increasing number of our subcontractors are unable to obtain insurance, and we have in many cases had to waive our customary insurance requirements, which increases our and our insurers’ exposure to claims and increases the possibility that our insurance will not be adequate to protect us against all the costs we incur.

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Depending on the stage of development a land parcel is in when we acquire it, these may include costs of preparing land, finishing and entitling lots, installing roads, sewers, water systems and other utilities, and taxes and other costs related to ownership of the land on which we plan to build homes.

If the rate at which we sell and deliver homes slows, or if we delay the opening of new home communities, we may incur additional pre-construction costs and it may take longer for us to recover our costs.

Increased interest rates would increase the cost of the homes we build.

If the rate at which we sell and deliver homes slows, or if we delay the opening of new home communities, we may incur increased pre-construction costs and it may take longer for us to recover our costs.

Increased interest rates could increase the cost of the homes we build.

Our business requires us to finance much of the cost of developing our residential communities.

One of the ways we do this is with bank borrowings.

At November 30, 2021, we had a $2.5 billion revolving credit facility with a group of banks

(the "Credit Facility") maturing in 2024.

It has a $300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $2.8 billion.

We also had warehouse borrowing facilities totaling $2.3 billion to support our mortgage lending activities.

At November 30, 2022, we had a $2.6 billion revolving credit facility with a group of banks (the "Credit Facility"), which had an accordion feature that could increase it to $3 billion.

We also had warehouse borrowing facilities totaling$2.85 billion to support our residential and commercial mortgage lending activities.

The interest on borrowings under the Credit Facility is at rates based on prevailing short term rates from time to time.

In 2022, the Federal Reserve steadily raised benchmark interest rates and said it intends to continue doing so in 2023.

At November 30, 2022, we had no borrowings under the Credit Facility.

However, if in the future we have a need for significant borrowings under the Credit Facility and interest rates increase, that would increase the cost of the homes we build, which either would make those homes more expensive for homebuyers, which is likely to reduce demand, or would lower our operating margins, or both.

However, if in the future we have a need for significant borrowings under the Credit Facility and

interest rates continue to increase, that would increase the cost of the homes we build, which either would make those homes more expensive for homebuyers, which is likely to reduce demand, or would lower our operating margins, or both.

Increases in the rate of cancellations of home sale agreements could have an adverse effect on our business.

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In some cases, however, a homebuyer may cancel the agreement of sale and receive a complete or partial refund of the deposit for reasons such as state and local laws, the homebuyer’s inability to obtain mortgage financing, their inability to sell their current home or our inability to complete and deliver the home within the specified time.

If there is a downturn in the housing market, or if mortgage financing becomes less available than it currently is, more homebuyers may cancel their agreements of sale with us, which would have an adverse effect on our business and results of operations.

With the weakening of the housing market, we have experienced an increase in cancellation rates.

If there is a further downturn in the housing market, or if mortgage financing becomes less available than it currently is, more homebuyers may cancel their agreements of sale with us, which would have an adverse effect on our business and results of operations.

Our success to a substantial extent depends on our ability to acquire land that is suitable for residential homebuilding and meets our land investment criteria.

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Our success depends to a significant extent upon the performance and active participation of our senior management, many of whom have been with us for 20 or more years.

If we were to lose members of our senior management, we might not be

able to find appropriate replacements on a timely basis and our operations could be negatively affected.

Also, the loss of a significant number of operating employees and our inability to hire qualified replacements could have a material adverse effect on our business.

If we were to lose members of our senior management, we might not be able to find appropriate replacements on a timely basis and our operations could be negatively affected.

Also, the loss of a significant number of key operating employees and our inability to hire qualified replacements could have a material adverse effect on our business.

Natural disasters and severe weather conditions could delay deliveries and increase costs of new homes in affected areas, which could harm our sales and results of operations.

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It is not clear how, if Fannie Mae, Freddie Mac and Ginnie Mae were to curtail their secondary market mortgage loan purchases, the liquidity they provide would be replaced.

There is a substantial possibility that substituting an alternate source of liquidity would increase mortgage interest rates, which would increase the buyers' effective costs of paying for the homes we sell, and therefore could reduce demand for our homes and adversely affect our results of operations.

There is a substantial possibility that substituting an alternate source of liquidity would

increase mortgage interest rates, which would increase the buyers' effective costs of paying for the homes we sell, and therefore could reduce demand for our homes and adversely affect our results of operations.

Our Financial Services segment can be adversely affected by reduced demand for our homes.

Approximately 99% of the residential mortgage loans made by our Financial Services segment in 2022 were made to buyers of homes we built.

Therefore, a decrease in the demand for our homes would adversely affect the revenues of this aspect of our business.

Therefore, a decrease in the demand for our homes or an increase in cash used by home buyers would adversely affect the revenues of this aspect of our business.

If our ability to sell mortgages into the secondary market is impaired, that could significantly reduce our ability to sell homes unless we are willing to become a long-term investor in loans we originate.

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The agreement governing our Credit Facility (the "Credit Agreement") makes it a default if we fail to pay principal or interest when it is due (subject in some instances to grace periods) or to comply with various covenants, including covenants regarding financial ratios.

In addition, our Financial Services residential mortgage companies have warehouse facilities to finance their mortgage lending activities and our LMF Commercial lending group has warehouse facilities to finance its mortgage origination activities.

In addition, our Financial Services residential mortgage companies and our LMF Commercial mortgage lending group have warehouse facilities to finance their mortgage lending.

If we default under the Credit Agreement or our warehouse facilities, the lenders will have the right to terminate their commitments to lend and to require immediate repayment of all outstanding borrowings.

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The indentures governing our senior notes do not restrict our incurrence of future secured or unsecured debt, and the agreement governing our Credit Facility allows us to incur a substantial amount of future unsecured debt.

We reduced our outstanding senior notes during fiscal 2021 by $1.2 billion, but we still have a significant amount outstanding.

We reduced our outstanding senior notes during fiscal 2022 by $575 million, but we still have a significant amount outstanding.

Sales of senior debt into the capital markets has, until recently, been a significant source of funding for our operations and acquisitions.

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• We may be more vulnerable to general adverse economic and homebuilding industry conditions;

• we may have to pay higher interest rates upon refinancing indebtedness if interest rates rise, thereby reducing our earnings and cash flows;

• We may have to pay higher interest rates upon refinancing indebtedness as a result of the increase in interest rates, thereby reducing our earnings and cash flows;

• We may find it difficult, or may be unable, to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements that would be in our best long-term interests;

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• We may have reduced flexibility in planning for, or reacting to, changes in our businesses or the industries in which they are conducted;

• [we may have a competitive disadvantage relative to other companies in our industry that are less leveraged];

• We may have a competitive disadvantage relative to other companies in our industry, if any, that are less leveraged;

• We may be required to sell debt or equity securities or sell some of our core assets, possibly on unfavorable terms, in order to meet payment obligations.

Our access to capital and our ability to obtain additional financing could be affected by any downgrade of our credit ratings.

Our access to capital and our ability to obtain additional financing could be affected if there was a downgrade of our credit ratings.

Our corporate credit rating and ratings of our senior notes affect, among other things, our ability to access new capital, especially debt, and the costs of that new capital.

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Our Financial Services segment, including LMF Commercial, has warehouse facilities that mature in fiscal year 2023, and if we could not renew or replace these facilities, we probably would have to reduce our mortgage lending and origination activities.

During fiscal year 2022, we will have to replace or renew a total of $2.9 billion of warehouse lines used by Financial Services, including LMF Commercial, as they mature.

During 2023, we will have to replace or renew a total of $2.85 billion of warehouse lines used by Financial Services, including LMF Commercial, as they mature.

We expect these facilities to be renewed or replaced with other facilities when they mature.

If we were unable to renew or replace these facilities on favorable terms or at all when they mature, that could seriously impede the activities of our Financial Services segment, which would have a material adverse impact on our financial results.

An inability to obtain performance bonds or post letters of credit could adversely affect our operations.

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Several of the joint ventures in which we participate will in the relatively near future be required to repay, refinance, renegotiate or extend their borrowings.

If any of those joint ventures are unable to do this, we could be required to provide at least a portion of the funds the joint ventures need to be able to repay the borrowings and to finance the activities for which they were incurred, which could adversely impact our financial position.

If any of those joint ventures are unable to do this, we could be required to provide at

least a portion of the funds the joint ventures need to be able to repay the borrowings and to finance the activities for which they were incurred, which could adversely impact our financial position.

Regulatory Risks

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New housing developments may also be subject to various assessments for schools, parks, streets and other public improvements.

addition, in many markets government authorities have implemented no growth or growth control initiatives.

In addition, in many markets government authorities have implemented no growth or growth control initiatives.

Any of these can limit, delay, or increase the costs of land development or home construction.

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The impact of those statutes, rules and regulations can increase our homebuyers’ costs of financing, and our cost of doing business, as well as restricting our homebuyers’ access to some types of loans.

Our obligation to comply with the laws and regulations under which we operate, and our need to ensure that our associates, subcontractors and other agents comply with these laws and regulations, could result in delays in construction and land development, cause us to incur substantial costs and prohibit or restrict land development and homebuilding activity in certain areas in which we operate.

certain areas in which we operate.

Budget reductions by state and local governmental agencies may increase the time it takes to obtain required approvals and therefore may aggravate the delays we encounter.

Shutdowns of government offices in response to the COVID-19 pandemic have further delayed the time it is taking to obtain required approvals.

In 2020 and 2021, shutdowns of government offices in response to the COVID-19 pandemic often delayed the time it took to obtain required approvals.

Government agencies also routinely initiate audits, reviews or investigations of our business practices to ensure compliance with applicable laws and regulations, which can cause us to incur costs or create other disruptions in our businesses that can be significant.

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Governmental rulings that make us responsible for labor practices by our subcontractors could create substantial exposures for us in situations that are not within our control.

We have substantial investments in real estate related businesses in which we are a minority investor.

We have investments in funds and other investment vehicles managed by Rialto Capital Management, a company we sold in November 2018, investments in a number of companies that are applying technology to various aspects of building and marketing homes and real estate related aspects of the financial services industry, and investments in FivePoint Holdings, a publicly traded company that has ownership interests in, and is managing the development of, three large multi-use master planned communities in California.

As a minority investor, we have limited influence over decisions made with regard to these funds and businesses.

Risk Related to Planned Spin-Off

Our planned spin-off of some of our businesses may not achieve its goals.

We are in the process of transferring some of our non-homebuilding businesses into a newly formed company, Quarterra Group, Inc., and, subject to market conditions, we intend to distribute the stock of Quarterra to our stockholders.

Our hope is that doing that will result in the combined market value of our stock and Quarterra's stock exceeding what the market value of our stock would be if we continued to conduct the businesses that we will transfer to Quarterra.

However, there is no assurance that that will occur.

Among other things, making Quarterra a self-standing entity will lose some synergies from which the businesses it will own currently benefit.

Therefore, it is possible that after the separation, the combined market value of our stock and Quarterra's stock will be less, not more, than what the market value of our stock would be if we did not spin off Quarterra.

Risks Related to Ownership of our Stock

We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders.

Stuart Miller, our Executive Chairman, through family and personal holdings of Class B, and to a lesser extent Class A, common stock, has the power to cast approximately 36% of the votes that can be cast by the holders of all our outstanding Class A and Class B common stock combined.

This gives Mr.

Miller substantial influence regarding the election of our directors and the approval of most other matters that are presented to our stockholders.

Miller's voting power might discourage someone from making a significant equity investment in us, even if we needed the investment to meet our obligations or to operate our business.

Also, because of his voting power, Mr.

Miller may be able to cause our stockholders to approve actions that are contrary to many of our other stockholders' desires.

The trading price of our Class B common stock has been substantially lower than that of our Class A common stock.

The only significant difference between our Class A common stock and our Class B common stock is that the Class B common stock entitles the holders to ten votes per share, while the Class A common stock entitles holders to only one vote per share.

However, for many years, the trading price of the Class B common stock on the NYSE has been substantially lower than the NYSE trading price of our Class A common stock.

We believe this is because only a relatively small number of shares of Class B common stock are available for trading, which reduces the liquidity of the market for our Class B common stock to a point where many large investors are reluctant to invest in it.

The limited liquidity could make it difficult for a holder of even a relatively small number of shares of our Class B common stock to dispose of the stock without materially reducing the trading price of the Class B common stock.

We have substantial investments in real estate related funds and businesses in which we are a minority investor.

We have investments in funds and other investment vehicles managed by Rialto Capital Management, a company we sold in November 2018, investments in a number of companies that are applying technology to various aspects of building and marketing homes and real estate related aspects of the financial services industry, and investments in Five Point Holdings, LLC, a publicly traded company that has ownership interests in, and is managing the development of, three large multi-use master planned communities in California.

As a minority investor, we have little or no influence over decisions made with regard to these funds and businesses.

However, we could suffer significant losses of our investments as a result of decisions that are made by the funds and businesses.

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However, cyber intrusion efforts are becoming increasingly sophisticated, and it is possible that the controls we have installed could at some time be breached in a material respect.

Further, there has been a surge in widespread cyber-attacks during the COVID-19 pandemic.

The increase in the frequency and scope of cyber-attacks during the pandemic exacerbates data security risks.

Our increased use of remote work environments and virtual platforms in response to COVID-19 may also increase our risk of cyber-attack or data security breaches.

Further, there has been a significant increase in work from remote locations since the start of the COVID-19 pandemic.

Increased use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches.

While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on our business or results of operations, if we were to be subject to a material successful cyber intrusion, that could result in remediation or service restoration costs, increased cyber protection costs, lost revenues or loss of customers, litigation or regulatory actions by governmental authorities, increased insurance premiums, reputational damage and damage to our competitiveness, our stock price and our long-term stockholder value.

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International activities subject us to risks inherent in international operations.

While there has been a pause as a result of the coronavirus pandemic, we historically have sold significant numbers of homes in communities in the United States to people who are not residents of the United States, and some large investors in our multifamily development and single-family rental ventures are located outside the United States.

We historically have sold significant numbers of homes in communities in the United States to people who are not residents of the United States, and some large investors in our multifamily development and single-family rental funds and ventures are located outside the United States.

Dealings with people or institutions located outside the United States create risks related to currencies and to political affairs in various countries.

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Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second fiscal quarter and increased deliveries in the second half of our fiscal year.

However, a variety of factors, such as the shutdown of large portions of our national economy in the second quarter of 2020 as a result of the COVID-19 pandemic, can change seasonal patterns.

Our quarterly results of operations may continue to fluctuate in the future as a result of a variety of

factors, including, among others, seasonal home buying patterns, the timing of home closings and land sales and weather-related problems.

However, a variety of factors can change seasonal patterns.

Our quarterly results of operations may continue to fluctuate in the future as a result of a variety of factors, including, among others, seasonal homebuying patterns, the timing of home closings and land sales and weather-related problems.

We could suffer significant losses if there are reductions in the market value of our investments in publicly traded companies.

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Our investments in Opendoor Technologies, Inc.

("Opendoor"), Sunnova, Hippo Holdings, Inc.

("Opendoor"), Sonder Holdings Inc., Sunnova, Hippo Holdings, Inc.

("Hippo"), SmartRent, Inc.

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Nonetheless, governmental requirements directed at reducing effects on climate could cause us to incur expenses that we cannot recover or that will require us to increase the price of homes we sell to the point that it affects demand for those homes.

Risks Related to Ownership of our Stock

We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders.

Stuart Miller, our Executive Chairman, through family and personal holdings of Class B, and to a lesser extent Class A, common stock, has the power to cast approximately 35% of the votes that can be cast by the holders of all our outstanding Class A and Class B common stock combined.

This gives Mr.

Miller substantial influence regarding the election of our directors and the approval of most other matters that are presented to our stockholders.

Miller's voting power might discourage someone from making a significant equity investment in us, even if we needed the investment to meet our obligations or to operate our business.

Also, because of his voting power, Mr.

Miller may be able to cause our stockholders to approve actions that are contrary to many of our other stockholders' desires.

The trading price of our Class B common stock has been substantially lower than that of our Class A common stock.

However, for many years, the trading price of the Class B common stock on the NYSE has been substantially lower than the NYSE trading price of our Class A common stock.

General Risk Factors

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors