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This statistic highlights Green Brick Partners’ Backlog and split across Backlog, reported on a quarterly basis from Q1 2016 onwards.
|Period||Q3 2020||Q2 2021||Q3 2021|
Green Brick Partners’ Backlog increased $553.05 million in Q3 2020 to $1,017.22 million in Q3 2021, marking a rise of 83.92% on a year-on-year basis. It increased almost by 4.40% as compared to $974.34 million in Q2 2021.(All figures are in millions, except percentages)
Backlog refers to homes that were under contract but had not closed by the end of the relevant period, while absorption rate refers to the rate at which net new home orders were contracted per average active selling community during the relevant period. The escrow money may be returned to the potential buyer if the transaction is canceled. As a result, backlogs may not be a good predictor of future income.
Their cancellation rate is calculated by dividing the number of sales contracts canceled by the number of sales contracts completed over the relevant time period. Sales contracts for homes in a backlog may be canceled by the potential buyer for a variety of reasons, including the inability of the prospective buyer to acquire sufficient mortgage financing.
Low financing rates, an increase in home sales prices after the sales contract is signed, an influx of Millennium first-time buyers, and demand for suburban homes from apartment dwellers as a result of COVID-19 have all contributed to a lower cancellation rate. Sales contracts for homes in a backlog may be canceled by the potential buyer for a variety of reasons, including the inability of the prospective buyer to acquire sufficient mortgage financing.
The escrow money may be returned to the potential buyer if the transaction is canceled. A cancellation rate of 15 percent to 20%, according to management, is reflective of the industry average cancellation rate. They have a lower cancellation rate than the industry average, which they attribute to good market circumstances through December 31, 2020.
The increase in the number of homes in the backlog was due to the record level of backlog entering the quarter. The rise in the average sales price of backlog homes was due to price hikes prompted by high demand and limited inventory.
High cancellation rates may negatively impact their business
The quantity and value of homes for which they have entered into non-contingent sales contracts with homebuyers but have yet to deliver are reflected in their backlog. Despite the fact that these sales contracts demand a cash deposit, contract stipulations allow a homebuyer to cancel the deal and receive full or partial reimbursement of the deposit.
Homebuyers may have an incentive to cancel their contracts with Green Brick if home prices fall, the national or local homebuilding environment or the general economy weakens, their neighboring competitors reduce their sales prices (or increase their sales incentives), interest rates rise, or the availability of mortgage financing tightens, even if they are entitled to no refund or only a partial refund. Because of lost sales revenue and the accumulation of unsold home inventory, significant cancellations could have a considerable negative impact on their business.
About the Company
The ticker sign “GRBK” is used to identify Green Brick Partners, Inc. on the New York Stock Exchange. The company buys and develops land, as well as provides land and construction financing to its homebuilder subsidiaries. Green Brick’s business model is based on the concept that a builder’s profitability begins with locally-focused land development, and that both homebuilding and land development are best handled on a local decentralized basis.
The Providence Group, a subsidiary of Green Brick Partners, combines local building knowledge in Georgia with the financial strength of a nationwide, diversified homebuilding and land development corporation.
Green Brick Partners has operations in Texas, Georgia, Colorado, and Florida at the moment. In the Dallas and Atlanta metropolitan areas, as well as the Vero Beach, Florida market, the company owns or controls about 21,351 premium house sites in high-growth submarkets.
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