KB Homes Shifts Strategy and Starts Building Smaller Homes
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KB Homes is shifting it’s strategy by reducing the size of the homes it is selling. While this is not a revolutionary idea, it is different from what we hear from other builders. Most of the builders in the market are claiming that once a development is started they have to press onward with the plan. They would prefer the glut of inventory on the market than to stall projects that have started.
However, KB Home’s approach is refreshing and good business. They are reducing the size of homes they are building which is attracting a bigger base of potential buyers. With higher energy costs expected to stay with us through the long haul having a smaller energy efficient home is a good bet for buyers and sellers alike.
KB Home differs from many other homebuilders because it doesn’t build a house until it has a buyer under contract. Other companies complete construction, then seek buyers. KB Home embarked on its smaller, cheaper strategy about nine months ago, with its first planned communities reflecting the change late last year.
The company declined to disclose national figures on how the smaller homes were selling. But KB said it sold 48 units in the past eight weeks at a Las Vegas community where homes range from 1,267 square feet to 1,608 square feet, and prices start at $195,590.
The homes are as much as 500 square feet smaller than homes buyers might have preferred a year ago, Mezger said. Prices vary, but the smaller homes are as much as 20 percent cheaper than larger versions. Buyers can still opt to add a bevy of amenities, which can drive up the final price.via the OC Register
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Comment by Samuel Metz on 14 December 2008:
Good business…….. for who!!!
just for the builder I guess. What about the people who purchased their last home with intentions to retire, thinking they were getting into an upscale or exclusive community. What happens when all of a sudden out of no-wear you find out your “upscale” community has been downgraded to a starter home community with homes much smaller, much cheaper and out of character and style from what you and the rest of your neighbors purchased. Then you find out that it’s a strategy KB Homes is using in other communities as well, they start building the larger more expensive homes first towards the back of the community and when the lots are 45% sold they change models and they start marketing the smaller, less expensive home thru the larger more expensive ones. Tell me, How is a community with homes worth 250,000 dollars, a pool, 24hr gym, community center, play ground, basketball court, walking trails and more, and that was sold under the terms upscale becomes a starter home community (homes in the lower 90,000). How in the hell is this refreshing and good business, apparently this has not happened to you in your community. Please reply, I would really like to know . Thank you.
Samuel Metz
Comment by Samuel Metz on 17 December 2008:
Good business…….. for who!!!
just for the builder I guess. What about the people who purchased their last home with intentions to retire, thinking they were getting into an upscale or exclusive community. What happens when all of a sudden out of no-wear you find out your “upscale” community has been downgraded to a starter home community with homes much smaller, much cheaper and out of character and style from what you and the rest of your neighbors purchased. Then you find out that it’s a strategy KB Homes is using in other communities as well, they start building the larger more expensive homes first towards the back of the community and when the lots are 45% sold they change models and they start marketing the smaller, less expensive home thru the larger more expensive ones. Tell me, How is a community with homes worth 250,000 dollars, a pool, 24hr gym, community center, play ground, basketball court, walking trails and more, and that was sold under the terms upscale becomes a starter home community (homes in the lower 90,000). How in the hell is this refreshing and good business, apparently this has not happened to you in your community. Please reply, I would really like to know . Thank you.
Samuel Metz