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Daily Real Estate News | July 6, 2007
Small Is Beautiful, Home Builders Say
Builders are learning that smaller, affordable homes have big selling power in the sluggish housing market.
Among the nation’s larger builders, KB Home of Los Angeles is leading the way toward downsizing. "Smaller homes generate lower revenues, but they sell faster, therefore the cash returns are better," says KB Home's chief executive, Jeffrey Mezger.
Other major builders, including Fort Worth, Texas-based D.R. Horton Inc., also have started downsizing some home offerings
KB embarked on its strategy nine months ago to build more small, affordable homes. It declined to disclose national sales figures, but has 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 with prices that start at $195,590.
These homes are about 500 square feet smaller than KB believed home buyers preferred a year ago, Mezger says.
The prices also are as much as 20 percent cheaper than they were before the downsizing, although buyers can still opt for a bevy of amenities that drive up the final price.
Source: The Associated Press, Alex Veiga (07/05/2007)
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