For a dwelling done your way, you might turn to KB Home. KB builds houses mainly for first-time, trade-up, and active adult buyers primarily in the West, Southwest, and along the East Coast. The company markets houses under its Built to Order brand, which allows buyers to customize their homes by choosing a floor plan as well as exterior and interior features. The average selling price of a KB home is around $224,600. KB offers attached and detached single-family homes, in addition to townhomes and condos. It offers title and insurance through its KB Home Mortgage. KB has built more than a half a million homes since it was founded in 1957.
However, those numbers have been slower to grow in the past few years. The economic recession has led to declining revenues and fewer home starts for KB since 2008, and the company has delivered fewer homes with lower average selling prices since the slump. The downtrend has come as a result of the glut of housing made available by high foreclosure rates, coupled with overbuilding and tight credit markets. At the same time, demand has decreased due to rising unemployment and declining consumer confidence.
Before the housing bubble burst, KB was cranking out houses. In 2006 the company built about 32,000 homes. That number fell to just over 5,800 in 2011. Selling prices have also dropped significantly from their 2006 average of $288,000, although they are starting to pick back up.
The housing slump has forced KB Home to adjust its business to the new market landscape. It has reduced costs by cutting staff, abandoning under-performing markets such as Detroit, shedding assets such as its international subsidiary, and working to move products to generate cash flow and manage debt. After a period of selling extra land holdings, the company has turned around and once again begun buying developable land which it expects to build on within three to five years. And in mid-2011, KB Mortgage stopped offering lending services (which was a very minor part of the group's earnings); instead, the company works in partnership with third-party providers.
All of the adjustments seem to be helping. In 2011, the average home sale price went up, and throughout the year, the company reported increasing deliveries. Although KB continued to lose money that year (some $179 million), it wasn't quite as bad as it was at the height of the housing crash, when the company reported losses of nearly $1 billion. Revenues have also continued to slip, though at a far slower pace: KB earned $1.3 billion in 2011 versus the $1.6 billion it earned in 2010. The company hasn't turned a profit since 2006, when it reported $480 million in net income. KB is focused on returning to profitability, and is trying new strategies to get it done, but the housing market remains challenging for new builders.
Another key to its strategy for surviving the downturn is the company's ability to turn out cheaper and smaller houses (something customers are hungry for). In 2009 KB introduced a product line called "Open Series" that allows homebuyers to control such specifications as square footage or how many rooms they want. KB has been rolling out the new program on a national level.
KB also continues to set itself apart from the competition. Much of its marketing strategy is focused on its customizable homes, and homebuyer-driven designs. Among its design options are special packages and entire locations that carry branding by Martha Stewart and the Walt Disney Company. Other available features include the My Home. My Earth environmental program, which features energy-efficient appliances and other earth-friendly options. The company is also increasing its solar power offerings in Southern California and Central Florida and it has begun building net-zero energy production homes. – less
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