KB Home focuses on affordability, scraps its luxury home development
Homebuilders are slashing prices in the Las Vegas Valley, and KB Home has taken it a step further by announcing plans to introduce smaller models in its master-planned communities to jump-start sales by focusing on affordability.
KB Home, the valley’s No. 2 homebuilder after Pulte/Del Webb has even scrapped its entry into the upscale $1 million home market. Four months after unveiling the La Vita at Seven Hills in Henderson, the Los Angeles-based builder has cancelled the project and will focus on its core business - entry-level and workforce housing.
Builders had emphasized incentives to lure buyers, but KB Home and builders have cut prices in the valley as part of a push toward affordability. So far this year, SalesTraq reports that the median price of new homes has dropped more than 7 percent to $318,807. The median price of new homes surpassed $355,000 in May 2006. Home Builders Research reported new home prices in June were down 9 percent from June 2006.
“You are still seeing incentives, but more and more what it’s coming to is that it was price all along,” said local housing analyst Steve Bottfeld.
Amid a record level of inventory, the price cuts by builders create more competition for homeowners. Some analysts suggest that could further prompt homeowners to cut their prices.
Dennis Smith, president of Home Builders Research, said some builders are offering price cuts across-the-board while others are holding special weekend sales events. It’s not uncommon to see reductions of $25,000 to $30,000 on a $400,000 house, Smith said.
“Nobody can tell me it’s not a good time to go looking for a house,” Smith said. “There are a lot of deals out there. They are trying to sell houses. They want to get people motivated to buy a house. At this point, generally speaking, I would say it’s not working as well as they would like.”
… Although his company isn’t slashing prices, Gary Mayo, group president of Toll Brothers, said what’s happening is not good for the market. It dampens consumer confidence for a market that should have rebounded given its job migration and population growth, he said.