Affordability is the New Mantra...

Great observations and a great post!

KB Homes has pocket neighborhoods around our area Arina for the last many years and has pretty much always focused on the low end. They used to have a lot of television commercials featuring their design centers. It's interesting where they built bigger homes they've scrapped that idea and as your article pointed out the smaller new homes are competing with the rentals. I hope it works for them.

Fernando, Thank you for coming by. I am sure that affordability in housing is here to stay for a long time. It is the new trend in every corner of the country and all across the world.

Gary,  I guess KB Homes, and all the other developers out there, were caught in the craziness of housing market boom (did here in Vegas!) and they got carried away ... time for reality check came and was not pretty! 

I am with you in a market that has taken quite a dip, Phoenix, one of the "big three" (Miami, Las Vegas and Phoenix) that have been hit the hardest by the market slide. I am sure that is all relative as so many markets have been flipped upside down by the past 18-24 months. You are precisely right with the focus by builders to smaller more affordable homes. I have noticed that it is the large builders that are moving away from the luxury market. The custom home builders, here in Arizona at least, are still kicking and building bigger and better than ever... just maybe not at the volume of the past. It will be interesting to see where this market and economy lead. Thanks for the post.

Thanks for the post and update !  It is great to get to hear directly from the source what is going on.

I have been keeping an eye out for homebuilder stocks like KB Homes.  Here in the Northeast, Toll Brothers is a big player.  I think we all will be on the pulse of the rebound but in areas like yours you might start to see it and feel it first as well.

Thanks again !

We can use KB here where affordable housing is in demand!

I think this is a trend happening everywhere, for different reasons.  

In Houston builders have cut back on luxury materials, finishes, and upgrades in thier homes because of the skyrocketing costs of fuel delivery and oil based products are driving up thier bottom lines and reducing any kind of profits they have left. Now they are constructing the same scale homes, with less "bling".

For production builders to alter their blueprints and pay architects and engineers to do so would be costly. Then to get approval by city, and neighborhood developers would take more time. Maybe worth it for what they save in material and making the homes more affordable will mean less inventory on the market.

I do notice the custom builders in our area are not slowing down much. The wealthy can still afford to purchase and right now with the incentives and low rates they are taking advantage of a chance to upgrade.

Its interesting to see how different parts of the country are adapting though, thanks for sharing.

thanks for sharing, very interesting on how LV stands up...

Good Morning Arina!

I have noticed in my area that all the new construction was getting bigger and bigger, there were no new Modest Homes... Some low income stuff, but only because they Have to.

I guess the theory was, the dirt costs the same if you put a 1500 square foot house or a McMansion.  So now we have Sooo many McMansions, Even the newer retirement developments have some huge homes 3000 square foot retirement homes stacked on top of each other in some neighborhoods (deed restricted to 55 and over)

I have not seen the trend to the modest home here yet, it is long over due.

Have a great weekend!

Zachry It is interesting to see how builders adjust to the new reality. As the economy goes through major sifts so should the important players in the housing market... It will be very interesting to see. The market is local indeed and so is the demand on housing.

I believe that builders should check the specifics of each local market condition.

Christopher, Intersting observation... During the bubble, KB Home, like many other big builders, blew up its old-line business by going ritzy and building expensive houses... Later the market strategy proved faulty... The faster they adjust the better.

Carol, It is all local...  KB Home went overboard in area where the demand was high and the buyers appetite even bigger... like here in Vegas,

Mike, You just hit the nail on the head,,, Yes, seems like the wealthy can still afford to purchase... and float in top of the waves of  the economy,,, STILL!

Robert, Any observation coming from a Countrywide man is worth full attention... Your area - New Jersey - is dwelling on big pockets. How are the prices on all those McMansions? Going up or down on the scale of affordability?

New construction has come to a screeeeching halt. At least in subdivisions.  The only place where there seems to be activity is water front.  Still people buying and tearing down to build huge monsters on the water, people with money (real money) still have it and are not afraid to spend it, it always amazes me whe some one buys a home for over 1,000,000 and tears it down. Must be nice to have that kind of money!

Most of our market is still a little too quiet for comfort. Our bread and butter buyers are skittish and many sellers still think their homes are worth what they were in 2005...(especially since their grass is greener than their neighbors house!)

We have had a few builders go bad in the past year and there are some sites sitting idle.  But my area is not dependant on new construction, it is prett established

Yawn...new reality?? Stuff and nonsense.

people builders, developers, etc always get sucked into the newest and flashiest con. An ant could have looked at the market and known it was tilted and needed to change. There is nothing new there except possibly greed at work. When banks will loan money to a door knob... others will find ways to part the borrower from their money and not always in the borrowers best interests (though i do not mean all were bad).

It was/is a game of numbers...If I can make 10% well 10% of 400K is a lot better than 10% of 100K (but it just looks that way...it is still 10%). But evaluate the risk. And the other market is still there. Now we have to reinvent ourselves...find the clients we overlooked and go back to "work" gosh, what a concept.

But lest remember, the next time around, for our part as REALTORS... houses are primairly homes...you don't live in an investment...not usually!

Arina

I would love to see builders be able to start building in our area.  The few that are have definetly "downsized" their product.  But existing homes have dropped so much that most builders can't compete and are instead doing additions and remodels.  this is even the builder that you would never have imagined doing anything but high-end housing