Builder- March 2009 - (Page 26) INSIDE STORY and sell from $95,000 to $160,000. LGI prefers specs because it wants buyers to see what they’d be moving into, surrounded by lots of parks and playground space. Every four to six weeks, LGI spends $60,000 per subdivision to send out 38,000 direct mail pieces to apartment dwellers within a 30-mile radius of each of its communities. “Repetition is key,” says Snider, in getting prospects to see how owning a house can be less expensive than renting an apartment. (see page 28) A DECADE OF GROWTH Year 2005 2006 2007 2008 2009 (est.) Source: LGI Homes Closings (in units) Revenue (in millions) 260 418 434 475 500 $28 $54 $59 $63 $65–$70 CREATING NEW CUSTOMERS: LGI Homes has expanded steadily by marketing its entry-level homes to local renters. EMPHASIZING EFFICIENCY B feet on 3,500- to 6,000-square-foot lots, Ruff ner says KB isn’t focusing on their size. “If you walk through them, you KB Home rolls out flexible house plans to compete with resales. wouldn’t get caught up in their square footage because of the way they are laid y early 2008, KB Home recog- of so-called innovations come and go in out.” Buyers can choose to increase the nized that its main competition his 21 years with KB. But Open Series is size of the house’s master bedroom by was mounting resales and foreclo- different, he insists. KB Home plans to altering the room count and can also sures. The Los Angeles–based roll out Open Series homes to 25 percent add options from KB’s My Home My builder had already adjusted its house of its communities this year and conduct Earth selection. plans and construction practices to make grand openings for the concept in half of The houses are value-engineered to its homes economical and in line with those targeted communities by the sum- reduce construction costs, and KB has the builder’s build-to-order business mer. The builder expects Open Series compressed the cycle time for Open Semodel. But the sheer numbers of unsold homes to account for 50 percent of deliv- ries to deliver a house within 10 weeks of inventory in markets such as Southern eries in the second half of 2009. a buyer’s signing a contract, or about half California and Arizona made selling The houses, with three to five bed- the cycle time of KB’s other houses. The new product nearly impossible. rooms, target fi rst-time buyers with series’ 50 or so floor plans include such So KB took another look at its be- prices in the high $200,000s to the time- and cost-saving solutions as posisieged submarkets and customer sur- mid $300,000s. “We wanted to design tioning bathrooms back-to-back so they veys. “There were a few real ‘ahas,’ ” homes that a medium-income buyer require only one plumbing tree. Mezger recalls Steve Ruff ner, president of the could afford,” says Ruff ner. “That is un- told investors in January that KB’s direct builder’s Southern California coastal di- usual for California.” While the house costs to build a 1,700-square-foot Open vision. KB found that buyers want hous- plans range from 1,239 to 2,300 square Series house in Tucson, Ariz., were es that are more efficient to $63,000, versus $89,000 for a live in. Ruff ner also says there comparable existing KBwas “high demand” for singlemade house in that market. story houses in markets where “That’s a significant game there weren’t many. changer for us,” says spokesHis division got together woman Heather Reeves. with trade partners and supThe series’ designs also pliers to devise a new kind of make it easier for the comhome that could be built for pleted house to comply with efficiency and priced to Energy Star ratings (a stancompete directly with redard feature in all KB houses) sales and foreclosures. What in terms of its insulation, emerged is KB’s Open Series windows, HVAC, and therof house plans, “the fullest mal bypass inspection. That expression of our Built to rating is a key selling point Order brand diff erentiaagainst resales that, Ruff ner tion,” says Jeff Mezger, KB’s A COMPACT RESPONSE: KB Home is rolling out its Open says, are 45 percent less Series of house plans, which includes giving buyers choices about president and CEO. efficient than newly built Ruffner has seen his share master bedroom sizes. houses.— J.C. Mark to Market 26 ■ B U I LD E R m a rc h 2 0 0 9 W W W.BUILDERONLINE.COM http://WWW.BUILDERONLINE.COM
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