Friday, March 27, 2009

KB Homes Builds Houses For A New America: Is it the Rise of the Netbook Home?

It seems that the McMansion may be dead according to this article. It also seems that KB Home is finally starting to sell more houses but they are much smaller and more affordable according to their earnings statements.

Half of all KB Home's sales this year are expected to come from its new Open Series blueprint, a smaller and less expensive model the company unveiled to compete with discounted foreclosed homes. KB Home is offering the Open Series in 30 communities, including some in southern California, North Carolina, Tucson, Ariz., Orlando, Fla., and Houston.

"Homes must change with the times," Mezger said. "It is not simply about reducing prices. It is about increasing value to the consumer."

These smaller homes helped make new home buyers account for 70% of KB Homes revenue this past quarter. These homes show that there is pretty decent demand out there for the right kind of home.

It kind of reminds me of the rise of the Netbook. For a while we had these massive laptops that cost thousands of dollars that made DVDs, played games, allowed you to edit movies, etc. HP and Dell's margins were great and people were buying them like crazy. Then when hard times hit people finally understood that for $300 you can do everything that you actually used laptops to do like browsing, email, carrying the thing in your bag, etc.

These Open Series blueprint homes are kind of the same thing. They hopefully get home buyers back to what they *should* be looking for in a home. A nice place to keep your stuff and live your life while you raise your family.

Your home is not an investment you can flip. It is not a piggy bank you can tap to finance a lifestyle on 100% credit. It is certainly is not a place where you can pretend to be rich and famous. That means no more eating off of a granite countertop, getting beers from your Sub-Zero freezer, and pooping in one of your 6 toilets while you forget about your interest-only ARM resetting next month. It seems fitting that the Netbook Age should follow so closely after the Age of Excess.

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