KB Home Will Build Again in D.C. Area
Thursday, September 17, 2009
KB Home said Wednesday that it intends to resume building and selling houses in the Washington region this year after curtailing operations in late 2007, yet another sign to real estate analysts of recovery in the area's housing market.
The Los Angeles-based company has built numerous communities throughout Northern Virginia and suburban Maryland, including Huntington Mews in Alexandria, Martin's Chase in Ashburn, Cherry Tree near Upper Marlboro and Middletown South in Waldorf. But the severe housing slump across the country prompted the company during the early days of the recession to suspend construction in Chicago, Albuquerque and the mid-Atlantic region.
Now, after seeing housing prices pick up and inventory levels fall, company officials said they plan to jump back into the market here. They said they will call back sales and construction workers and offer more affordably priced single-family units to meet the demands of an increasingly cost-conscious consumer.
"We've always viewed D.C. as a strategic market for us," said Vince DePorre, regional president of KB Home's southeast division, who oversees the mid-Atlantic operation.
"Our intention is to activate existing communities and look for land opportunities to grow our business," he added. "It's such a good market for us."
KB was never a major player in the Washington region, real estate analysts say. Still, taken together with encouraging data on builder confidence, home sales and the federal government's prospects for hiring more than 100,000 new workers in the region, experts said the KB announcement portends better days ahead.
The National Association of Home Builders said Wednesday that its national survey of builder confidence for new single-family homes increased in September for the third consecutive month. The index this month rose by one point to 19, its highest level since May 2008, according to the association.
The number of homes listed for sale in Northern Virginia plunged nearly 30 percent in August from a year ago, according to Metrostudy, a research firm that analyzed the data. The listings total 16,723, the lowest level since January 2006, according to the firm.
And a new analysis of multiple listing service data by George Mason University's Center for Regional Analysis shows average home prices rose for the first time in at least two years in two of the area's hardest hit jurisdictions -- Prince William and Loudoun counties. Prices in August were up 5.9 percent in Loudoun and 2.5 percent in Prince William compared with the same month last year.
"I think it's a recognition that the housing market in the Washington area has normalized," said Stephen S. Fuller, the center's director. "With the price pressures and diminishing supply, builders see they can maybe make money on a house."
The housing slump spurred thousands of layoffs at numerous home builders in the region, experts said. It also prompted many to stop building on spec and to focus on made-to-order homes.
Other builders say they also are gearing up based on positive signs they're seeing in the market.
Pennsylvania-based Toll Brothers, which has built high-end homes in the Washington area, said that after sitting on the sidelines for months it began making offers in August on properties here.
"We've had a steady summer of sales that left us with a good sense of optimism that we're on an upswing," said William Gilligan, president of the region that includes Maryland and Virginia.
"There's a lot of distressed land out there," Gilligan said. "We are spending a lot of time looking at these assets, seeing which is the best match for Toll Brothers, and we're going after it."
While the recession could be over, KB Home officials say they think consumers will continue to demand discounted products for a while.
DePorre, KB's regional president, said the builder is offering a new line of more-affordable single-family homes with windows, heating and cooling systems and insulation aimed at saving energy costs.
"It enables the first-time home buyer to get into our product," DePorre said. "They can pick the price range that makes the most sense to them."