KB Home, one of the nation’s largest homebuilders, reported earnings today. Although profits were up sharply, orders for new homes were down and cancellations were up. “The market is slowing,” KB ceo Bruce Karatz told us earlier in the week. The slowdown is forcing builders to get creative and none more so than KB. The Los Angeles-based company inked a deal to have domestic doyenne Martha Stewart design some of its homes for a royalty fee. That’s Karatz with Stewart in the photo above, posed in front of a home that was modeled after “Lilly Pond,” Stewart’s Long Island estate. The first batch of homes was unveiled in Cary, North Carolina, a suburb of Raleigh on March 6. Karatz says 3,500 families came through on opening weekend and all one hundred of the homes put up for sale were snapped up. Stewart’s touches included open shelving in addition to cabinets in the kitchen (see photo below) and built-in desks near the children’s bedrooms. “She thought of a lot of things we wouldn’t have,” Karatz says. “Like putting a dining room table big enough for sixteen people in the living room to show that you can accommodate big Thanksgiving dinners in the home.” Karatz says he’s rolling out the new Stewart designs in a half a dozen other cities starting with Atlanta this Spring and including Houston, Orlando and Las Vegas. Karatz has proven to be a clever marketer in the past. He’s built model homes on the roof of a Paris department store (KB is a big builder in France) and in Midtown Manhattan. But nothing has come close to Martha. “We have 650 communities,” Karatz says. “I don’t think we’ve ever opened with that kind of demand.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.