It’s not easy filling someone else’s shoes, especially if that someone is long time KB Home chief exec Bruce Karatz. Karatz built a reputation as an innovative marketer, once putting up a model home in Midtown Manhattan and inking the creative partnership with Martha Stewart that’s generated headlines from the Carolinas to California. Karatz was ousted this past November as result of the options backdating scandal. His long time number two, Jeffrey Mezger (right), took over immediately. Mezger’s an old pro. His father was a homebuilder and Mezger still tells tales of building his first home—a tree house made with his father’s lumber—at age eleven.
Mezger’s already putting his own stamp on KB, one of the nation’s largest home builders with more than $9 billion in sales. Last month, for example, Mezger canceled a planned high rise residential tower the company was going to build from scratch in downtown Los Angeles. It’s not a knock against his hometown or the long term trend of folks moving back to and even retiring in urban settings. Mezger, ever practical, says such projects take too long and are hard to replicate. He’d rather focus on urban infill projects in cities such as Anaheim and Woodland Hills where old single family homes and apartment buildings are giving way to modern three and four story townhomes. “Bruce was very entrepreneurial,” Mezger says. “He loved to do new things. I’m not so easily bored with success.”
For KB that means fewer luxury projects and renewed focus on first time home buyers. Mezger says condos and townhomes at 25% of sales will still be an important part of the company’s mix. Much of that will be in urban areas where land shortages and high prices make new home construction difficult. “It’s the only way to keep housing affordable,” he says.
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.