Times have been gloomy for new home builders lately. But yesterday’s big merger between Pulte and Centex shows there’s still life in the business. As part of my recent touring of the Inland Empire east of Los Angeles I stopped by a new home development in Fontana, Calif. run by KB Home a week ago Sunday.
As you can see from the photo above, there was a pretty good stream of would-be buyers coming into their little sales office.
If you have a job, it’s a good time to buy a home. KB was selling 3 bedroom, 2 baths, 2-car garage, 1,400 sq feet houses for $225,000. With an FHA 30-year fixed loan with 3.5%
down at a 5.25% interest rate the monthly payment is $1,800, including principal & interest,
property taxes and insurance. That’s about what it would cost you to rent an apartment that size. You also get back $18,000 in federal and state tax credits for buying a newly built home in California.
Touring the models reminded me of how Detroit is now scrambling to produce smaller, more fuel efficient cars. KB, under its new Open Series design, puts a lot of house into a small space. That’s Steve Ruffner, KB’s Southern California division president, standing in the main room of one of the model homes. You can see it’s a combination of a kitchen, living room and dining area—the “Great Room” in home sales terminology. The house was built so tight you could look right into one of the bedrooms when you open the front door. Still, in terms of its use of space, it reminds me of those old Park Avenue apartments in New York that cram a lot of rooms into little square footage.
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.