originally appeared in Zacks Equity Research:
KB
Home, one of the leading homebuilding companies in the U.S., recently
acquired lands for 100 luxury homes in the sought after community of
Playa Vista in Westside, Los Angeles. The construction of homes will
start in spring.
The company intends to build three story
detached homes of 2,800 square feet. The homes will have four bedrooms
and three and half baths. The company also intends to build single floor
condominium homes of 2,000 square feet with private elevator access for
each home.
For simple or more complex bathroom remolding projects, consider an outstanding bathroom remodel grand rapids company that does quick, professional work.
Owing
to its operational business model KBnxt, KB Home always begins
construction only after a purchase agreement is executed. As such, the
consumers buying KB homes in Playa Vista will get the liberty to plan
their homes according to their preference.
This process also
helps the company turn over its inventory more quickly than its peers,
thereby supplying capital for reinvestment. In the long run, this
reduces the risk of unsold inventory leading to higher returns on
invested capital.
Playa Vista is one of the most sought after
luxurious communities in Westside, Los Angeles. The acquisition of land
in Los Angeles’ Westside is in line with KB Home’s strategic shift in
its geographic footprint. The focus is to place the communities in
highly desirable land-constrained submarkets that enable it to sell
larger, higher-priced homes, thus driving a strong increase in average
selling price.
The rising demand for new homes has led to a
favorable situation in the housing market, where inventory levels are
dropping and prices are moving up. The demand has been particularly
strong for luxury homes. Toll Brothers, Inc., another leading luxury
homebuilder in the US, has been witnessing strong overall growth over
the past few quarters.
Therefore, building adequate number of new
homes is necessary in order to maintain the required level of inventory
to meet the growing demand for homes. Acquiring lots and lands in the
Playa Vista community will help the company to capitalize on the
increasing housing demand.
With housing market recovery gaining
momentum, KB Home believes its strategic initiatives including overhead
reduction, margin expansion, and land investments in higher-priced,
better-located communities; and increasing backlog will help it achieve
profitability in the upcoming quarters. Though we have faith in KB
Home’s strategic initiatives, we believe that it may take time to
achieve sustainable profitability as the housing market recovery process
is erratic and uneven.
We currently have a Neutral recommendation on KB Home. The stock carries a Zacks #3 Rank (a short-term Hold rating).
Showing posts with label home upgrades. Show all posts
Showing posts with label home upgrades. Show all posts
Friday, December 14, 2012
Thursday, May 22, 2008
Will upgrading your home help you sell it?
If you're putting your home on the market anytime soon, you may want to rethink those plans to bump out the kitchen or add an extra bath.
During the housing boom, such ambitious projects would recoup as much as 90 cents on the dollar. Not today. The resale value of improvements in general is sliding, according to experts. In a departure from recent trends, homeowners are getting the best payback from relatively mundane improvements, such as sprucing up the exterior of their house or putting in new windows.
After spending $400,000 remodeling the suburban East Greenwich, R.I., home he bought for $820,000 in 2002, Jonathan Salinger learned he probably couldn't sell it for more than $1.1 million in today's market. That's after posh additions that included landscaping, a pool, an outdoor kitchen, first-floor laundry and mud rooms, and custom cabinetry. As a result, the 45-year-old district manager for a mortgage lender recently decided not to list his house for sale and scratched plans to move the family closer to his children's private school in Providence.
The slumping housing market has made remodeling much trickier. When house prices were climbing ever higher, buyers knew they could spend big bucks to expand their homes and still make a profit when it came time to sell. But today, a buyer who spends unwisely on remodeling may be simply digging a deeper hole when it comes time to move.
Further complicating the equation: Even though housing prices are slumping, construction prices have continued to climb. That means adding that new bath will cost more, even as it contributes less to the resale value.
Homeowners have taken note. Remodeling activity peaked in 2006 before slowing last year. And it is expected to fall 4.8 percent this year, according to a report by the Harvard Joint Center for Housing Studies released last month.
Since many homeowners remodel using borrowed money, tighter credit means it's also harder for many homeowners to afford big projects. Still, American homeowners will spend an estimated $166 billion on remodeling this year, according to the Harvard housing center.
Nationally, returns for all major home-improvement projects are fetching 70 cents on the dollar, according to a Remodeling magazine survey of real-estate professionals conducted late last year. That's down from 80 cents in 2004. Back then, a minor kitchen remodel cost an average $15,300 and recovered an estimated 93 percent if the home was resold within a year. Today, a similar remodel costs $21,100 and would recoup only about 83 percent.
This doesn't mean all remodeling is a waste of money. Home improvements that help a property stand out in a glut of newly built houses and foreclosed properties are most likely to pay off now, as are those that make a house lower-maintenance or more energy-efficient.
"Make the outside of the house look really great so that people fall in love between getting out of the car and the front door. That is money that is worth spending," says Diane Saatchi, senior vice president at the Corcoran Group real-estate agency, who sells high-end properties in the Hamptons of New York's Long Island.
Freshly painted trim and new hardware also help a home show well, says Ms. Saatchi. And landscaping, including well-manicured trees and shrubs, can help older homes compete against new ones that lack mature vegetation, she says.
New windows and doors and siding help homes look well-tended and spiffy from the street. They also help make houses more energy-efficient, which increasingly matters to buyers grappling with rising fuel and air-conditioning costs, experts say.
Some elaborate remodels, though, may actually make your home harder to sell, says New Mexico builder Lonny Rutherford. He notes that lenders are nixing higher-than-normal appraisals, and that many buyers are looking for a deal. Even if someone wanted to pay extra, they "would have a hard time financing the house unless they have a lot of cash," he says.
Inferior remodeling work may be worse than none at all. Cheap cabinets and poor workmanship won't fool buyers as they might have a few years ago, when many had to make snap decisions about buying a house, says Anslie Stokes, a real-estate agent in Washington, D.C.
"Buyers can spot shoddy renovations, and they aren't willing to pay for it anymore," Ms. Stokes says.
Some improvements have regional appeal. Backup power generators bring greater returns in the West and Southwest, following several seasons of extreme weather that can knock out electrical power, than in New England. Steel replacement roofs bring greater returns in wildfire-prone California than in Iowa or Minnesota, according to the Remodeling magazine survey. As for interior amenities, home buyers in some high-tech-focused cities find "wired" homes very desirable, but they aren't in demand everywhere.
"People are looking for broadband access and alarm systems," says Jim Amorin, a real-estate appraiser in Austin, Texas. "That is almost getting to be a necessity in my market." He says barbecues, pools and other home-entertaining amenities are also in demand in his part of the country. "In downward-trending economies, people spend more time at home, so they like things that make that more enjoyable."
Despite the real-estate meltdown, some homeowners are still putting their faith in renovations. Susie Hastings, a 61-year-old homemaker, recently spent $60,000 upgrading her mother's 1948 four-bedroom house in Farmington, N.M., for possible resale or rental. Ms. Hastings replaced all the windows and doors with double-paned energy-efficient ones, redid the stucco exterior and added a high-efficiency boiler to slice the utility bill. Now she hopes the house will sell for more than its previous appraised value of $220,000.
"It has made a big difference in the look," she says.
By: M.P McQueen
Wall Street Journal; May 16, 2008
During the housing boom, such ambitious projects would recoup as much as 90 cents on the dollar. Not today. The resale value of improvements in general is sliding, according to experts. In a departure from recent trends, homeowners are getting the best payback from relatively mundane improvements, such as sprucing up the exterior of their house or putting in new windows.
After spending $400,000 remodeling the suburban East Greenwich, R.I., home he bought for $820,000 in 2002, Jonathan Salinger learned he probably couldn't sell it for more than $1.1 million in today's market. That's after posh additions that included landscaping, a pool, an outdoor kitchen, first-floor laundry and mud rooms, and custom cabinetry. As a result, the 45-year-old district manager for a mortgage lender recently decided not to list his house for sale and scratched plans to move the family closer to his children's private school in Providence.
The slumping housing market has made remodeling much trickier. When house prices were climbing ever higher, buyers knew they could spend big bucks to expand their homes and still make a profit when it came time to sell. But today, a buyer who spends unwisely on remodeling may be simply digging a deeper hole when it comes time to move.
Further complicating the equation: Even though housing prices are slumping, construction prices have continued to climb. That means adding that new bath will cost more, even as it contributes less to the resale value.
Homeowners have taken note. Remodeling activity peaked in 2006 before slowing last year. And it is expected to fall 4.8 percent this year, according to a report by the Harvard Joint Center for Housing Studies released last month.
Since many homeowners remodel using borrowed money, tighter credit means it's also harder for many homeowners to afford big projects. Still, American homeowners will spend an estimated $166 billion on remodeling this year, according to the Harvard housing center.
Nationally, returns for all major home-improvement projects are fetching 70 cents on the dollar, according to a Remodeling magazine survey of real-estate professionals conducted late last year. That's down from 80 cents in 2004. Back then, a minor kitchen remodel cost an average $15,300 and recovered an estimated 93 percent if the home was resold within a year. Today, a similar remodel costs $21,100 and would recoup only about 83 percent.
This doesn't mean all remodeling is a waste of money. Home improvements that help a property stand out in a glut of newly built houses and foreclosed properties are most likely to pay off now, as are those that make a house lower-maintenance or more energy-efficient.
"Make the outside of the house look really great so that people fall in love between getting out of the car and the front door. That is money that is worth spending," says Diane Saatchi, senior vice president at the Corcoran Group real-estate agency, who sells high-end properties in the Hamptons of New York's Long Island.
Freshly painted trim and new hardware also help a home show well, says Ms. Saatchi. And landscaping, including well-manicured trees and shrubs, can help older homes compete against new ones that lack mature vegetation, she says.
New windows and doors and siding help homes look well-tended and spiffy from the street. They also help make houses more energy-efficient, which increasingly matters to buyers grappling with rising fuel and air-conditioning costs, experts say.
Some elaborate remodels, though, may actually make your home harder to sell, says New Mexico builder Lonny Rutherford. He notes that lenders are nixing higher-than-normal appraisals, and that many buyers are looking for a deal. Even if someone wanted to pay extra, they "would have a hard time financing the house unless they have a lot of cash," he says.
Inferior remodeling work may be worse than none at all. Cheap cabinets and poor workmanship won't fool buyers as they might have a few years ago, when many had to make snap decisions about buying a house, says Anslie Stokes, a real-estate agent in Washington, D.C.
"Buyers can spot shoddy renovations, and they aren't willing to pay for it anymore," Ms. Stokes says.
Some improvements have regional appeal. Backup power generators bring greater returns in the West and Southwest, following several seasons of extreme weather that can knock out electrical power, than in New England. Steel replacement roofs bring greater returns in wildfire-prone California than in Iowa or Minnesota, according to the Remodeling magazine survey. As for interior amenities, home buyers in some high-tech-focused cities find "wired" homes very desirable, but they aren't in demand everywhere.
"People are looking for broadband access and alarm systems," says Jim Amorin, a real-estate appraiser in Austin, Texas. "That is almost getting to be a necessity in my market." He says barbecues, pools and other home-entertaining amenities are also in demand in his part of the country. "In downward-trending economies, people spend more time at home, so they like things that make that more enjoyable."
Despite the real-estate meltdown, some homeowners are still putting their faith in renovations. Susie Hastings, a 61-year-old homemaker, recently spent $60,000 upgrading her mother's 1948 four-bedroom house in Farmington, N.M., for possible resale or rental. Ms. Hastings replaced all the windows and doors with double-paned energy-efficient ones, redid the stucco exterior and added a high-efficiency boiler to slice the utility bill. Now she hopes the house will sell for more than its previous appraised value of $220,000.
"It has made a big difference in the look," she says.
By: M.P McQueen
Wall Street Journal; May 16, 2008
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