Wide-Open Spaces, Inside and Out, Fuel KB’s Sales in Castaic
By AMY MOGLEN
Forget the bells and whistles after 46 years of homebuilding KB Home Inc. has all but perfected the science of determining what entry-level and move-up homebuyers are looking for: space.
After conducting surveys and studies of the region, the company decided to forgo any elaborate designs and instead constructed standard houses with ample square footage. Want extra features like a loft, a fireplace? That’s extra.
That strategy, in part, is responsible for the company’s success with its Belmont Collection at Hasley Hills, the burgeoning development that was the most active residential project in 2002.
KB Home sold 104 units out of 198 lots in the Belmont Collection, a hillside community in Castaic, about 30 miles north of Los Angeles near the Ventura County border.
Los Angeles-based KB has been riding high in the face of record-low mortgage rates. Earlier this month, the company reported first-quarter net income of $52.8 million, compared with $42.7 million for the like period a year ago. Sales for the three months rose 20 percent, to $1.1 billion. KB Home Chief Executive Bruce Karatz told Bloomberg News he expects the company to earn $8 a share in 2003, above the $7.75 Thomson Financial average estimate. KB Home stock has been up for the year.
Concerns over Iraq and the economy notwithstanding, the housing boom shows little sign of letting up. Applications for mortgages continue to hover around record-highs, despite ongoing concerns by economists that a housing bubble is possible in certain regions of the country.
As for KB’s Belmont development, Jay Moss, division president for Greater Los Angeles at KB Home, attributes the sales success to the simple addition of space and price. “It’s the most affordable Valencia marketplace and we offer the most square footage,” he said.
In the past, KB Home has sold to mostly first-time homebuyers. Hasley Hills, however, is drawing a mix of buyers. Perhaps because of L.A.’s soaring housing prices, or because of the growing Valencia economy, many homeowners from the surrounding area are moving in.
“This appeals to people who already live in Valencia and the San Fernando Valley who are looking for a single family home that they can afford in a nice suburban community,” said Moss.
The project has not missed out on the county’s steep run-up in values. The average sale price of a home at Hasley Hills has gone up to approximately $400,000 today, from $350,000 last year, according to Tom DiPrima, division executive vice president at KB Home.
The three- to six-bedroom contemporary California homes sell for between $365,990 and $418,990. Buyers can choose from three models and four floor plans; there are both one and two story models and the plans range from 1,853 to 2,914 square feet. All units have large family rooms with separate living and dining rooms, a two-car garage and a list of optional amenities like fireplaces, lofts and decks.
The mix of space, price and options has led to some of the best referral rates in the company, DiPrima said. A fifth of all sales last year came from referrals by existing homeowners. The average resident-referral rate for the company is between 15 and 16 percent.
The project is within five miles of the Castaic Village Center and three miles south of boating and fishing in Castaic Lake State Recreation Area. The Golden State (5) and Antelope Valley (14) freeways are nearby. Valencia is five minutes away.
With 198 units, last year’s activity has cut availability to only nine remaining lots, said Cindy Wilk, a sales agent for the project. Six of the nine available lots are vacant and three are under construction.
“It’s one of the last great affordable developments,” said DiPrima. “Our plan is to finish building and close the project this year.”
Most Active Residential Project – Belmont Collection at Hasley Hills
Player: KB Home Inc.
The Deal: An emphasis on square footage and basic design has kept costs down at the 198-unit development in Castaic. That allure resulted in 104 units sold in 2002, at prices averaging $350,000. The
developer expects the remaining nine lots to be sold this year.