KB Home’s No-Frills Home Approach Draws Ire in N.C.

 By Dawn Wotapka - The Wall Street Journal May 14, 2009

In Hillsborough, N.C’s Kenion Grove subdivision, homes were selling for more than $300,000 three years ago. But KB Home is now advertising homes with price tags less than half that much. And some homeowners are irate with the builder, one of the nation’s largest.

To protest, the Tar Heel residents stuck “For Sale By Owner” signs in their yards earlier this month, reports the (Raleigh) News & Observer. They weren’t looking to sell – which wouldn’t be that easy anyway – but they aimed to deliver a message that they didn’t want to lose equity.

KB says it is simply responding to the changed market. “Homebuyers are now looking for an affordable home at a certain price point that they can afford,” says KB Home spokeswoman Cara Kane.

It’s a dilemma that is sparking friction nationwide. To appeal to first-time buyers, considered the battered market’s sweet spot, and to compete with bargain-priced foreclosures, many builders are shaving prices, floor-plans and features. Buyers, they say, no longer want the upgrade-filled McMansions that fueled the housing boom. But that’s upsetting current residents who say the new designs do not match the vision they were sold.

In compliance with homeowner association rules, KB Home has been building larger homes with no frills, but one resident grumbled they don’t match the existing neighborhood. “It’s a box with windows,” Albert Mealer, who purchased his house for $247,000 in August, told the paper.

There could be a compromise: If the homeowners association revises its rules to allow homes smaller than 2,000 square feet, Mr. Mealer thinks KB could hit its price point with smaller units that retain the high roof pitches, dormers and ample windows on the current homes.

The residents were scheduled to meet with a company executive this week.