Customers Embrace Affordable, Flexible “Open Series” House Plans
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Credit: KB Home
NOT JUST FOR FIRST TIMERS: KB'S Open Series accounted for half of its closings in 2009, and attracted a wide range of buyers.
CHALLENGE: This concept offers features and prices that compete with mounting resales and foreclosures.
SOLUTION: In early 2007, KB Home’s management could see that its primary competition wasn’t new homes from other builders but resales and foreclosed homes that were flooding many of its markets.
“Jeff [Mezger, KB Home’s CEO] challenged our team” to come up with a response, recalls Steve Ruffner, president of the builder’s Southern California division. “He said that we could wait for the market to change or assume that this was the market going forward.”
A buyer survey revealed that a growing number “wanted more for less,” says Ruffner. They wanted energy-efficient homes with utilitarian rooms. A surprising portion of buyers also preferred single-story houses. “That told us we needed to come up with something that had more utility in a smaller footprint.”
That “something” was KB’s Open Series. Its 1,240- to 2,300-square-foot house plans on 3,500- to 6,000-square-foot lots represented what Mezger called “the fullest expression of our Build to Order brand differentiation,” which had been around for about a decade. Ruffner says Build to Order is “an important component” for Open Series, as is the builder’s design center that offers buyers 3,000 different options. The third seminal component to Open Series is its four-month cycle time from sale to completion, which makes it less likely that buyers will drift toward existing-home alternatives during construction.
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Credit: KB Home
FEWER BARRIERS: The Open Series, which was created to compete against foreclosures and resales, features flexible house plans and room designs.
Prices for Open Series homes range from the mid $100s to the low $400s, says Ruffner, and are the result of the builder’s architecture department working overtime to design and value-engineer the house plans for affordability. Ruffner also credits KB’s trade partners for agreeing to renegotiate their prices so that the builder could get Open Series’ construction costs down.
One of the first things buyers notice about Open Series homes, says Ruffner, is that the houses “don’t have a lot of formal space.” Buyers can increase the size of one area by altering the house’s room count. All of the homes are Energy Star qualified, too, and offer options from KB’s “My Home My Earth” selection. “I never realized how important green and energy efficiency are to buyers until we started selling these homes,” he adds. An Open Series house promises 40 percent energy savings over an existing house built 10 years ago.
RESULTS: To say that Open Series struck a chord with buyers would be an understatement of epic proportions. Introduced in the Southern California division in 2008 and rolled out over six months, Open Series is now available in every market in which KB builds. Open Series homes accounted for half of the builder’s 8,488 closings in 2009, and are expected to exceed that percentage this year. The company recently added a flex feature to the series, which gives buyers greater latitude in choosing room count and size. And in Northern Los Angeles it has introduced a move-up model, called Vista.