Los Angeles

[STARCHY]

http://www.bloomberg.com/news/2011-02-17/kb-home-may-spend-700-million-on-land-with-expansion-in-cal...

[stop_bailouts]

Woo hoo! More supply = lower prices.

[LoansbyJW]

KB has always been an opportunistic builder. They buy cheap land, put up even cheaper homes (I should know, I live in one...) and make money the old fashioned way - they earn it. Nows a great time to pick up land from flailing builders at a reduced cost than you could only a few years ago. Labor rates are also very low today, so why not invest?

Thanks for reading,

[Hank_in_Hancock]

Wow, so they must be one of the few optimistic home builders, as if you recall, the Homebuilder Mood Survey came out a few days ago with continued severe pessimism.

"The National Association of Home Builders said Tuesday its housing market index held at a level of 16 for a fourth consecutive month in February. The results were in line with expectations.

The index was based on a survey of 424 builders.

The numbers used in compiling the index are adjusted for seasonal variations. A number of 50 in the NAHB index would mean more builders view conditions as good than as poor. The last time the home builders’ confidence gauge was in positive territory—that is, 50 or better—was April 2006."

[987s]

They're just buying land.     I think most large homebuilders will buy land during a housing downturn and wait to actually build during the upturns. 

If they're buying land now, they are probably guessing this is the bottom as far as land values go.

[Hank_in_Hancock]

Hmmm, actually according to the article, the "might" or "may" be buying land.  They "might not"/ "maybe not", too.  The article sounds to me a lot like propaganda and PR by KB/CEO Mezger, fishing for deals on land from municipalities.  "Hey we've got almost a billion to spend, so any community that wants the revenue that our communities will generate, you better come up with sweetheart deals for us to consider buying land in your jurisdiction".  Just my honest opinion and interpretation of the article.

KB Home May Spend $700 Million on Land This Year

KB Home, the Los Angeles-based homebuilder that targets first-time buyers, may spend $600 million to $700 million on new land this year as it expands its community count, Chief Executive Officer Jeffrey Mezger said.

“If the markets firm up and are better we’ll spend more,” Mezger said in an interview yesterday at Bloomberg’s headquarters in New York. “If the markets get more difficult, we’ll spend less.”

So maybe they'll spend more, maybe they'll spend less.  Maybe they'll spend exactly what they say they'll spend.  Sounds like a typical executive...all talk and no substance.

[Lizard]

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STARCHY wrote:

http://www.bloomberg.com/news/2011-02-17/kb-home-may-spend-700-million-on-land-with-expansion-in-cal...

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I know this company very well and there is no way they will spend $700M buying land in 2011 or 2012 for that matter. They have negative cash flow, not enough cash to pull it off w/o borrowing [too $$$] and they won't sell stock when their share price is flirting with a 10yr low.

I might add they took a $206M hit in 2009 mostly from land option abandonment.

All this is publically available information:

http://biz.yahoo.com/e/110131/kbh10-k.html

Lastly, I personally would not buy a home by this builder.

[STARCHY]

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Lizard wrote:

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STARCHY wrote:

http://www.bloomberg.com/news/2011-02-17/kb-home-may-spend-700-million-on-land-with-expansion-in-cal...

---

I know this company very well and there is no way they will spend $700M buying land in 2011 or 2012 for that matter. They have negative cash flow, not enough cash to pull it off w/o borrowing [too $$$] and they won't sell stock when their share price is flirting with a 10yr low.

I might add they took a $206M hit in 2009 mostly from land option abandonment.

All this is publically available information:

http://biz.yahoo.com/e/110131/kbh10-k.html

Lastly, I personally would not buy a home by this builder.

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good points - could be all fluff

on the other hand, could be a sign that they are bullish on the recovery

only time will tell