Kb Homes

KB Homes

The Company

KB Home (NYSE: KBH) is a homebuilding company based in the United States, founded in 1957 as Kaufman & Broad. It was the first company to be traded on the NYSE as a home builder and is a Fortune 500 company. Its headquarters are in Los Angeles, California.In fiscal 2005, the company delivered homes to 37,140 families in the United States and France and had revenue of over $9 billion.KB Home is a lending partner with and offers complete mortgage services through Countrywide Home Loans

Problems facing the company

Default in Sub-Prime sector.

Sales down in Feb. after no gain in Jan.1.5 Ml will lose their homes due to Foreclosure!

According to The National Association of Realtors, which frequently trumpets the fact that median U.S. home prices haven't declined since the Great Depression, said yesterday for the first time that they expect prices to do just that. In February the NAR was still calling for a 1.9% increase, but now says prices will likely drop nationwide 0.7% from 2006 levels. This means less eligible buyers, and a rise in foreclosures is adding to the inventory of houses in already over-stocked markets. The report said "fallout from the sub prime loan debacle" will likely delay a housing market recovery until 2008. Separately unfair press by their misleading information is adding to the market stress which is raising the very real possibility of overzealous regulatory and legislative responses.

Increase in interest rate

Increasing interest rate means less demand for new homes. Some experts believe that it would be better to rent for the next five years rather than buy.

Rising defaults by sub prime borrowers have forced more than two dozen lenders out of business in recent months and raised the prospect of a credit crunch that might squeeze out some potential buyers.

A wave of foreclosures could also hurt new home builders, forcing them to lower prices to compete with existing properties.

Negative publication

Also the resent negative news about KB Homes high foreclosure rate could heart them more than ever, since buyers are more cautious about purchasing new homes. Here is one of the reports on DEC/28/2008;

Outstanding Report: KB Home a big factor in high foreclosures - 91 percent, got their loans from KB's mortgage company

... “Colorado's home foreclosure rate to the highest in the nation this year and Weld County to the highest in Colorado, real estate experts say: stagnant prices, too many houses for sale, 100 percent loans with rising interest rates, mortgage fraud, unregulated brokers, false appraisals and buyers reaching beyond their means... He and others say some builder incentive programs, particularly those that require buyers to use an affiliated lender, also can raise the risk of loan defaults... "The Post analysis found high foreclosure rates in several communities of one national builder, KB Home. In most cases, the loans for those homes came from KB's mortgage branch. In a Northglenn neighborhood built by KB Home, 56 of the original buyers have been foreclosed. Fifty-one, or 91 percent, got their loans from KB's mortgage company. In Kentfield, a Thornton neighborhood, 80 of the original buyers have been foreclosed. Seventy, or 87 percent, borrowed from KB's mortgage company. About half were foreclosed on their original loans, which KB sold to other lenders, and