KB Homes Tries Tiny Homes to Attract Buyers

By Melissa Dittmann Tracey

The softening housing market is causing builders to start downsizing homes to help shed high construction costs and offer a more affordable home to cash-strapped buyers. KB Homes recently announced its plans to build 880-square-foot, two-bedroom, one-and-a-half-bath houses in three suburban Houston areas. The homes will sell for $64,000.

Depending on how well the homes perform, KB plans to build them in other cities as well. CEO Jeffrey Mezger says the move is a return to the company’s post-World War II roots, when small homes were standard.

“Any time there’s been an age of exuberance and the economy turns, people get back to ‘What do I need?’ rather than ‘What could I buy?'”  Mezger told Business Week for a short article on the smaller homes (Read: “Tiny Homes for Tough Times“).

The National Association of Home Builders reported at its International Builder Show in January an overall downsize of new homes. In fact, NAHB said it’s the first significant decrease in new home sizes since they’ve started reporting: 2,629 square feet to an average of 2,438 square feet. NAHB expects the trend to continue.

Do you think smaller new homes will be the answer to get buyers off-the-fence? What is selling in your markets: The larger or more compact homes?

Melissa Tracey

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, writing about home & design trends, technology, and sales and marketing. She manages the magazine's award-winning Styled, Staged & Sold blog.

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  1. I think the smallest home that will make a good fit for a family size makes sense. But I can understand that the builders will prefer to build what the buyers demand. I think when Mezger talks about age of exuberance, he is referring to age of greed and consumerism.

  2. Using care and good thought, smaller homes can be designed and built to actually be more functional than their massive counterparts. Small homes aren’t just for “cash-strapped” buyers but for responsible buyers or simply those looking for less to take care of. Smaller homes will also help with global warming issues and community sustainability by allowing families to live comfortably and lessen their “imprint” on the environment. While large, spacious homes might seem more elegant, they’re not always efficiently laid out spaces. I’m looking forward to this trend continuing. I hope other builders follow suit.