Explaining Southern California's economy

KB Home has confidence in California housing recovery

Justin Sullivan/Getty Images

A sign is seen outside of a KB Home sales center in Richmond, California. The company beat Wall Street expectations for its third quarter.

KB Home turned in a better-than-expected earnings report today, for its third quarter. It beat Wall Street's expectations by two cents per share — $0.15 versus $0.13. 

More importantly, the company, based on Los Angeles, anticipates a housing recovery in California finally moving off the affluent coasts and making it inland, to regions that were decimated by the financial crisis. The state doesn't have enough housing inventory to meet current demand, which is pushing up prices. We need to build new houses. And it's less costly to build those houses inland.

This is from the L.A. Times:

In a conference call with analysts Friday morning, KB Home chief executive Jeffrey Mezger said that while demand remained strong in the coastal markets of California -- places such as the Bay Area and Orange and Los Angeles counties -- the company was now experiencing strength in more inland markets as well.

“We are now seeing dramatically improved market conditions,” Mezger said.  “It is simply a different market than it was six months ago in the inland areas.”

Mezger repeated several times that the company is now going “on offense” and will continue to aggressively acquire land.

“The housing market recovery is accelerating as inventory continues to decline and prices are now rising,” Mezger said. He said that California, in particular, was set to continue recovering and that the company was well positioned to take advantage of those improvements.

Read More...