Builders target New Orleans
Posted on Wednesday, December 7, 2005
LOS ANGELES — Heading into territory long ignored by the nation’s top builders, KB Home says it plans to build up to 20, 000 houses in the New Orleans area and other parts of Louisiana devastated by Hurricane Katrina.
The construction would represent the first major housing investment in the New Orleans region since Katrina struck at the end of August, devastating the city and leading to flooding that destroyed or left uninhabitable thousands of homes.
Los Angeles-based KB has formed a 50-50 joint venture with Shaw Group Inc., a Baton Rouge-based construction and engineering firm that is among the top contractors involved in rebuilding the Gulf Coast region, KB Home chief executive Bruce Karatz said.
“We want to rebuild New Orleans,” Karatz said Monday in announcing the plan.
“These are major players putting their money where their mouths are,” parish president Aaron Broussard told The (New Orleans ) Times-Picayune. “They are anticipating a great influx of people coming to Jefferson.” Financial terms of the partnership were not released.
The companies will look for undeveloped land to construct new-home communities in metropolitan New Orleans and suburban locales away from the flood-prone urban neighborhoods hardest hit by Hurricane Katrina and its aftermath, Karatz said.
Already, the firms have a pending agreement to acquire 3, 000 acres of farmland in Jefferson Parish, a 30-minute commute from downtown New Orleans, KB officials said. The partners are also considering properties in Baton Rouge and elsewhere.
KB Home’s foray into Louisiana would be among the first by major U. S. builders, which have shied away from the state because of its lackluster economy, receding population and unusual geographic constraints that put parts of the area below sea level. D. R. Horton Inc., the largest U. S. home builder, said last month that it has started to acquire lots near Baton Rouge, where the population has skyrocketed as refugees from the hurricane zone seek housing there.
Even though the lasting economic impact of Katrina is unclear, Karatz said, “there’s such enormous need” for housing.
“If we develop the ability to execute home building in the region, and do it successfully, it will be a sizable market,” Karatz said during a phone interview while touring the 9 th Ward, one of the hardest-hit neighborhoods in New Orleans.
Local economists have estimated that more than 300, 000 homes were destroyed or rendered not habitable on the Gulf Coast, with two-thirds of those in the New Orleans area.
KB Home is the nation’s fifth-biggest builder, constructing more than 25, 000 homes this year with an average price of $ 250, 000. It specializes in so-called entry-level homes for first-time buyers in California, the Southwest and the Atlantic Coast. The median home price in the metro New Orleans area is $ 152, 000.
Karatz declined to estimate when any new KB Home units would be available in Louisiana, or at what price. Information for this article was contributed by The Associated Press.
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