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Other builders unlikely to follow KB out of Indy, experts say

July 11, 2007

KB Home Inc. probably will be the only national builder to abandon the Indianapolis-area market, local observers say.

Dallas-based Centex Corp., Pulte Homes Inc. of Bloomfield Hills, Mich., and Beazer Homes USA, headquartered in Atlanta, are even more likely to stay now that KB is leaving, said Steve Lains, CEO of the Builders Association of Greater Indianapolis, a trade group of housing contractors.

If other large builders were considering leaving the market, KB's decision might give them pause because they would have one fewer major competitor to confront, Lains said.

"If something happens, it's going to be something small-one or two, not five or six," he said. "My sense is, no, there is not going to be a mass exodus out of this marketplace."

Dax Meredith, who directs the Indianapolis office of American Metrostudy Corp., a housing research firm based in Houston, said rumors of KB's departure swirled for months. However, he said he has heard nothing similar about other national builders.

"Only time will tell," Meredith said, but, "That's a hard barometer to read right now."

KB confirmed to IBJ yesterday that it was pulling out of Indianapolis. The Los Angeles company entered the state three years ago through buying Indianapolis-based Dura Builders Inc.

KB will eliminate local jobs by the end of the year as it finishes its order backlog, but will honor existing 10-year warranties, the company said.

The 585 building permits KB pulled in the nine-county Indianapolis area ranked it fifth last year, Lains said. That was a drop from 667 in 2005.

The region issued 9,514 permits last year, compared to 13,202 a year earlier.

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