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BEHIND THE NEWS: Veteran builder keeps faith, despite shortage of buyers

September 22, 2008

Paul Shoopman could have sat on the sidelines savoring the fact that he sold his homebuilding firm in 2004, just months before the market began a calamitous slide.

But that's not Shoopman, who'd been building houses since 1971, the year he graduated from high school. His dad loaned him the money for his first lot, and co-signed for the construction loan.

Shoopman built Dura Builders Inc. into Indianapolis' fifth-largest homebuilder before selling it to Los Angeles-based KB Home. A little more than two years later, with his non-compete agreement expiring and with KB opting to exit Indianapolis, he jumped back in, scooping up some of KB's communities along the way.

"Honestly, the reason I got back into it is I just missed it," said Shoopman, 55, who in his second act serves as president of the Paul Shoopman Home Building Group.

Forget any notion that Shoopman sold because he saw the storms brewing. Quite the contrary. He thought homebuilding would remain robust, fueled in part by low interest rates.

Dura had been building about 600 homes a year. He figured that as a publicly traded company, KB had the financial firepower to accelerate growth. He expected it would be building more than 1,000 Indianapolis-area homes within a couple of years.

"We had no idea or expectations about all the things that are happening currently," he said. "If we all knew that, we'd probably be back in Las Vegas placing the next bet."

The local homebuilding market has cratered since. Through August of this year, just 3,394 home permits were issued in the Indianapolis area. That compares with 8,881 issued through the first eight months of 2004, the year he sold Dura. The decline has knocked some prominent homebuilders out of business this year, most notably Davis Homes.

But Shoopman is undaunted. He remembers when market conditions were far worse. In 1981, interest rates for 30-year mortgages topped 18 percent. That year, Dura built 67 homes-a paltry number, to be sure, but more than any other builder in the state.

Shoopman ramped up his new firm in the second half of 2007, then built 10 homes the remainder of that year. Paul Shoopman Home Building is on track to construct 125 this year and is shooting for 200 in 2009.

Ultimately, Shoopman wants to get back to building about 600 homes a year-about the most he can handle and retain his hands-on approach.

He's no sit-in-the-office guy. Though his company has 24 employees, Shoopman does most of the design work himself. He visits each work site weekly and handles all the inspections for key phases of construction.

But Shoopman knows no amount of hard work can stoke buyer demand. The big problem isn't a lack of people with the financial wherewithal to buy homes, he said. It's that they don't feel comfortable making a big investment.

"You drive home, and gas is $3.40 today. It's $3.80 tomorrow. It just messes up your head," he said.

Shoopman said his company has been able to do better than most builders by making its projects stand out with striking design features, such as stone exteriors, high roof pitches and gables. He said the company also has strong locations and is focused on the right niches. In Greenwood, for instance, it's building attached townhomes that start in the low $100,000s-a product targeting the growing number of residents who are at least 55 and looking to downsize.

"If I did not have my previous experience, I wouldn't make it," he said. "There are too many variables to juggle."

One thing that experience has taught him is he shouldn't get too down about the tough market. He said Americans want to live in homes rather than apartments. Eventually, he said, buyers will get off the fence.

"Really, our life right now is focused on what's to come," he said. "We know it will come back. It always comes back."

Retailer to be revived?

Whole Foods completed its $565 million buyout of Wild Oats a year ago, and the Wild Oats name disappeared from the Indianapolis grocery market months ago.

But not so fast. In a surprise ruling, a federal appeals court two months ago resuscitated the federal government's antitrust lawsuit charging that the merger lessens competition in natural-and-organic-food retailing.

If Texas-based Whole Foods would lose, it might be forced to "divest Wild Oats in a manner that restores Wild Oats as a viable independent competitor in specified markets," Whole Foods said in a regulatory filing.

Indianapolis almost surely wouldn't be one of those markets. Whole Foods had no presence in Indiana before the deal; it was one of just five states where Colorado-based Wild Oats had stores but Whole Foods didn't.
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