The Indianapolis-based company was stung by the double whammy of low demand and lower prices that made it difficult for any home builder to turn a profit. Most builders laid off employees and hoarded cash in 2008, seeking to survive the worst market for new homes they had seen.
Founded in 1985, Davis built more than 12,000 homes across central Indiana. But, early in 2008, its count of new-home permits had dropped 70 percent from 2004. The firm filed 15 permits in the first quarter, down from more than 80 during the same period in 2007. As of May, it had 30 employees, after shedding more than 170 workers since its peak in 2001.
The builder said it secured warranty insurance, so Davis homeowners should be covered. It also said it had arranged for regular maintenance and was looking for other home builders to complete its neighborhoods.
CEO Brad Davis said he expected only about 5,000 houses to be built in the Indianapolis area in 2008, a steep slide from the at least 13,000 built annually since the late 1990s.
The market won't stage a comeback until at least 2010, Davis predicted, and even then the number of units will reach about 10,000—nowhere near pre-downturn levels.
Davis told IBJ he had hoped to stick it out, but began to realize survival wasn't possible. Several real estate acquisitions in early 2006 loaded the company with financing it couldn't continue to service.
"The market just kept getting worse and worse," he said. Davis said he plans to get back in business soon, building custom and semi-custom houses.