Paul Shoopman put 33 years into Dura Builders Inc. before selling his residential construction firm to national player KB
Home Inc. as the local housing market boomed.
Two years later, he's getting back into the business even as KB and others retrench.
"It's a rewarding business," said Shoopman, 53. "You can drive by a lot and it's dirt and drive by again two weeks later and there's a house there. I enjoy the hustle and bustle."
So hustle he will. His goal is for the new Paul Shoopman Home Building Group Inc. to start construction in nine communities next year--including five he bought for an undisclosed sum from Denver-based KB, which is scaling back in central Indiana's slowing housing market.
So is Shoopman crazy to be picking now to get back in the market? Maybe not.
While not quite a bust, the end of the housing boom has home builders like KB backing off their once-aggressive growth strategies, leaving room for others--including Shoopman--to move in.
KB Home spokesman Jason Lindaman confirmed the company sold off five properties in an effort to become leaner. It has also laid off some employees, though he declined to say how many.
The company delivered 585 homes in central Indiana this fiscal year, down from 667 in 2005. Its drop reflects a wider trend in central Indiana, where permits for new-home construction have declined in recent years.
New-home permits for Marion and surrounding counties hit 11,316 in 2005, almost 25 percent lower than in 2001. And this year is worse. Through October, only 8,449 permits had been filed, according to the Builders Association of Greater Indianapolis. Permits are usually slow in November and December.
"The home building industry is very cyclical, and we're adjusting to meet the demand of Indianapolis," Lindaman said.
KB is not alone in scaling back, said association CEO Steve Lains. During the boom years when new homes were selling fast, many builders bought land to branch out into areas that weren't their traditional price points or styles, he said. Now they're getting back to their fortes.
"A slowdown gives everybody the opportunity to re-evaluate their strengths and refocus on their core business," Lains said.
Still, not everyone is experiencing a slump. Centex Homes is bucking the trend locally, gaining in permits and market share for 2006, said Ed Hackett, president of Centex Homes' Indianapolis Division.
Hackett admits the decline in housing permits and growing backlog of finished homes on the market don't tell a happy story. But other economic signs--like a falling unemployment rate and a growing local economy--offer hope.
"Those indicators would say it's a great time to get in," he said.
BAGI's Lains compared the current situation with the stock market. If an investor is certain the market is near its low and is bullish about the future, a slow time is the best time to jump in. Shoopman said that's his take on it.
"I think everybody just got nervous, but the pipeline of buyers is now being rebuilt," he said.
And the timing was right for other reasons, too. Although Shoopman agreed not to compete with KB after the 2004 Dura sale, the term of that confidential agreement apparently has expired. Shoopman has stayed active in the meantime, launching and running Indiana Land Development Corp., a small firm that prepares developments by subdividing land and building infrastructure for home builders.
Now he's ready for more. Shoopman said the property he's developing is in a variety of stages--some already subdivided with streets and some barely touched--but none of it has model homes yet.
The new company's first nine communities will include more variety than Dura Builders was known for, industry watchers said. Dura enjoyed a strong reputation and was focused on the affordable end of the market, appealing to first-time buyers or those doing their first "step up" from starter homes.
Shoopman's new company will develop some communities along those lines, such as one on the east side of Indianapolis where homes will start at $130,000. But it will also tackle Cass Estates, a higher-end Carmel-area development where home prices will run as high as $500,000.
Shoopman wants to get his new company to where Dura was in its prime--with 150 employees and 500 to 600 permits a year. He's starting from scratch, so he knows that might take two or three years, but he'd like to build at least 125 homes in 2007.
"When you stay under 600 homes per year, it's a lot more manageable," he said, adding that ILDC will also still do land development for other clients.
He hopes to get started right away.
"We'll be going at a rapid pace, which is just part of the business," he said.