Davis Homes CEO Brad Davis said today he plans to begin building custom and semi-custom houses before the end of the year. Davis said he plans to start on his native north side by tapping relationships with real estate agents who know of people looking to build.
"I thoroughly love homebuilding," said Davis, 47.
His comments followed an announcement earlier today that the company would fold after being decimated by a nasty market.
Davis Homes joined more than 30 homebuilders nationwide that have discontinued operations since 2007. The builder said it has secured warranty insurance so Davis homeowners will be covered. It also has arranged for regular maintenance and is looking for other homebuilders to complete its neighborhoods.
The company built more than 12,000 homes in more than 80 neighborhoods across central Indiana since it was founded in 1985.
Davis Homes was stung by the double whammy of low demand and lower prices that make it difficult to build at a profit.
The company's 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 last year. As of May, it had 30 employees, after shedding more than 170 workers since its peak in 2001.
Brad Davis said he expects only about 5,000 houses to be built in the Indianapolis area this year. The market began contracting in earnest last year after the region experienced a run of at least 13,000 annually since the late 1990s.
The market won't stage a comeback until at least 2010, Davis said, and even then the number of units will reach about 10,000 - nowhere near pre-downturn levels.
Davis said he had hoped to stick it out, but in the past couple of months began to realize that survival wasn't possible. Several real estate acquisitions in early 2006 loaded the company with financing that it couldn't continue to service.
"The market just kept getting worse and worse," he said.
No suppliers or subcontractors will lose money as a result of the shutdown, but Davis Homes investors will, Davis said. Those investors include his 75-year-old father, Charlie Davis. He wouldn't disclose names of the remaining investors.
"There really isn't any equity to speak of at this stage," Davis said. He declined to discuss what the company could have been sold for at the peak of the housing boom in 2005.
A new company to build custom and semi-custom houses probably will include Charlie as an investor, Brad Davis said.