Another homebuilder's top-of-the market purchase has gone sour.
Hovnanian Enterprises has announced that it was laying off 200 employees from First Home Builders in Ft. Myers, Fla. The layoffs will become effective Dec. 28. Hovnanian Enterprises bought First Home Builders in 2005.
The reductions will come from all sectors of First Home Builders. "This is a painful action, but a necessary one to right-size the company," said Tim Graney, vice president of finance for Hovnanian, in a press release.
First Home will continue to target first-time home buyers in the difficult Ft. Myers market. That could be a challenge considering it's one of the worst markets in the country. Through June 30, 2007, 3,502 homes had been sold in the market compared with 10,568 homes in 2006, according to Hanley Wood Market Intelligence.
"We are now positioned to operate more efficiently at a lower volume than we have enjoyed in the past few years," Graney stated in the release.
First Home is already facing legal problems in the market. People who bought real estate investment properties from First Home from Sept. 1, 2003, through Dec. 31, 2005, have filed a class action suit against the builder. The suit alleges that the defendants made misleading and false statements to investors in order to entice them to buy rental properties in Lee County, Fla.