Choice Homes, the Ft. Worth, Texas-based builder that ranked No. 40 on the BUILDER 100 list of the nation's largest builders as recently as 2007, is shutting its doors for good.
Choice Homes President Daniel Couture said in a statement Feb. 25: "Faced with the escalating downturn in the housing market, the likelihood of a deep, prolonged recession, and very difficult credit markets, Choice Homes, after 21 years in business and building over 39,000 homes, has decided to wind down its home building operations."
Couture continued: "This was not an easy decision, but faced with the unprecedented market conditions, we have decided on this course of action. It is our intent to satisfy our obligations to our subcontractors and suppliers and to work closely with our secured creditors to maximize the proceeds from the sale of the assets of Choice Homes. Our plan is to do an orderly wind down without a bankruptcy filing."
The company said it will refund all deposits to contracted buyers who decide not to proceed with the purchases of their homes. Couture also said, "All subcontractor bills have been paid current, and we have confidence in our subcontractors standing behind the warranties on their work."
The builder had little choice but to shut down. "Choice was focused on the affordable first-time buyer, and they had land positions that reflected that," said Lisa Jackson, vice president at John Burns Real Estate Consulting. "Today, those are the areas that are hardest hit with foreclosures. Getting their target buyer qualified for sales would be very challenging given the mortgage environment."
Choice's exit continues what has so far been a difficult 2009 for large builders. Just this month, John Laing Homes filed for bankruptcy, and Chicago-based Pasquinelli Homes is neogiating with lenders to avoid the same fate. Indianapolis-based C.P. Morgan announced Thursday it was shutting down Feb. 27.
In January, Texas-based Wall Homes, headed by former Choice Homes CEO Steve Wall, filed for Chapter 11 bankruptcy. In 2005, Wall left the CEO position of Choice Homes just as the company was beginning to deal with the housing downturn and the mortgage crisis. A succession of new executives were brought on board to turn around the company, but the company was unable to recover.
Privately held Choice reported closing 1,567 homes in 2007 with revenues of $236 million, a decline of 43% from 2006. It had risen as high as No. 18 on the Builder 100 list in 2003, when it reported 4,394 closings.
Lynn Norusis is senior editor at BIG BUILDER magazine.