“We love the Texas area,” said Alan Arthur, the Irvine, Calif.-based company’s CFO. “Our employees are wonderful, wonderful people.” Fieldstone has built more then 3,000 homes in the greater San Antonio market since 2003.
But a confluence of circumstances made it the right business decision, Arthur said. Fieldstone, like many private builders, still has trouble getting construction financing as many banks have been out of that business, said Arthur. So the company had to decide where best to consolidate its resources.
“We hate to leave this market, but with our smaller overall size today, we had to decide where we wanted to focus our future efforts,” said Arthur.
Because of heavy competition from other builders, thin margins, and a thinner pool of buyers who can qualify for home loans, San Antonio became the logical market to exit.
“In addition, the San Antonio market is very competitive,” said Arthur. “Most of the large public builders are there, and there are a lot of well-capitalized local builders.”
Texas, with its relatively stable market and smaller price depreciation became a haven for many builders in the downturn. But those traits could make it a less profitable market to be in when the economy turns around than those markets where prices have fallen further and might rebound greater, said Arthur.
“California and Utah are more likely to have some price appreciation (when the markets recover),” he said."We are less likely to see that in Texas.”
Fieldstone will be exiting the market after it sells its 120 completed homes and models in 14 communities. Those houses have been marked down and additional flexible incentives added to help the homes sell quickly. Fieldstone will continue to honor home warranties and provide customer service to Texas buyers even after closing down shop.
“There are a lot of great families in San Antonio who need homes,” said Arthur. “We hope that with our new reduced pricing and special incentives, we can match them up with our available homes in San Antonio."
Fieldstone also has its 640 finished lots and 1,300 entitled lots in San Antonio up for sale to builders and developers, but it won’t be as aggressive in marketing those.
“We are not a distressed seller. Maximizing value is more important than timing,” said Arthur.
Teresa Burney is a senior editor for Builder magazine.