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Concordia Homes - Nevada Home Builder

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2008-10-09

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stories: lvrj.com

We first received word that Nevada and Arizona home builder Concordia Homes had shutdown operations via the following tip in our feedback line:

On Tuesday of this past week, Concordia Homes of Nevada and Arizona (website: concordiahomes.com), the owner Gidget Graham made the announcement to the employees that after 14 years in business in Nevada they were closing this past Friday the 9th.

All employees were told they had until the end of the day on Friday to clean out their desks as the company would no longer operate after Friday because of the failure to get loans to complete homes, pay subs and employees.

Concordia Homes of Nevada only two years ago had closed on over 300 homes [per year] and at one point had more than 60 employees.

On October 15th, the Las Vegas Review Journal reported that home builder Concordia Homes had elected to shutdown operations due not only to slowing demand, but also to buyers who couldn't get loans. Per the article:

Concordia Homes of Henderson, Nevada has closed its sales offices and will be refunding deposits on homes that have yet to start construction, an industry source said today.

The Henderson-based home builder has not gone out business and has not filed for bankruptcy, but it will not be selling any new homes, Home Builders Research principal Dennis Smith said.

Established in 1977, Concordia Homes has built homes in Las Vegas, Henderson and Pahrump, as well as Bullhead City and Avondale, Ariz. ...

"This is not strictly about demand," he said. "This is also credit. You've got buyers and you can't get loans approved. What do you do? You close subdivisions."

We are unclear at this time which narrative regarding Concordia is correct: is it that the company could no longer get loans to complete homes or because home buyers couldn't get the loans necessary to buy them. Perhaps both have some elements of truth. If anyone can better articulate what happened, please let us know.

Concordia issued the following press release (dated October 15, 2008) by Gidget Graham, President of Concordia Homes, as a follow-up to the LVRJ article:

Concordia Homes has taken an action that was necessary to reflect the realities of today's homebuilding market. Concordia Homes has decided to suspend the operations at the sales centers for the majority of our subdivisions. The main factors that lead to this decision was the rapid decline in real estate values. Our main office remains open and is still managing customer service operations as normal. Our intention is to reopen our sales centers when market conditions improve.

As of the time of their shutdown, we believe Concordia was building in six communities in Nevada and one in Arizona with houses ranging in price from approximately $160K to $470k with square footage ranging from approximately 1,350 to 3,400 square feet.

If anyone can provide further information regarding Concordia Homes, please comment below or use our feedback line.

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Comments:

Justin at 05:58 2008-10-15 said:
We got this in our inbox -- what almost appears to be a quote from a news article (though no link was attributed to it):

On Tuesday of this past week, Concordia Homes of Nevada and Arizona, the owner Gidget Graham made the announcement to the employees that after 14 years in business in Nevada they were closing this past Friday the 9th. All employees were told they had until the end of the day on Friday to clean out their desks as the company would no longer operate after Friday because of the failure to get loans to complete homes, pay subs and employees. Concordia Homes of Nevada only two years ago had closed on over 300 homes and at one point had more than 60 employees. You can call any of the companies communities and notice no-one picks up. The company had 6 active subdivisions in Nevada and 2 in Arizona. www.concordiahomes.com
Anyone know anything more about Concordia? We were specifically trying to determine if the "300 homes" comment was a figure for the life of the business or one year. Permalink
SlickJulie at 21:46 2008-10-15 said:
http://www.lvrj.com/news/breaking_news/31052229.html Permalink
Justin at 13:30 2008-10-16 said:
Interesting write-up ... so not a bankruptcy and only closing sales/stopping building pre-sales ... is this an implosion? Hmm ... I'm leaning to "yes" in that they seem to be halting ongoing operations voluntarily but for the forseeable future. Permalink
jbwilkins at 18:20 2008-10-16 said:
300 is their approxmate yearly volume......I don't know if that is for just Nv or both Az and NV........they were a 'niche' builder and were recently the first builder in the nation to introduce a "GE Ecomagination" subdivision........ Permalink
Aristotle at 19:23 2008-10-16 said:
It's no secret that I am actively looking for stories about banks and other construction financing sources (e.g. Lehman Brothers) intentionally breaching their contractual obligations to fund construction costs when developer/borrowers were not at fault.

The information received by the Implode-O-Meter, quoted by Justin above, makes it seem as if the construction lender(s) on Concordia's projects breached their contracts to fund construction draws as the projects progressed.

The Las Vegas Review Journal story does not quote the owner of the company, but instead an industry consultant who spins the story a different way, that buyers could not get purchase money financing.

In the case of small homebuilders getting construction money from powerful local banks, when construction lenders breach contracts the homebuilders are very often afraid to say so publicly, for fear of never getting another construction loan again. That is really sad for both the builder and its employees.

I hate to bore all of you by talking about the S&L crisis, but back in 1986 there was very convincing evidence that the largest savings and loan in the world intentionally breached its obligation to fund construction draws under many construction loan agreements it signed. I know about that because I spent several years cleaning up the messes those intentional breaches created.

My son and I even went on a walking tour of a project on the Galveston sea wall, left half built and open to the elements, because of an "order from above" to stop making construction disbursements.

I saw a similar intentional breach of the contractual obligation to fund construction draws when the FSLIC issued a stop lending order to a small local savings and loan. It seemed insane to me, to leave a half built project exposed to the elements and to vandalism, but that is what the business decision makers decided to do.

As a taxpayer, I am profoundly disgusted by such short sighted decision making. Permalink

davidandsooze at 22:00 2009-05-31 said:
I'm new at this, and just found this site. We bought one of the Concordia models in Feb 2008. They signed a one year lease the sales contract obligated Concordia to return the home to a "production" house when they turned it over to us. They defaulted on the lease at the end of September 2008 and didn't make the next 5 payments. They also advised us that they didn't have the money to complete any of the renovations to convert the house from a model. When we took possession, we had no water heater, no garage doors (ours was the sales office and had two sets of french doors), no interior doors and a garage full of interior walls for offices. We have spent thousands of dollars to convert the home to a liveable condition. Additionally, they were supposed to convert the iron fencing surrounding the property to a vinyl fence to conform with the rest of the neighborhood. My question is has anyone heard anything about their financial status? We are told by the President, Gidget Graham, that they are still viable, not in bankruptcy and she has asked us to submit bills for payment when they are able to pay them, which we have. To date, there has been no reimbursement, although she continues to tell us that we will be the first to get dollars once she can get a line of credit. I heard a rumor that Concordia filed for bankruptcy in Arizona. Anyone???? Permalink
houston at 12:53 2009-06-01 said:
I would say that Concordia is in pretty bad shape.
Our main office remains open and is still managing customer service operations as normal. Our intention is to reopen our sales centers when market conditions improve.
They have closed all operations other than customer service but how long can that continue. If they are unable to assist you with this rather glarring need, their bank account must already be in a pinch.

I am guessing that you are converting the former model to sell it and that you are in the LV market. This is not a good time to "flip" but you have to do what you have to do. Good luck. Permalink

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Important: This company is on our list of builder operations that have "imploded" (see also ailing lenders). This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid declines in enterprise value; or abnormal "bail-out" by corporate parents or peers in order to continue to operate. The builders may be residential or commercial.