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Davis Homes - Indiana Home Builder

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2008-07-23

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stories: ibj.com

It appears that Indiana's Davis Homes (davishomes.com) has ceased operations. They have a notice regarding the shutdown posted on their website:

Davis Homes, one of Central Indiana’s largest neighborhood developers and homebuilders will stop its normal business operations on July 23 due to a severe downturn in the housing market. Started in 1985, the local, family-owned company built more than 12,000 homes in more than 80 neighborhoods across Central Indiana but was hit hard by the deterioration of the housing market that began locally in 2007.

Unlike some companies that simply closed their doors, Davis has worked hard during the past few months to implement a plan to complete all the homes that were under construction and to pay homebuilding vendors and subcontractors. In addition, Davis invested in warranty insurance plans for all of its homes and homeowners to ensure that future warranty obligations will be met.

Davis was one of the top 200 builders in the nation (We are eagerly trying to track down this top 200 list!).

Their notice cites a slowing local economy — specfically, a rapid decline in the housing market of central Indiana. Of note, it appears that housing starts in Indiana have declined from a peak of around 13,000 to only a little more than a third of that peak, with 2008 projected starts in Indiana at about 5,000.

An article published at IBJ.com regarding Davis' closure notes that in 2001, Davis employed 170 people. As recently as May, that number was down to 30.

Our own take on their closure: it certainly seems as though Davis is "on top" of their shutdown. Very few builders that have imploded have taken the time to even publish a notice of their closure on their websites, much less invest in warranty insurance plans.

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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.