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Obra Homes - low-cost residential builder, south-TX

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2008-05-21

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stories: brownsvilleherald.com

This regional yet prolific builder of sub-$100k homes appears to have seen the writing on the wall and is rather efficiently winding down business. The Brownsville Herald has more:

The Rio Grande Valley-founded home builder has shut its doors locally and sold its remaining properties to a partner. The company is no longer building homes here, and calls to its local phone number yield messages indicating the line is no longer in service.

The company is still selling homes in the Houston area, but its presence in the Valley is now limited to a storefront sign on an empty showroom off Business 83. Messages at a Houston number were unreturned.

...

EZ Home Club purchased all 109 of Obra's local homes, many in Edinburg, and is selling the properties. Most of those homes were built without owners, or buyers backed out before the homes were completed. The company is also still offering to build in one subdivision in Edinburg.

EZ Home Club kept all 15 of Obra's Valley employees, Garza said.

David O. Rogers III, son of the chairman of Edinburg-based First National Bank, founded Obra Homes in 1997. Rogers could not be reached for comment Wednesday.

As for characterizing the company's size, the article states:

At its peak in 2005, the company was the largest Valley-based home builder, putting up more than 500 homes here that year. In 2006, it ranked as the 70th largest home builder in the United States, with $135 million in revenue, according to Builder Online.

That is nothing to sneeze at. What is interesting is that the low-price end of the market is hurting so badly, even though one might think more activity would move from the $200k region down, as prices and loan approval amounts fall. Perhaps the factors of reverse-migration and much more stringent lending standards overshadow even price declines as deciding factors.

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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.