Mayer Homes to close
The slumping housing market is forcing the closure of one St. Louis’ largest home builders.
Mayer Homes soon will cease operations after building more than 8,500 homes during the last 30 years. It is the third major builder in the area to close in the past two years.
Slow home sales caused the Town and Country-based company to default on bank loans in late March, said Randy Mayer, the company’s chief executive. The company’s costs were simply too high compared with its sales in recent years, he said.
"It’s just the downturn in the market was longer than we could withstand," Mayer said Wednesday. "I don’t think anybody should write off the industry. But when you have so many good years in a row, you can only imagine the valley we’re going through has been deeper than normal."
Last year, Mayer Homes was the seventh-largest area builder by volume, with 67 building permits issued, according to the Home Builders Association of St. Louis and Eastern Missouri. But the firm had been struggling since 2007, when it still had more than 30 employees. It now employs two, Mayer said.
The company’s lender, Bank of America, is working with Mayer to allow it to finish selling homes that are being built or already completed, including about 90 to 100 display homes and speculative homes, Mayer said. The company owns another 900 lots it planned to develop that likely will be sold by the bank to another developer.
Though there is no written agreement, the bank and Mayer have agreed that the company will officially shut down once it sells homes that are under way, Mayer said. The company will continue to honor escrow agreements to keep up infrastructure in subdivisions where it is still building, he added.
Mayer Homes will be the third large area home builder to fold during the recession, following Bower & Bailey, which closed in March 2008, and Taylor-Morley Homes Inc classic car insurance. in May 2008.
Throughout the area, the number of building permits for new homes was down 63 percent at the end of 2008 from the high for the decade in 2004, according to the Home Builders Association. The figures have been no better this year, as the number of permits were down 49 percent through April compared with that point a year ago.
The market has been especially unkind to companies that took on large debt to buy property to develop, said Dan Barnard, president of the local Home Builders Association and of Greater Missouri Builders Inc., a St. Charles-based builder.
While it is sad to see historic builders go down, Barnard said, few in the industry have been surprised at these closures.
"Usually when there’s a hot market, people build like crazy… and when demand softens, the market hammers excess and (the industry) undergoes a correction," he said.
However, for those builders still hanging on, the housing market appears to be improving because the excess supply of homes is dropping, said Joe Zanola, president of Zanola Co., a local real estate research firm. "When you drive through subdivisions today, you’ll see more inventory that people are buying than you will see homes under construction," he said.
Mayer said his company is seeing a turnaround as well — just not soon enough.
"I wish we would have just held in there for another year," he said. "I think (the market) is coming out of it."
Filed under: legal by Finance Boss