McStain to shut headquarters
Louisville home builder joins others trying to survive in tough market
By John Rebchook, Rocky Mountain News (Contact)
Published November 13, 2008 at 12:05 a.m.
Dennis Schroeder © The Rocky
Video: Caroline and Tom Hoyt, co-founders in 1966 of McStain Neighborhoods, have been homebuilders with an emphasis on sustainability through several economic recessions. They've decided to forego a central office in favor of a virtual office in order to reduce costs and serve customers. Watch »
Photo by Barry Gutierrez © The Rocky
Bob Dodge, Interior Services Network president, Darren Mitchell, sales director, and Milt Pressler, warehouse assistant, from left, show furniture for sale.
Photo by Sonya Doctorian / The Rocky
Caroline and Tom Hoyt co-founded McStain Neighborhoods in 1966. The home builder is closing its headquarters and hoping to implement a virtual office. Tom Hoyt said the housing industry needs lenders "to start lending again and get out of this panic mode."
Photo by Dennis Schroeder © The Rocky
The Hyland Village Penthouse Townhomes in Westminster Wednesday November 12, 2008.
McStain Neighborhoods is closing its Louisville headquarters at the end of the month and postponing construction in two communities in a move that may help the Colorado company stave off bankruptcy.
McStain, started in part by a husband and wife team in the 1960s, is the latest area home builder getting whipsawed by the terrible housing market.
Village Homes, the biggest locally owned home builder in the metro area, last week filed for reorganization under Chapter 11 bankruptcy.
Denver-based MDC Holdings, parent of Richmond American Homes, cut its work force by 10 percent in the third-quarter and announced it is pulling out of Illinois. The company's home sales have plunged by 43 percent overall..
Beazer and Centex Homes, two large national builders, announced earlier this year that they were pulling out of Colorado.
Even Stapleton, one of the hottest home sale markets in Denver, is expecting a 30 percent drop in new home sales this year compared with 2007.
Denver-area builders, buffeted by national economic forces out of their control, are grappling with a downturn many are saying is even worse than the real estate depression of the late 1980s.
"We have considered bankruptcy," said Tom Hoyt, who heads McStain with his wife, Caroline.
He added that every midsized builder in the Denver area must consider bankruptcy in this environment. "Our game plan is how do we avoid that?"
The big hurdle is the lenders.
"Lenders need to start lending again and get out of this panic mode," Hoyt said.
"And even more important, we need to see consumer confidence return."
"But right now, we are standing on the thinnest ice bridge that gets us from here to that solid foundation," Hoyt said.
About two months ago, he and Caroline took back the helm of McStain.
McStain traces its roots to 1966 and was building "green" homes at a time when most people thought that was a color rather than sustainable, energy-efficient construction. It has built thousands of homes in the Boulder and Denver areas but will build only about 150 homes this year in communities in Westminster, Lafayette, Lowry and Stapleton.
About 75 people were working for McStain two months ago, down from a peak of about 120. As of Wednesday, there were 21.
Hoyt said he has toyed with the idea of getting rid of a physical headquarters building and using technology to create a virtual office. For one thing, he liked the sustainable aspect of eliminating commutes and going paperless.
"But it was something I was hoping to implement over two years, not 30 days," he said.
As part of his plan to cut costs, he has postponed a planned 600-unit development in Longmont and a high-end development in northwest Lowry.
Coincidentally, from 10 a.m. until noon on Saturday, McStain will be selling about 100 pieces of furniture at a warehouse at 5303 E. 47th Ave., Unit N, in Denver.
"They'll be at garage sale prices," said Tami Noel of McStain Home Studios. "They're priced to move."
While McStain sells excess furniture every year, Hoyt said that as part of its belt tightening, the company wants to get rid of excess inventory. And since there aren't as many model homes available for these sofas, tables, desks and bedroom furniture, it's a good time to unload them, he said.
McStain isn't the only company in a cost-cutting mode.
Christopher M. Anderson, senior vice president and chief financial officer of MDC, one of the nation's largest home builders, in a recent SEC filing said that "our employee head count decreased by more than 10 percent in the third quarter alone. Unfortunately, these difficult steps are necessary to return our company to profitability."
The company has been having these "reductions in force" for the past year.
This downturn is worsening at a time when the market slows for seasonal reasons, anyway, said Roger Reinhardt, executive vice president of the Home Builders Association of Metro Denver.
"Builders truly are struggling and in jeopardy," Reinhardt said. "They're at the mercy of of economic factors that they have no control over."
Economist Patty Silverstein said that the silver lining is that by not building, the supply of unsold homes is reduced, which the market needs to get back on it feet.
On the other hand, the home-building industry has a huge economic ripple effect.
"It's a shame if builders can't hang on for a little longer," said Silverstein, president of Development Research Partners in Littleton and chief economist for the Metro Denver Economic Development Corp.
She said she thinks the market will start to recover around mid-2009.
"But I guess the bottom line is that there are still some very painful situations in the months ahead," Silverstein said. "It's not like everything is going to turn around tomorrow."
Interested in buying company's model home furniture?
* When: 10 a.m. to noon Saturday
* Where: Interior Services Network, 5303 E. 47th, Unit N
* Items: Sofas, tables of all kinds, office furniture, bedroom furniture and art
* Payment: Cash or checks payable to McStain Enterprises
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November 13, 2008
5:29 a.m.
Suggest removal
River_Bolden writes:
"About 75 people were working for McStain two months ago, down from a peak of about 120. As of Wednesday, there were 21"
I wonder if these x workers have trouble paying their mortgages, maybe facing foreclosures, or are no longer planning on buying a home for themselves.
oh wait a minute.... thats right... there is no real estate bubble in denver... thats only in CA & FL, what was I thinking??
Denver real estate... look for 25% haircuts from summer 05 tops, miniumum.
November 13, 2008
5:30 a.m.
Suggest removal
River_Bolden writes:
yes, that name "McStain" has got to go..
I thought it was a joke when I first read the headline.
November 13, 2008
6:58 a.m.
Suggest removal
youngman writes:
In this same paper the politicians are making a budget under the assumption that sales tax revenues, income taxes, revenues will increase this year....Politicians are great forcasters you know....now wait for them to scream "crisis"
November 13, 2008
7:50 a.m.
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Bob299 writes:
McStain is a great company. I hope they survive.
November 13, 2008
8:11 a.m.
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Willy writes:
With the technology that is available there is no reason why there aren't more companies with virtual offices.
November 13, 2008
8:54 a.m.
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gs writes:
You'd think McStain would have learned from their 85 bankruptcy.
November 13, 2008
9:14 a.m.
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Colesbluerose writes:
I drive by the Westminster location they've abandoned every day. It used to be a field with horses, with a great view of the mountains. I was upset to see the land being developed for homes and now will have to drive by an awkward looking spectacle. Why couldn't the horses and field stay where they were? The view was much better and in a word priceless.
November 13, 2008
9:45 a.m.
Suggest removal
The_Punnisher writes:
Just a thought. McStain Development: How about changing your whole concept of stuffing as many houses in as little space as possible?
I left the SFBA because Daly City and other places of that ilk had become LEVITTOWNS
http://en.wikipedia.org/wiki/Levittow...
Colorado HAD wide open spaces. The SFBA had the excuse of lots of people, not much property to house them. Colorado doesn't have this problem.
When you have a neighbor 6 feet away, that causes stress. So you create HOAs and more government to fix the SYMPTOMS and not the PROBLEMS.
It is known that if you stuff too many rats in a box, they start eating each other. The stress becomes too great.
Your PLANNED communities have some UNPLANNED consequences.Think about it...
And don't CALIFORNICATE Colorado!
November 13, 2008
9:45 a.m.
Suggest removal
morelightlessheat writes:
I saw this story on the front page when I picked up my paper this morning. I wonder why McStain, which is still plugging along, got the front page when Village Homes, which filed Chapter 11, didn't. It's a shame the News played this story so big, because it makes it even tougher for this exceptional local company, which has not only been leading the green building movement for 45 years in Colorado, but nationally.
November 13, 2008
9:58 a.m.
Suggest removal
Amy99 writes:
With all due respect "Punnisher," you clearly don't understand responsible land planning. The type of development you're promoting actually creates sprawl which privatizes open space. McStain's type of compact development preserves open spaces for the greater good of the community.
November 13, 2008
10 a.m.
Suggest removal
NeilT writes:
Sure, Punnisher, because sprawl doesn't have any problems associated with it.
Traffic, mass energy consumption, pollution and lack of services in areas outside the urban core are imaginary issues.
November 13, 2008
10:04 a.m.
Suggest removal
Biff writes:
Hey Punnisher...if you don't like it....don't buy one!
November 13, 2008
10:10 a.m.
Suggest removal
SlouchingTowardBoulder writes:
"Just a thought. McStain Development: How about changing your whole concept of stuffing as many houses in as little space as possible?"
But McStain's entire m.o. is to minimize enivironmental impacts. They know what's good for you which is why their houses are priced materially above what a comparable house is priced at. Darn it, they know better than the consumer and .. and ... and why aren't people buyting our overpriced houses!
Perhaps they can ask for subsidization from the Ritter administration given that McStain is the darling homebuilder of the Governor's ever-expanding Governor's Energy Office.
November 13, 2008
10:12 a.m.
Suggest removal
The_Punnisher writes:
I was smarter. I DIDN'T buy one. I think other people don't like hearing that they got SCAMMED.
I believe it is called the " Sour Grape " syndrome..
My 40 year old house has better quality construction than these new ones. It doesn't use OSB ( unofficially known as S***board ) in its construction...
And I don't have neighbors 6 feet away. Just Deer and Elk who drop by occaisionally...
November 13, 2008
10:25 a.m.
Suggest removal
SlouchingTowardBoulder writes:
What's OSB?
November 13, 2008
10:33 a.m.
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The_Punnisher writes:
What denotes SPRAWL? Highlands Ranch? Bailey? Evergreen?
Or stuffing as many houses in as little space as possible??
http://jonwhitney.net/gallery/fa/sour...
Now THAT is SRAWL!!!
" There's a Pink One and a Blue One and a Green One and a Yellow One "....
http://en.wikipedia.org/wiki/Little_B...
I co-exist with the ORIGINAL occupants of my living space. Can YOU say the same thing?
November 13, 2008
11:19 a.m.
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morelightlessheat writes:
Dear Punnisher, let's engage in a bit of basic logic. Let's take all the people whose homes are currently on compact home sites and expand those home sites to the size that you're obviously living on. What happens? All those "wide open spaces" that you're talking about get absorbed into bedroom subdivisions where you have to drive to school, to the store or even to a park.
That's the real definition of sprawl. Look it up ...
http://en.wikipedia.org/wiki/Urban_sp...
November 13, 2008
12:56 p.m.
Suggest removal
Salsmom writes:
I feel bad for the folks who are going to lose their jobs but I don't get how a company continues to build homes when the housing sector has been under extreme stress over the past year or so and all indications are is that it is extremely difficult to get a home loan from any bank or mortgage company.
November 13, 2008
1:01 p.m.
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Dick_Tater writes:
Hey McStain, get in line behing AIG and GM. I'm sure you can get bailed out too. Money for everyone!
November 13, 2008
1:09 p.m.
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The_Punnisher writes:
Sorry. People are living organisms too. You can apply your sprawl meaning to ANY organism: biology states that when an organism is crowded into a smaller space ( or outgrows the one it is in), it dies....
Try and twist it; you have to deal with the FACTS: most planned communities are poisoning their own environment, just not in one way. ( too many rats in the box & we try MAN-MADE solutions to these problems...)
As I said before, SPACE and co-existing with the ORIGINAL inhabitants just might be a workable solution, it works in my case.
Manefest Destiny is NOT the answer...
http://en.wikipedia.org/wiki/Manifest....
Learning RESPECT for the land ( and it's occupants ) just might be the right way...
What happens if you ZONE so that you MUST keep that open space? Then the only REAL losers are the people that give houses postage stamp sized lots, HOAs and all that other stuff that staves off the " rats in a box " reality. Not speculation, REALITY.
I could apply to break up my lot and end up with 6 foot away neighbors; I could do the same thing with my holdings in WI and make tons of $$$. I CHOOSE NOT TO!!!
The land stays wild. I am ( IMHO ) a good steward of my land, are YOU?
November 13, 2008
1:26 p.m.
Suggest removal
NeilT writes:
The_Punnisher writes: "I co-exist with the ORIGINAL occupants of my living space. Can YOU say the same thing?"
Yeah, I can. In fact, I'd wager that my "living space" is a bit larger than yours. I have some additional occupants that roam around these parts, but they're not original. You're likely to find them on your dinner plate.
I could even subdivide and build-out a few hundred homes. That could be a good thing, as long as we design for it. You know, like, responsible homes, mass transit to haul folks to their nearby jobs and services and shopping that's easily accessible.
Too bad the housing and job market won't support that plan right now. Oh well, folks still gotta eat and I'm at least sitting half pretty on that one. But if, or when, I do develop, I'll think of you.
November 13, 2008
2:59 p.m.
Suggest removal
The_Punnisher writes:
Don't think of ME. Think of the fact that we are just TRANSIENTS on this planet and later generations have to live with the consequences of your actions ( good and bad ).
Have we REALLY been good stewards ( tenants ) of this ball of rock we live on?
Or will we get a celestial eviction notice?
Maybe, just maybe this whole Global Warming thing IS that eviction notice....and not something MAN has created...
Because we really just sit between two BIG fires..
http://en.wikipedia.org/wiki/Chikyu_H...
http://en.wikipedia.org/wiki/Project_...
November 14, 2008
9:27 a.m.
Suggest removal
COnative1966 writes:
I really like McStain. They build a very good home. McStain has a number of high quality developments across the metro area as you can see in their new homes for sale:
http://www.cohomefinder.com/browse-ci...
As a Colorado based home builder, I really hope McStain makes it and survives this tough real estate market.