Builder files bankruptcy to get house in order

Posted February 3, 2009 3:51 p.m. EST
Updated March 9, 2009 5:12 p.m. EDT

— A stagnant housing market and tight credit have combined to force St. Lawrence Homes Inc. to seek bankruptcy protection.

The Raleigh-based homebuilder filed a Chapter 11 petition on Monday in an effort to restructure its finances. The petition listed $158 million in assets and $116 million in debts to lenders, contractors and others.

"We do feel like we have the financing to go forward," company spokesman Richard Ohmann said.

Founded in 1989, St. Lawrence builds about 150 to 250 high-end homes in the Triangle each year. It has developed neighborhoods from Fuquay-Varina to Creedmoor, including Waterford Estates in Cary, Northampton in Wake Forest and Trenton in Durham.

The company gained widespread publicity last year when it partnered with the Carolina Hurricanes to give away a $300,000 home in Wake Forest in honor of the NHL team's 10th year in North Carolina.

Ohmann said the company has 139 finished homes on the market, including more than 40 in the Triangle. St. Lawrence also operates in Charlotte and Wilmington, as well as Cincinnati.

"People love our houses. We're banking on that," he said, noting the company plans to continue operations through the reorganization.

Real estate agent Connie Floyd said she was surprised to hear about St. Lawrence's bankruptcy and said it doesn't bode well for local builders. Still, she said, home buyers with good credit can find great deals in the market if they can sell their existing homes.

"There is certainly not the desperation here we see in other parts of the country. A lot of our hold-up is people relocating to the area and not being to sell where they're coming from," Floyd said.

Mike Walden, an economist at North Carolina State University, pointed to the slack local market for existing homes – sales were down 47 percent in December from the previous year – as evidence of trouble for homebuilders.

"This financial situation really didn't have its origins here in the Triangle, but we're tied into the national financial system," Walden said. "The entire economy can't get healthy until the housing market gets healthy. This recession started in the housing market, and I think it will have to end in the housing market."

Several area homebuilders went to Washington, D.C., last month to lobby for tax and mortgage incentives to encourage people nationwide to buy homes. Some planned to make a second trip Thursday to deliver a petition with 3,000 signatures to members of Congress, asking that money in the federal stimulus package go to the home-building industry.

Walden called St. Lawrence's bankruptcy "an unfortunate circumstance," but said it shouldn't have a negative impact on the area's long-term economic future.

"I think the immediate situation is very trying for homebuilders," he said.