An Illinois homebuilder with several projects in Colorado plans to file for Chapter 11 bankruptcy.
Warrenville, Ill.-based Neumann Homes announced this week that it had been unable to secure adequate funding to operate its business and had closed its sales, production and customer service offices.
It also said it has laid off most of its employees. Chief executive Kenneth Neumann blamed the situation on a “significant downturn” in housing markets including Denver.
“Even after the significant help we have received from our lenders this year, the company can no longer weather this storm,” Neumann said in a statement Monday.
Neumann could not be reached for comment Tuesday.
In the metro Denver area, Neumann’s communities included Harmony Park in Westminster, Neutowne in Parker, Serenity Ridge in Aurora and Mountain Shadows in Firestone.
Of the 1,095 homes Neumann planned to build in the Denver area this year, it reported selling just 81 through August, according to Hanley Wood LLC, a Washington-based firm that tracks the homebuilding industry.
Neumann’s demise comes as a national housing meltdown has roiled the markets and shaken consumer and investor confidence.
The company blamed its woes on the housing decline in three of its largest markets – Detroit, Chicago and Denver – where foreclosures have been rampant and the number of existing homes on the market has spiked.
Nationally, construction of new homes plunged to the lowest level in 14 years in September as turmoil in credit markets intensified the problems in the housing industry. Construction of new homes fell 10.2 percent in September to a seasonally adjusted annual rate of 1.191 million units, according to a Commerce Department report last week. The decline was more than double the 4.2 percent drop that analysts had been expecting, and it pushed activity down to the lowest level since March 1993.
“A lot of builders out there are hurting,” said Jay Peterson, Hanley Wood’s regional director. “Margins on homebuilders are thin. The market is having a pretty drastic effect on these builders.”
While Neumann had big plans for Colorado, its performance was disappointing, said Mike Rinner, senior analyst at The Genesis Group.
“Builders have had to work hard to compete and distinguish themselves,” Rinner said. “The product has gotten pretty good. I didn’t see that in Neumann’s homes. Their product has been a step behind, and in this market did not compete very well.”
Neumann’s vacant lots will end up back on the market.
“They will have takers, especially in Parker,” Rinner said. “I would expect somebody to pick that up. There’s a lot of homebuilding going on in Parker today that’s less centrally located and more remote.”
Neumann had announced plans to auction off 49 properties in suburban Denver on Oct. 3. It was unclear Tuesday whether that auction was successful.
The Associated Press contributed to this report.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
Neumann’s Colorado subdivisions
Parker: NeuTowne at Parker
Firestone: Mountain Shadows
Aurora: Serenity Ridge
Westminster: Village at Harmony Park
