Plano-based Sheridan Homes of Texas is the latest North Texas home builder to file for bankruptcy protection this year.
The nationwide credit crunch and high foreclosure rates have stymied the housing industry across the country. Analysts have said that North Texas has been largely immune from the effects of the housing bubble because there wasn’t a large increase in housing prices.
According to court records, Sheridan reported 100 vacant lots and 80 finished but unoccupied homes when it filed its Chapter 11 case in early August. The firm was also building five homes in Grand Prairie and Waxahachie that has already been sold.
Court records indicated that the homes were not completed and delivered to the buyers due to the companies “precarious financial position.”
The company also has model homes in Arlington and Mansfield.
Three other North Texas builders have filed for bankruptcy this year. Buescher Homes, Goff Homes and Steelman Homes also filed for protection from their creditors in 2008, according to court documents.
Even large national home builders are feeling the pinch of the credit crunch. Fort Worth-based D.R. Horton reported a loss of $1.8 billion between September 2007 and June 2008, and its home sales are down over 30 percent from last year.
With the cost of building materials rising and home foreclosures driving down prices, builders have seen their profit margins evaporate.
The Commerce Department reported recently that new home construction fell to levels last seen in 1991, when the nation’s economy was in a recession. Housing starts plunging below the seasonally adjusted annualized rate of 900,000 for only the sixth time since record keeping began in 1959.
A leading indicator for future building activity, permits for new construction, dropped to an annual rate of 854,000 units in August, down 8.9 percent from 937,000 in July. The report indicates that permits have now fallen 36.4 percent from year-ago levels.
