By Joseph S. Pete, Daily Journal of Johnson County staff writer
C.P. Morgan Homes, the most active home builder in Johnson County's cities, will shut its doors for good as a result of the housing slump.
The 26-year-old homebuilder erected nearly 2,500 homes in Franklin and Greenwood since 1990 and was the most prolific builder in each city during the height of the housing boom, planners said. In Greenwood, C.P. Morgan built nearly three times as many homes as rivals Beazer Homes and Arbor Homes.
The sudden closing leaves Johnson County with five unfinished subdivisions, including the massive Homecoming at University Park on Greenwood's east side.
C.P. Morgan built about one of every five new homes in central Indiana during the building boom, according to the Builders Association of Central Indiana.
Major Johnson County subdivisions include Summerfield Place and Sweetgrass in Greenwood and the unfinished Heritage in Franklin.
The builder laid foundations and paved driveways on at least 10 lots in the Villages of Grassy Creek and Timber Valley in Greenwood. All undeveloped or unfinished lots will be turned over to the lending institution, attorney David Sease said.
A third-party residential warranty company will honor all warranties on C.P. Morgan homes, as outlined in each homeowner's warranty manual.
The company, which had 100 employees, will cease operations entirely today, citing what it called the worst market conditions in a generation.
"This is one of the most difficult decisions I've ever had to make," said Charles Morgan, the company's founder and chairman. "With home prices dropping precipitously, resulting in millions of foreclosures, we believe our industry will be in trouble for many months to come. Unfortunately, I believe it's a crisis that will swallow up many companies like ours all across the nation."
Home building in central Indiana has fallen 65 percent from its peak of about 13,000 permits across the Indianapolis area in 2005 to 4,500 permits last year, according to the builders association.
All builders are struggling with the decrease in demand, but large builders like C.P. Morgan have the most difficulty weathering these economic conditions because of their high fixed costs, Greenwood custom builder Mike Gorman said.
C.P. Morgan had to pay salaries to its corporate employees, utility costs for model homes and other overhead that could be cut only so far, he said. A builder of their size has to sell at least 30 homes a month just to cover costs, but there hasn't been enough demand.
The first-time buyers C.P. Morgan targeted haven't been able to get the credit to buy or are worried because of the bad news about declining home prices, Gorman said.
Davis Homes, another major builder in central Indiana, closed down last year when low prices made it tough to turn a profit. Other large builders might shut down or leave the area if housing doesn't recover in at least the next 18 months, he said.
C.P. Morgan struggled with slowing sales but fought the closing until the very end, Morgan said.
"This definitely is not what I contemplated when I started the company in 1983, but this is the worst catastrophe I've seen in our industry in my lifetime," Morgan said in a statement. "I could never have imagined this outcome, even as recently as six months ago. We have done everything possible to prevent this from happening."
The company has built more than 25,000 homes in the Indianapolis area, Lafayette and Charlotte, N.C. C.P. Morgan built more than 2,100 homes in the $80,000 to $200,000 price range in Greenwood, where it built out the Clearbrook Park, Stoneybrook, Summerfield Place, Summerfield Village and Sweetgrass subdivisions.
C.P. Morgan was far and away the most active homebuilder in Greenwood, building commissioner assistant Peggy Deer said. Rival Beazer Homes built 725 new homes in four subdivisions since 1996, while Arbor Homes built 644 houses since 1999.
The builder, which constructed homes of 1,000 to 4,000 square feet aimed at first-time buyers, was not as active in the Center Grove area.
Since 2004, C.P. Morgan built 343 new homes in the Heritage subdivision in Franklin and 36 in the Branigin Woods subdivision. Since Heritage is about two-thirds finished, the closing will slow the pace of residential development in Franklin when the economy does turn around, planner Krista Linke said.
The company leaves behind more than 770 vacant lots in Greenwood, in the Timber Valley, Villages at Grassy Creek and Homecoming at University Park subdivisions.
About 515 lots are left at Homecoming, where the developer had planned 985 homes and built a 42-acre park that included an amphitheater, basketball court, playground equipment and dog park. Most of the new home construction in Greenwood last year took place in that subdivision.
Most of the subdivision has been recorded and platted, so another homebuilder could come in and continue to build it out with little paperwork, Greenwood planning director Ed Ferguson said.
C.P. Morgan's closing could have an economic ripple effect, including on housing and lumber suppliers, Franklin Mayor Fred Paris said.
"This is not good news," he said. "The only silver lining is that when less is built, that will help stabilize the prices of existing homes."