Home builder Obra drops out of Valley market

McALLEN -- Obra Homes is the latest victim of a dismal home building market.

The Rio Grande Valley-founded home builder has shut its doors locally and sold its remaining properties to a partner. The company is no longer building homes here, and calls to its local phone number yield messages indicating the line is no longer in service.

The company is still selling homes in the Houston area, but its presence in the Valley is now limited to a storefront sign on an empty showroom off Business 83. Messages at a Houston number were unreturned.

While the Valley's housing market has fared better than the national housing market - there are actually fewer home foreclosures here than there were last year - the national mortgage crisis has made it harder for people to get mortgages.

"It's a tightening credit market and things are getting tougher," said Ernie Garza, owner of EZ Home Club, which purchased all of Obra's assets. "There has been an increase in foreclosures and mortgage companies have tighter standards."

Garza formerly worked for Obra Homes.

EZ Home Club purchased all 109 of Obra's local homes, many in Edinburg, and is selling the properties. Most of those homes were built without owners, or buyers backed out before the homes were completed. The company is also still offering to build in one subdivision in Edinburg.

EZ Home Club kept all 15 of Obra's Valley employees, Garza said.

David O. Rogers III, son of the chairman of Edinburg-based First National Bank, founded Obra Homes in 1997. Rogers could not be reached for comment Wednesday.

It's unclear whether Obra plans to re-enter the market when conditions improve.

At its peak in 2005, the company was the largest Valley-based home builder, putting up more than 500 homes here that year. In 2006 it ranked as the 70th largest home builder in the United States, with $135 million in revenue, according to Builder Online.

Obra focused on low-cost homes, many in the $85,000-to-$100,000 price range.

Much of that market has disappeared in recent months as lenders have tightened mortgage standards - people with modest incomes now can't qualify for loans, said William Brueggeman, director of the real estate department at Southern Methodist University in Dallas.

"They've all cut back," he said of lenders. "Their volumes are below half of what they were in the boom years."

In the Valley, home building has taken a significant hit from downturns in mortgage markets. During 2005 and 2006, more than 6,800 homes were being built in Hidalgo County each year. New home permits have dropped by more than a third since then.

Los Angeles-based KB Home, one of the nation's largest home builders, pulled out of the Valley in 2007.

Metrostudy, a real estate research firm, estimates there are more than 3,000 unoccupied, new homes in Hidalgo, Cameron, Willacy and Starr counties.

"Some companies have really been hit hard," said Randall Allsup, a researcher for Metrostudy who covers the Valley.
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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.