A snapshot of the housing market's about-face

Ten years ago, three business partners pinpointed Fair Grove as the perfect spot for a new subdivision, and their instincts served them well - until the declining housing market dashed their dreams.

BHL Properties Inc. built and sold speculative homes on 51 lots in Meadow Woods in the early 2000s, a time when Springfield area home builders were flourishing. Based on the early success, a majority of the company's owners - who are Darrell Link, Tony Hamilton and Stan Brunson -- voted to move forward with Meadow Woods Estates, an adjacent subdivision consisting of about 100 lots in four phases.

But after developing the first 30 lots of Meadow Woods Estates and building just three homes, the subdivision fell victim to market forces. The development's 17 remaining lots and another 24 undeveloped acres nearby are now owned by Springfield-based Citizens National Bank, which recently foreclosed on the property after BHL defaulted on a $730,000 loan. The bank purchased the property back at a June 5 public auction for $265,000 - a bid based on the appraised value, said Citizens National CEO Frank Hilton.

"The developers couldn't service the debt," he said. "We took the property back, and our intent will be to hold it as investment on the bank books until the property values return. ... Unless we all believe the real estate market has folded up, there are still going to be some folks who will want to build a new home and live in Fair Grove."

Hilton said bank-owned property accounts for less than 1 percent of total assets, but Citizens National received a cease-and-desist order from the U.S. Department of Treasury in April for "unsafe and unsound" banking practices, largely related to a high concentration of real estate loans.

Greene County property records show that BHL obtained the loan from Citizens National in December 2005, and Fair Grove City Clerk Dana Louderbaugh said the final plat for Phase I of Meadow Woods Estates was approved in May 2006.

Hamilton, a home builder by trade, said he was worried that new spec homes in Meadow Woods Estates wouldn't sell as quickly as those in Meadow Woods had, but he was outvoted by his partners.

"At the end of the other subdivision, I could see it slowing down some," Hamilton recalled. "That's why I voted against developing the other (subdivision). ... It just didn't look to me like it was a good time to take that risk."

Hamilton said relatively inexpensive land in Fair Grove, the town's proximity to Springfield and the future four-laning of U.S. Highway 65 all played into BHL's decision to develop both subdivisions, which are south of downtown Fair Grove and east of Highway 65. Meadow Woods enjoyed a strong start -- about 15 homes sold in the first year - followed by a steady stream of buyers, Hamilton said.

But Meadow Woods Estates stalled almost immediately. Hamilton built one home, Brunson built another and they partnered on a third. But finding buyers was virtually impossible. Hamilton is now renting the house he built, and Brunson worked out a trade for his. The third is now bank-owned.

Hamilton and Brunson, who still owns eight lots in Meadow Woods Estates, both walked away from BHL last year, leaving Link as the company's lone stockholder. Link could not be reached for comment, but Brunson said he has no plans to build on the lots, which are slowly reverting to pastureland.

"This has just about turned me against doing anything like this," said Brunson, who temporarily worked for Lacey Bros. Construction until he was laid off earlier this year. "It just soured me. When you see your life savings dwindle and dwindle into nothing, it gets you soured."

Hamilton, who's now operating as Hamilton Construction, has turned his attention to custom homes, with current projects in Galena and Cabool. Subdivisions full of spec homes hold little appeal for Hamilton these days.

"I wouldn't do another one," he said confidently. "My pockets aren't deep enough to take that kind of risk."[[In-content Ad]]