Faced with increasing competition, New Generation Homes - the oldest homebuilding company in the Colorado Springs area - will exit the construction business when it finishes the last 17 homes it has started.

The company will instead develop lots for other builders, installing streets and utility lines in the 800 acres it owns in the Fountain Valley area.

President Mark Watson, who co-owns the company with his brother, Frank Watson, said they believe New Generation will be more profitable with less effort than if they tried to maintain a shrinking share of the increasingly competitive Fountain Valley area housing market.

He said the company will lay off most of its 14 employees when the remaining homes are completed. Several are in their mid-60s and plan to retire, he said, and others have already found jobs elsewhere in the homebuilding industry.

"We've been dominant in this market (the Fountain Valley area) historically, but now with more competition our business plan has not been as effective," Mark Watson said. "We believe the opportunities in land development outweigh those in homebuilding, based on the time invested. It was a hard decision. We are fulfilling the American dream for many people. We will still be doing that by building quality neighborhoods."

New Generation has been building and selling 40 to 45 homes annually in recent years, but needed to sell 60 to 70 a year to maintain its historic level of profitability, Mark Watson said. To reach that level, the company would have had to expand into neighborhoods beyond the Fountain Valley area, a strategy that he and his brother, who are both in their 60s, were not interested in pursuing.

The company's single-family homes generally include three to five bedrooms and sell for $225,000 to $300,000.

New Generation will continue to staff its model home complex in The Glen at Widefield, near Powers and Fontaine boulevards, until those homes are sold. And it will honor warranties on all of its homes, Mark Watson said.

New Generation has received preliminary commitments from several local builders to buy some of its lots, which average about 7,000 square feet and sell for about $55,000, Mark Watson said. The company has about 60 lots already completed and could begin construction immediately on streets and utility lines for another 450 that are already approved for development, he said.

The 800 acres New Generation owns could support up to 3,000 homes and represent a 20-year supply of land at the current rate of development, he said.

Doug Stimple, CEO of Classic Cos., one of the largest homebuilding and development companies in the Colorado Springs area, said New Generation's departure from the industry marks the end of an era that has spanned several generations.

"The Watson family has been synonymous with homebuilding for many years," Stimple said. "It will be a different world without them."

The late Jules Watson, father of Mark and Frank Watson, started the company as Widefield Homes in 1957. He and four partners bought a 500-acre ranch in the unincorporated area south of Colorado Springs and started building all-brick homes the next year for a market that included Fort Carson. He also bought a nearby dairy, started his own water and wastewater company and continued to add land so the company had a plentiful inventory of lots in the Fountain Valley area.

The water and wastewater company eventually was converted into a government agency that still serves the area

Jules Watson retired in 1994 and turned over Widefield Homes to Mark and Frank Watson, who changed the company's name to New Generation Homes to reflect the transition to the family's second generation. Jules Watson died in 2001.

. Widefield and New Generation have built nearly 10,000 homes, including most of the Widefield area, which extends east of U.S. Highway 85-87 along Fontaine Boulevard.