Sacramento-area homebuilders shouldn't expect a "quick turnaround anytime soon," says a new analysis of the region's housing market by Houston-based Metrostudy.
Metrostudy's Northern California division director Greg Gross says new-home closings will likely "remain flat or even fall slightly in the first half of 2010 as the weak economy continues." Builders are already dealing with sales numbers that rival lows seen in the 1960s and earlier.
Gross says they're still facing too many negative trends such as the region's abundance of distressed housing. It continues to lower prices even with a pickup in sales activity, he says.
The consulting firm says builders have responded with nearly 40 percent of home starts being priced below $300,000.
"That means that builders are now lowering base prices to compete directly with foreclosures and 'short sales,' and using fewer incentives," he says. "One of the more difficult challenges builders are facing now is that appraisals are coming in lower than sales price."
The consulting firm also released a cheerier outlook for San Francisco Bay Area builders - saying they are poised for recovery.