Builders bullish these days in the Sacramento area.

According to the Sacramento Business Journal, builders have been pulling more building permits than in recent years. Before the housing market collapse, it was common for builders to have 50-60 homes under construction. Then in the aftermath of the turbulent economic times, homes were built once they knew they were under contract with a buyer. Now you will find some builders building 5-10 at a time which means there is a new home ready to go for anybody qualified to purchase a new home.  Builders still can’t buy land and get entitlements, but they are seeking out finished lots or nearly finished lots to minimize their risk and trying to improve inventory.

Part of the reason there is a surge in new home purchases is due to the fact that potential home buyers are frustrated with the process of buying an existing home because it tends to be more time consuming and frustrating.  Another reason builders believe there is a change in demand is the emerging spillover of demand from the bay area.

All this new activity doesn’t necessarily translate into a stellar housing market, however, the changes in the building climate for new home construction is causing builders to gain confidence.   With the prices rising over last year for a median home in the Sacramento metro area, caution is giving way to a new enthusiasm  in the building sector. Even though we are not anywhere near the housing market of 2005, at least we are heading in the right direction.