When John Reynen, co-founder of Sacramento’s third-largest developer Reynen & Bardis Communities, filed for personal bankruptcy last week, he became the latest symbol of how far this market has fallen during this period of low buyer demand for new homes.

On Friday, the California Building Industry Association (CBIA) estimated that Sacramento’s housing starts in March, at 318 units, were two-thirds fewer than the same month a year ago. About half of this market’s home sales are repossessed properties, and the county’s median selling price was down 36 percent from its peak in 2005.

The Gregory Group, a Folsom, Calif.-based consultant that tracks housing-related activity, estimates that sales in Sacramento through the first quarter of 2008 were off nearly 52 percent, to 1,304. More to the point, permits “are way off, by 50 to 60 percent,” says Greg Paquin, who runs the firm.

Sacramento reflects the general housing malaise in California, where starts in March fell 65 percent to 4,713, the state’s worst month since 1976, and were down 50 percent through the first quarter, according to CBIA. Alan Nevin, the association’s economist, stated that as few as 40,000 single-family homes might be built in the state this year, versus 155,000 during the peak year of 2005.

Paquin tells BUILDER that virtually all builders in the Sacramento market are feeling pain, some more acutely than others. Reynen & Bardis, for one, mothballed its home building operations late last year, after shutting down its Corinthian Homes division earlier in 2007, and has since halted construction at a number of projects. The developer, which recently laid off 180 employees, has missed payments on $750 million in loans that its founders, Reynen and Christo Bardis, personally guaranteed. The Bank of the West, which alone is owed $26 million by the company, according to the Associated Press, attempted to seize the personal assets, including numerous houses, owned by the two founders, which triggered John Reynen’s decision to protect his assets by filing personal bankruptcy. A company spokesperson, Michele McCormick, told the Sacramento Bee that the filing would not affect the company’s operations, and that Reynen & Bardis Communities continues to negotiate with lenders to restructure its debt.

The company’s problems stem from its purchasing too much land at peak-period prices that has lost much of its value during the housing slump. (The company currently controls 18,000 lot-acres in Sacramento and Reno, Nev.) The company also faces lawsuits filed by homeowners in some of its communities over construction defects and landscaping issues.

During this period of relative builder inertia, Paquin says there’s been “a lot of activity in the equity market” looking to pick up land at lower prices. But he and other market watchers also note that some builder-developers here, such as Elliott Homes (which ranked 10th in closings last year, according to Hanley Wood Market Intelligence), have enviable land positions and strong-enough balance sheets to wait out the storm for market conditions to improve.