With almost 10,000 new homes expected to be built in Denver this year, 2016 was on pace to be a strong year for custom home builders in Colorado. If you’re looking for a new home, our builders at Nelson and Son Construction Service in the Denver are ready to help build your Colorado dream.
State of the Market Today
Due to population growth, the demand for homes in the Denver area is high. It’s undoubtedly a boom. According to a Denver Post article, the Metrostudy housing research group reported that new home starts in the first quarter of 2016 were 47 percent higher than the prior year. This is an increase not seen since before the last recession and the highest level since 2007.
In addition, the physical size of Denver homes is increasing. According to an article on Builder, out of all new homes sold here, the average unit size increased 4.3% over last year to 2,781 square feet in September of 2016.
The Denver Post reports that local builders started 2,413 new homes and closed on 2,141 units in the first quarter, an increase of 29 percent from the first quarter of 2015. If this pace continues, there will be nearly 10,000 new homes built by the end of the year.
As for purchase price of a new home, it now averages around $503,768 contrasted with an average price of $398,663 for existing homes sold in April, according to the Denver Metro Association of Realtors.
Implications of Increased Demand
Despite the builder activity, the number of homes still falls short of keeping up with the Denver area’s population growth. New home demands still outpace building needs. And with low-interest rates and people moving to the area in large numbers, it has created a demand that has local builders scrambling.
For lower-income and first-time buyers, it’s been particularly challenging to find a builder because many focus on the higher end homes priced above $400,000. While it might seem shortsighted, this strategy covers the majority, or 60 percent of the housing market, according to Metrostudy.
However, because there is such strong demand for homes under $400,000, builders are expected to respond by building more condos, townhouses, and paired homes in suburban locations. Their time line to get started might be another story since the demand for higher priced homes is so strong.
Another implication of the high demand for housing is increased pressure on the vacant lot supply. In the first quarter of this year, there were 11,494 vacant developed lots available in the Denver area and new home building has greatly outpaced the ability of lot developers to make even more available.
The Denver metro area is definitely a hot market for new homes. And while 2016 was on pace to be a strong year for custom home builders in Colorado, Nelson and Son Construction Service in Denver can assure you that we have the resources available to take on your custom home build. Get in touch to discuss your plans with our experts today, and let’s get started on making your dream a reality.