There has been a lot of press these days about how new home construction needs to increase in Colorado Springs. While I personally agree, the reality is that people will start buying new homes more frequently when they no longer can find enough selection of existing homes. For that to happen, more people are going to have to jump back in to the real estate market.
We have not been building many new homes for several years now, and pent up demand for newer homes is increasing. With high unemployment, a general retraction in peoples belief they can afford the real estate they have, etc, it just hasn’t made that much sense. But over time, people graduate from college, get married (or divorced), they have kids (or their kids move out), families grow (or shrink), and the need for newer larger homes (or smaller ones!) will come back. It’s called household creation. Until it does, we probably have just the right amount of new building going on.
In these conditions, when does new construction make sense? When an existing home won’t do the job. With over 4600 homes for sale, it is logical to first see what’s already there, because it is not that likely that a builder can build a new home for less than what an existing home would cost, unless they have gotten an AMAZING deal on the land it sits on (which does happen occasionally). Sometimes there are features that someone wants or needs that just don’t seem to exist in any existing homes. Sometimes the condition of a resale home just can’t match up to what someone feels they need. Some new developments have amenities that were not available when many of our existing homes were built. There are lots of reasons, but they all get back to the economic trade off: are they worth the price.
When the number of buyers increases to the level where the existing inventory no longer is adequate, new construction will pick up again. It won’t be instant, and it won’t happen all over the area, but it will happen. Some of us in the real estate industry can’t wait!
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