New construction has historically been a major part of the Colorado Springs real estate market, sometimes as much as 1/3 of the market. In our own practice, even in 2009, 30.7% of our buyers selected new construction. In addition to the ‘spec’ homes that builders have historically made a part of our inventory, ‘pre-sale’ homes that are built to buyer specifications are a very important to the market. With the recent recession, home building activity is way down, particularly for high end custom homes, but some of the ‘volume’ builders are still doing fairly well. New construction is not available as an option in many areas of town, because of the availability (or cost) of build-able land. New construction is most prevalent in the South, East, and Northern areas of town. In general, new construction starts in the $180’s in even the most affordable areas, and more commonly in the low $200’s. In our current environment, new construction is generally the best option for buyers if:
- Only a new home will do the job. This is often the case for people who have always lived in new homes, and even a recently built re-sale home often just won’t cut it.
- If the new home will have features and specifications that are not available in resale homes in the areas they are interested in.
- They are in a price range where the inventory of resale homes is not adequate in the areas they are interested in.
- The buyer has cash reserves for installing blinds, landscaping, etc. Depending on the buyers tastes and what the builder is including in that neighborhood, this can easily run $5,000 to $10,000 (it can be 3 times that, though not typically)
Choosing a Builder
A lot of factors go into choosing the right builder. We strongly recommend you have an agent to represent your interests and help guide you through the process. Most of our builders want your agent to accompany you on your first visit, so call Rick Van Wieren today at 719-590-4768 to get the process started. Even in these times, Rick sells new homes fairly often (when it is the right answer for a particular client). Over 30% of his buyers bought new homes in 2009! The price to you is the same, whether or not you have an agent, and he can usually save you money, in addition to reducing headaches, help make the process a smooth one, and safeguard some of your interests when it comes to reselling the home some day.
Once you have an agent, starting with a realistic price range is step 1 to ensuring a smooth process, and this is best done by meeting with a reputable lender. While many builders want you to use their lender (and even incentivize you to do so), starting with someone we know to be competitive, honest, and thorough can avoid headaches later, even if it turns out that the builder’s lender ends up having to do the deal.
Once we know the price range, this helps a lot in determining some of the factors, such as what areas have new construction in that range, what builders are building in those areas, and what lots and floor plans those builders are offering. Obviously the more budget there is to work with, the more choices. Rick has been helping buyers with their new construction needs since 1992, and has worked with many, if not most, of the major builders of the area. He can help sort out the complexities into a set of options that make sense. While often there are several builders to choose from that have acceptable floor plans, many times the choice gets down to a favorite plan on a lot that only that builder controls. Sometimes schedule affects the decision, in that if a builder has a ‘spec’ home that is ready to move into, it can be to the buyers advantage to take one ‘off the shelf’ instead of starting from scratch and waiting 6 months to have it built.
If you have an existing home to sell and cannot qualify for 2 homes, the builders like you to have your home under contract prior to starting work on the new house. They will usually give you 30 to 60 days while they are getting some of their ‘ducks in a row’ to get that contract, but in the current environment, most will not do a true contingency contract.
Most builders require a deposit that ranges from $1,000 to as much as 3 1/2% of the purchase price. Unlike resale homes, this money is not held in escrow, and the builder can use these funds. The importance of working with a reputable builder is key here, because we have had many builders go out of business in the last 2 years (even large national builders).
The contracts for new construction are written by the builder’s attorneys, and are not standard ‘state form’ contracts. They have lots of language that protects them as a builder, not you as a consumer, so to repeat an important point, it is best for you to have representation in the process, even if you have had homes built new before.
For more information, see the following links: