The old days of selecting a dirt lot, signing a contract with a builder, and then waiting 9-12 months for your home to be built may be going by the wayside in Denver’s Central Park. How so?
An extreme rise in construction costs has made it difficult for homebuilders to predict their costs. On the other side of the coin, buyer demand for new homes in Central Park’s last neighborhood, North End, is higher than ever before.
Combine these two factors, and what’s the result? Things are changing quickly as builders continue to sell the last few hundred lots in North End.
Let’s take a step backward, and I’ll walk you through what’s happening right now around the Denver metro.
First, our team here at Focus Real Estate checks in with Central Park’s builders weekly. We also chat with builders in other new home communities we work in around the Denver metro, such as Painted Prairie close to DIA and Sterling Ranch in Littleton next to the foothills. We’re hearing the same thing from many of the builders we work with: lumber costs are skyrocketing.
This recent article in the Denver Post analyzes the lumber issue, but the biggest takeaway you need to know is that lumber prices are up about 250%. Some estimates suggest higher lumber prices add $36,000 of new costs to each new home. Wow! Other prices are skyrocketing, too. Copper, granite, insulation, and more are approaching record prices.
The end result? Builders might not know how much the homes they’re selling right now will actually cost to build in a few months. Yikes!
Meanwhile, we’re fortunate to have several dozen clients who are in the process of building around the Denver metro right now. (Remember, every builder in Denver pays your broker a separate commission, and your new home is the same price regardless of whether you use a broker or not – so our services are effectively free to you. This Youtube video by Ashley Faller dives into how a broker can help you with your new build home). What we and our clients have learned is demand for new homes is higher than ever before.
Given all this, some builders appear to be moving toward a “spec home” selling model similar to how Brookfield could be selling their last 300+ homes in Central Park. You can check out more from Joe Phillips in this post: The Scoop on Brookfield Residential in Central Park. But here’s a quick excerpt:
“Brookfield, in an effort to expedite receiving permits from the City, is pre-selecting which homes will go on each lot and making the structural selections for each home. (By structural selections I mean things like fireplace, finished basement, optional balcony on second floor, etc.)
So what does this mean for buyers? It means when you contract on the home you shouldn’t have to wait as long but it also means you’ll have less choices to customize the home. For example, say you don’t value the sliding door to the patio from the master bedroom and want to remove it? Sounds like if you ask the answer will be no, because those options are pre-selected.”
So your ability to customize your new home may be changing. Also, builders know they have a lot of interested buyers, so some builders aren’t allowing buyers to sign a contract until the home is about to be constructed or under construction. The longer they wait the better they’ll understand their costs for that home … and of course they can adjust the final price they charge the buyer to reflect increasing costs.
In short, this “spec home” model means less customization, you might sign your contract only a few months before closing (as opposed to a 9-12 months out), and pricing could be more unpredictable since some builders aren’t locking in pricing until the home is further along and closer to closing.
The good news? You might not need to wait long for a new home once your builder is ready for you to sign a contract. Also, less customization isn’t necessarily bad. Central Park builders build beautiful homes, and having your builder or their professional designers pick options could be a good thing. Last, bridging the gap between selling your current home and closing on your new home could be easier, since you’ll have a better idea of when your new home will be done.
My advice if you want to build a new home in Central Park or elsewhere in Denver? Contact your broker so you know exactly what your builder is charging *right now* (hint: pricing has probably changed in the last few weeks). Also, get on the builder’s waitlist and touch base with your builder regularly, or have your broker do this. Last, be ready to be flexible with your design options.
Things could change, of course, so we’ll have to wait and see what happens. Also, not all builders are the same – for example, Brookfield has 300+ homes to sell, while other builders like Parkwood are down to their last few lots. So every builder and every home is somewhat unique, and how each builder handles this increasing cost environment could be different.
Regardless, I wanted to give you the latest on what we’ve been hearing around town from several different builders!
Last but not least, here are some recent Scoop posts on new home construction in Central Park:
Your last chance to build a Parkwood – forever – is here
More “Wee Cottages” coming to Central Park Neighborhood!
“Why is THAT term in my new home contract?”
What’s going on with David Weekley in the North End?
