The days of buying a home in the Denver metro area for under $300,000 are all but gone.
Just 1 percent of the homes started in metro Denver in the first quarter were priced below $300,000, down from 3 percent in the first quarter of 2017, according to Metrostudy, which tracks home construction in the region and other big cities. The numbers include new single-family homes, townhomes and condominiums.
And it isn’t because construction is taking a breather. Builders are ramping up this year, with home starts 14 percent higher in the first quarter than they were a year earlier. That marks the second consecutive quarter of double-digit gains, according to Metrostudy.
At an annualized rate, home starts are running above 12,000 for the first time since 2007. But much of what is being built skews above the half-million-dollar mark. Starts on homes priced below $299,999, already low, have dropped by two-thirds the past year.
Only 22 percent of the new homes started in the first three months of this year were priced below $400,000, even after a big jump in the construction of townhomes, which usually cost less to build than a comparable single-family home. Just two years ago, homes priced below $400,000 accounted for 40 percent of starts.
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“Many prospective entry-level, new-home buyers are now priced out of the market, and those that can afford to buy are either moving further out into the periphery, or into more affordably priced attached product, which explains, in part, why townhome product is growing so quickly,” John Covert, the study’s author, said in the report.
To qualify for a 30-year mortgage on a $400,000 home, assuming a 20 percent down payment, a household would need to earn around $85,500, according to Mortgagecalculator.com.
Builders were most active during the first quarter at starting homes priced from $500,000 to $599,999. Those represented 22 percent of all starts in the first quarter in metro Denver, up from 18 percent in the first quarter of 2017. Homes priced in the $600,000 range also saw a big jump, going from 5 percent of starts to 9 percent.