Homebuyers turn to new construction in Denver metro for options, incentives

The fourth quarter is the best time to buy new construction homes due to builder incentives, price reductions, and rate buydowns, realtors say.

With a limited supply in the existing home market, buyers are turning to new construction for more options.

“This is the best time of year to buy,” said Heather Christensen with The Agency. “As builders near the end of their fiscal year, they want to get these homes off their books, so they don’t carry over the debt.”

Suzi Cook with West+Main said some builders also offer help with closing costs or offer upgrades like better appliances, carpeting, or blinds.

“You can get some great concessions,” Cook said.

New homes offer modern finishes and energy-efficient features but may have downsides, such as longer commutes and smaller yards.

In the second quarter, 30 percent of homebuilders reported using interest rate buydowns to help buyers, said Lawrence Yun, National Association of Realtors chief economist. The association predicts new-home sales will increase 12% in 2023 and 14% in 2024.

Fifty-five percent of home builders are using incentives to bolster sales, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

Those incentives may include buying down mortgage rates or offering extra perks, such as free home upgrades. About a quarter of builders say they’ve reduced their prices, with an average price decline of about 6%, the survey shows.

New construction advantages

Cook said with a median age of 40 years, the Denver metro’s existing housing stock is aging. That means buyers of existing homes needing renovations will pay for upgrades.

But when they buy new construction, the homes offer advantages like new systems, including HVAC, water heaters, and appliances. They also include warranties.

Cook said new homes are built with the latest technology and use engineered products designed to withstand high winds and sun damage.

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“Apples to apples, new builds are the way to go right now,” Cook said. “With the money buyers can save between concessions and buydowns and the knowledge they won’t have to replace anything for several years. That’s where I’d steer someone.”

New construction disadvantages

High land cost drives builders further away from central Denver, making homes less expensive but giving buyers longer commutes.

New developments typically feature smaller lots, so the homes are closer together, which may not appeal to some people. The developments also often offer walking trails, dog parks, and playgrounds to offset the smaller yards, Cook said.

Some buyers might feel overwhelmed with decorating choices or prefer something other than modern finishes that they consider sterile, Christensen said.

The news and editorial staffs of The Denver Post had no role in this post’s preparation.

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