New Home Construction

By Larry Hotz, All Denver Real Estate

Builders in the Denver metropolitan area started to construct only 1607 residential homes in the first quarter of 2008.  That’s a dramatic decrease from the same period last year.  And, permits for new home starts were down 43% in the first quarter compared to the same period last year.

Those are both abysmal statistics.  They reflect the dire straits new-home builders find in 2008.  But that may actually be the good news for people wanting to sell their own homes in the near future.

Even though new home starts declined for the eighth consecutive quarter compared to the previous year period and even though builders pessimism caused them to take out fewer new-home permits, that could actually signal an improvement in the housing market soon.  Builders have been forced to cut prices and offer huge incentives in order to sell their homes.  This competition has dramatically hurt regular home sellers.  People wanting to move up or change locations have found themselves in tremendous competition with builders in some cases.

Regular sellers will have less competition from those professional home sellers in the near future.  Eventually, demand for existing single-family homes will increase.

There were some interesting changes in the statistics for last quarter new home sales.  For the first time in a long time, the majority of homes started construction in Denver County rather than in the suburbs. Usually, the suburbs have more new home construction.  But the new homes being built in the hot inner-city markets seem to be less affected.  This includes those popular downtown, high-rise condominiums as well as new homes in Lowry, Stapleton, Highlands and Bonnie Brae.

Another interesting development is that Oakwood homes has opened a new series of smaller, single-family, starter homes with prices beginning at $170,000.  That’s much less than the average new home.  New-home prices in the suburbs now average over $300,000 and new homes in Denver proper are selling from $400,000 to well over $1 million.

Builders of the Denver metropolitan area started to construct only 1607 residential homes in the first quarter of 2008.  That’s a dramatic decrease from the same period last year.  And, permits for new home starts were down 43% in the first quarter compared to the same period last year.

Those are both abysmal statistics.  They reflect the dire straits new-home builders find in 2008.  But that may actually be the good news for people wanting to sell their homes in the near future.

Even though new home starts declined for the eighth consecutive quarter compared to the previous year period and even though builders pessimism caused them to take out fewer new-home permits, that could actually signal an improvement in the housing market soon.  Builders have been forced to cut prices and offer huge incentives in order to sell their homes.  This competition is dramatically hurt regular home sellers.  People wanting to move up or change locations have found themselves in tremendous competition with builders in some cases.

Regular sellers will have less competition from those professional home sellers in the near future.  Eventually, demand for existing single-family homes will increase.

There were some interesting changes in the statistics for last quarter new home sales.  For the first time in a long time, the majority of homes started construction in Denver County rather than in the suburbs. Usually, the suburbs have more new home construction.  But the new homes being built in the hot inner-city markets seem to be less affected.  This includes those popular downtown, high-rise condominiums as well as new homes in Lowry, Stapleton, Highlands and Bonnie Brae.

Another interesting development is that Oakwood homes has opened a new series of smaller, single-family, starter homes with prices beginning at $170,000.  That’s much less than the average new home.  New-home prices in the suburbs now average over $300,000 and new homes in Denver proper are selling from $400,000 to well over $1 million.