Is it Cheaper to Buy or Build a Home in Colorado?
Buying a home is typically cheaper than building from scratch, but building your own custom luxury home brings a level of joy that can’t be beaten. Nothing is typical about Colorado, where locals are just as high as the mountain peaks since legal marijuana exists in the colorful, laidback state that seems to have attracted a laundry list of people eager to call the state their home. People are excited to live the outdoor life that Colorado offers them.
There’s so much that brings people to Colorado and keeps natives in their home state. Marijuana brings its fair share of people to the state and the green chile had plenty of fans. But with so much to love about Colorado, it is safe to say far more relocate because they want to enjoy the state as we do already.
Colorado is beautiful from one end to the next, offering a range of scenery and views, wildlife, flowers, and sheer enjoyment.
The demand for housing has increased as well, making it difficult for most everyone to find a property that suits their every need and wants. With more demand than supply, it’s a seller’s market and they’ve taken full advantage of the fact.
Colorado Home Prices
Colorado home prices have soared to an average of $555,000 for a single-family home -36% higher than the U.S. national average of just over $374,000- and overzealous buyers aren’t afraid to pay well over the list price to get what they want. Investors often scoop up homes faster than families can, which worsens the currently drained housing market.
In February 2022, home prices in Denver were up 20% compared to the same time last year. It is a hard market for buyers even more so now than it was a year ago. Prices continue to skyrocket as demand follows suit.
“Yes, there’s more competition,” said Colorado Association of Realtors (CAR) Spokesperson Matthew Leprino, “and they (buyers) have to give up more concessions than they did in the past, but there are homes available at all price points, it is possible.”
Homes sell in a matter of days in the state. On average, homes sell in about 13 days, up from 11-days this same time last year. Once a house hits the MLS, buyers jump on the chance to buy, and dozens of offers flood in for every single home listed.
Buyers eagerly bid on homes, unconcerned if they spend more than the list price so long as they get their name on the deed. It is fierce out there in the real estate world!
Build a Colorado Home
Buyers who don’t have time to play the MLS games or bidding wars can build a custom home for about the same cost as buying a prebuilt property. With a good contractor on your side, it is easy to create that home of your dreams without going into debt in the process. The decision to build a home eliminates the headache of competing for property and ensures that you get what you want in your new home. It does take longer than buying a home in many situations but buyers often find that one small price to pay in exchange for the home of their dreams.
The average cost to build a home in Colorado ranges from $254,800 to $545,000. Does this price sound too good to be true? Of course, it is too good to be true. This price does not include the cost of land, hookups for water/electricity, landscaping, or other features that make a house a home.
People who own land already can almost always build a home cheaper than buying a prebuilt home. People who do not own land already can carefully maneuver their choices in the home size and location and find themselves part of a great building project.
If you value your sanity, building a home with help from respected homebuilders in Colorado is the best option. Buying a home is stressful for anyone although Colorado buyers seem to have it a little worse than people in other states. There’s more competition, the prices are more expensive, and there’s more to learn about Colorado. Building a home alleviates the stress, giving you control of every aspect of the property so you can create the home of your dreams at a cost about the same as buying. You also avoid the headaches associated with buying so there’s more time to enjoy your new home.
Factors Affecting Colorado Home Prices
Whether you buy or build, many factors impact the overall cost of a home.
Location
Aspen has the most expensive housing rates in the state, with prices exceeding the $2 million price range. Boulder follows closely behind, averaging $1 million in home prices.
Denver and Colorado Springs are the next most expensive cities in Colorado. Buying or building a home in a major city spike up costs of the property. The neighborhood also influences the price.
Cherry Creek, downtown, and Park Hill are three exclusive areas in Denver. Not only are the areas highly sought after, but they’re also among the most expensive neighborhoods in the city.
Consider an area like Limon, Trinidad, Salida, or Aurora for lower housing costs. Keep in mind that while housing costs are lower in these areas, costs for things like electricity connections and running pipes can cost significantly more.
Home Style
Unbeknownst to many people, the style of home you choose affects its price. The more foundation a home needs, the costlier the project becomes.
That’s why two-story homes offer the best overall value. You get far more space for less money in a two-story property.
Contradictorily, ranch-style homes require excess foundation space. They’re more expensive than many other housing styles, although very popular in the state. Reconsider your choice if cost is of concern.
Lot Size
One to three acres of land sells for at least $300,000 in the metro Denver area while it can sell for as much as $1 million. These prices are higher than you would pay in other states but reasonable here in Colorful Colorado.
The lot size drastically impacts the costs to build a home. If you currently own a plot of land, building your home certainly has the potential to cost less than buying a pre-built property.
Finding a good piece of land at a good price is possible but this can take time. Do you have the patience and resources to find land for your new home? Consider the amount of acreage you want as well. Do you really need all of that green space?
Choosing a pre-built home eliminates this concern for anyone who does not own land already. You’ll know exactly how much land is included with the home when you buy.
Location is the biggest factor affecting the cost of a home in Colorado. Choose carefully and scoring a phenomenal deal on a new home is possible.
Buying a Home
Homes in Colorado are expensive and realtors expect the housing situation to worsen before it gets betters. We’re years away from change in the real estate market.
It can take months on end to find a home meeting your needs and there’s no guarantee that your bid will be the winner. Are you ready to play those bidding wars and compete with so many buyers on any home of interest? Buying a home in Colorado is a game of Home Russian Roulette. It is stressful, frustrating, and sometimes, downright disheartening.
The good news is that the home is ready for move-in as soon as you close the deal. This can be a matter of days in some cases. The home is complete with a driveway, grass, landscaping, and all the ordinary features you would expect in a home.
Many homes in the state sell in “as is” condition. How disheartening it would be to buy a beautiful home only to find out it needs extensive renovations that cost a ton of money! A new roof alone can set you back a few thousand. Imagine how much money you’d be out if there were two or three problems. That’s always a worry buyers have, even after professional property inspections.
There are also costs associated with renovations to rooms that don’t meet your standards or needs. Whether it is the hideous kitchen or a bathroom that takes you back to the 1990s, there’s bound to be at least one or two things that have got to go! Renovating costs can be exorbitant, depending on the changes you want.
Buying a home can be easy or difficult but sadly, there is no way to predict how the situation will play out in a seller-friendly state like Colorado. It is the game of Russian Roulette all buyers play.
Buying a home is best if:
- You will not qualify for a construction loan
- You have friends/family in the real estate industry
- You need a home immediately
- You don’t mind bidding wars
- You don’t mind paying over the list price
- You’re okay with HOAs and other stark rules and regulations
Building a Home
Constructing a Colorado mountain home takes about seven months on average. Weather and other factors may delay this timeframe. Many buyers spend seven months or more competing for a home with other buyers.
Building a home from the ground up allows your family to be the first to occupy the property that you’ve designed with them in mind. You control the design of the home, the features, its color patterns, and every other feature. It feels great to know how much impact you have on your home.
Do you qualify for a construction loan? Since the home isn’t yet built, you need this special type of loan to begin the building process. Obtaining a construction loan is sometimes harder than qualifying for a mortgage, especially if you have less-than-perfect credit.
One benefit builders typically enjoy is the lack of an HOA. Homeowners associations often mean well, as they are designed to keep the community safe. Yet, they oftentimes place restrictions and steep fees on homeowners that only increase year after year. Building zaps those restrictions and costs.
In the event, you decide to move for one reason or another, resell values on new construction homes are great. You can expect a great ROI if you change your mind and sell the home.
Consider building a home rather than buying if:
- There are specific features/amenities you need
- You want to live in a specific neighborhood
- You want to avoid bidding wars
- Choosing the design of your home matters
Buying or Building in Colorado: Which is Cheaper?
Buying an already constructed home is cheaper in some situations but not the best idea in others. Each situation is unique and should be handled that way.
Evaluate the pros and cons of buying and building, factoring in your specific needs and circumstances, to decide which option is best for your needs.
Speak to our homebuilding experts after careful evaluation of your situation can help you better decide which option is best. At the end of the day, becoming a homeowner is the best feeling in this world, whether you build or buy.
Call Denver Urban Builders today at (720) 902-5773 if you are interested in learning more about building the home of your dreams or renovating a current property.
