Hot Sterling Ranch news: Skyrocketing costs & buyer demand changing new home sales in Sterling Ranch
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 south Denver's new Sterling Ranch neighborhood. 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 Sterling Ranch is higher than ever before.
Combine these two factors, and what’s the result? Things are changing quickly as builders continue to adjust to a new, fluctuating cost model.
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 builders around the Denver metro weekly. From Central Park (formerly Stapleton) to the Canyons in Castle Pines to Painted Prairie close to DIA to Montaine in Castle Rock, we’re hearing the same thing from many of the builders we work with in different new home communities:
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 on our team 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 could are discussing moving toward more of a “spec home” selling model as opposed to a "dirt lot" selling model, at least in the short term. What this means is that instead of selecting a lot, signing a contract, selecting options, and then having your builder construct your home over, say, 9-12 months, your builder could make its own selections, start building the home, and then you sign the contract close to when the home is completed. So less customization, but also less time between when you sign your contract and when your home is complete.
The general idea is the longer builders wait the better they’ll understand their costs for each home they're building … so they can adjust the final price they charge the buyer to reflect increasing costs when the buyer signs the contract. And while allowing buyers the ability to customize is a benefit of building new, the reality is demand is high for new homes around Denver, and builders think they can sell partially or completely finished homes without much issue.
A client's home under construction in Sterling Ranch
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. Sterling Ranch's 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 Sterling Ranch? Contact your broker so you know exactly what your builder is charging *right now* (hint: pricing has probably changed recently). 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. Parkwood normally only has a few lots available at any given time in Sterling Ranch, while Lennar might have dozens of options - so the economics and selling models could differ. Regardless, every builder and every home is somewhat unique, and how each builder handles this increasing cost environment could be different.
Last but not least, here are several Roundup posts on new home construction in Sterling Ranch:
Mariel Ross is a real estate broker who specializes in helping clients buy, sell, and build homes. We professionally list and sell homes in Denver for a 1.5% listing commission if you also buy your next home with us.
Learn more about what I do here, as well as the cost. If you build in Sterling Ranch or just about every other new neighborhood in Denver your builder pays your broker, not you. So our services are at no additional cost to you - which is how we're able to offer our free New Home Package.
The Sterling Ranch Roundup is powered by Focus Real Estate. Copyright 2021 Alex R. Ross, Esq.