Getting your player ready...
Home builders – planning some significant expansions along the Front Range this year – could affect the direction of Denver’s market in 2013, altering some of the trends that real estate agents and their clients have become acclimated to during the delicate recovery.
That expansion will be part of a major national expansion in production building, according to market analyst Jack O’Connor, broker/owner of The Denver 100 real estate group. “If you’re buying stock in the top ten (national) builders now, you’re going to make money on all ten,” O’Connor said. Here in Denver, he added, builders will respond to a huge drop in home inventory by pulling four times as many building permits as during the last four years combined. Some builders have already confirmed major expansions along the Front Range, with substantial gain in the number of neighborhoods they will offer, even weighed against those that are closing out now after successful sales. What difference will that make to sellers of resale homes? “Builders’ products are going off the chart because inventory has dropped so fast,” O’Connor said. People who are contemplating selling have experienced an average 14 percent increase in the Denver metro area in potential value over the past year – prompting them to sell. However, the situation for sellers is tighter than the numbers would suggest. “Even though the market price increased,” O’Connor continued, “if you bought two years ago, the problem you face is that the market may have lost a few percent in 2011, but the cost of sale is around 8.5 percent (figuring in a commission and other costs), and that’s assuming you get 100 percent of the sales price.” As a result many sellers sense that they have little equity, despite last year’s gain. In this situation, O’Connor said, where despite the low inventory average sellers can’t sell and net enough to put it on the market, builders are going offer buyers many advantages. “Their product has high energy efficiency, is wired for wireless, and has new, open styling. They have the market in a perfect spot.” That leads to the ‘e’ factor – energy efficiency – one that could give new homes a substantial edge, according builders who offer those packages. “Many new homes are achieving HERS scores in the 60s, which means they are 30 to 40 percent more energy efficient than homes built to current codes and more than twice as efficient as older homes,” says Rich Laws, president of Berkeley Homes, building in Lone Tree and Centennial. “Combine that with updated floor plans for the way people live today and host of new home features, many buyers are choosing new over resale.”