Rendering for New Construction in Denver The Denver real estate market has seen an influx of new home builders in response to the shortage of homes for sale in Denver.  As I specialize in new construction in Denver, many of my clients know they want new construction, but don’t understand the different options.  There are now a variety of options for new construction in Denver, most of which fall into three main categories: Custom Homes, New Home Communities (also known as Tract Homes), and Spec Homes.  Like most things in life, all have pros and cons, so it all depends on what is best for you.

I created a breakdown of the differences between them, including the pros and cons.

Custom Homes

Fully Custom Homes are designed and built for an individual. You will never hear the word "No", which is very appealing to most home buyers. With a fully Custom Home, you pick all your finishes and also play a role in the architecture and aesthetic design of the home.

"There is nothing better than seeing someone sketch their perfect home on a piece of paper and then see their vision come to reality,” says Jeff Ayres, owner of Denver Design Build, a Custom Home Builder in Denver. "We find that everyone's wants and needs are different and with a Custom Home, there is no need to compromise."

Pros: The three rules of real estate are Location, Location, Location and with a Custom Home, you can choose exactly where you would like to live.  While out-of-pocket cost is typically higher, custom homes in a highly desired location are often worth more than what someone paid to build it.  For example, homes for sale in Denver's LoHi Neighborhood can sell at over $400/square foot, much higher than the average price per square foot of the greater-Denver area.

Cons: Cost is the most common complaint for fully Custom Homes.  The higher cost is typically due to the land costing more than that of a Tract Home, as well as typically higher end finishes and building materials.  In terms of financing, Custom Homes can require a larger down payment (20%) and the use of a construction loan, but with the variety of construction lenders in the market this is often just as easy as using a traditional mortgage.

New Home Community in DenverNew Home Communities

Also known as Tract Homes, New Home Communities are built by large production builders. Some of the most well-known builders in Denver include Lennar Homes, Meritage Homes, Infinity Homes and Ryland Homes, all of which have new construction homes in Colorado available now. These new construction home communities are often on large sections of land in the suburbs with hundreds of home sites available, all typically offering similar floorplans and home styles.  Buyers have a limited set of design and floorplan options, which can be a positive or negative, depending on the buyer's priorities.

Pros: Lower cost per square foot is the biggest positive to buying a Tract Home.  Volume building and volume land acquisition cuts the cost per house significantly and some of that savings is then passed on to you.  The other nice thing is that you are surrounded by other newly built homes and the community often times offers amenities like parks, pools, or rec centers. From a financing perspective, these homes often times require very little down and no construction loans are required.

Cons: Quality of Work and Customer Service are the most common complaints I hear from clients that have purchased a Tract Home.  As cost is a main consideration for these homes, the quality of work often suffers.  Limited choice is another common gripe and it is often times very frustrating to hear the word "No" from your builder. Location can also be a compromise as these communities are typically located further away from Downtown Denver and its highly desirable restaurants and shopping.

Spec Homes in Denver - Modern DuplexSpec Homes

Spec Homes is short for Speculative Homes, built by a local builder with the speculation of what buyers want.  Denver real estate has seen an influx of this type of home, particularly modern homes, some of which are modern duplexes. These homes are often complete when a buyer finds it, but there are many spec homes in Denver that are still in the beginning stages.

Depending on when you engage the builder of a spec home, it is often possible for you to customize some of the home, especially the interior finishes.  Some home builders in Denver work solely on spec homes while others build both spec homes and Custom Homes due to the current demand for new construction in Denver.

Pros: Spec homes are appealing to buyers who want to move-in quickly.  It also gives you the opportunity to see what your money is buying, depending how far along the build is. Location is usually desirable. For example, spec homes in Denver’s Berkeley neighborhood and Denver’s Wash Park neighborhood are common as they are both highly sought after neighborhoods.

Cons: Spec homes often cost as much or more than a Custom Home, because spec homes are built with intention of the builder or investors making a profit.  You also don't get to customize it to the same level as a fully Custom Home.  As such, the home is someone else's vision of what the ideal home should be.  

So...What is the Best Option for New Construction?

When it comes down to it, there isn't a black and white answer for which new construction option is best.  Like so much of the home buying process, it's a personal choice and it all depends on your priorities. No matter which new construction option you choose, take comfort in the fact that you'll end up with a brand new home in the end!

As always, if you have any questions about new construction homes for sale in Denver or anything else concerning Denver real estate, just contact me as I'd love to help.

Posted by Jay Feaster on


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