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Building a Home in Colorado Springs

Building a new home is an appealing option for many people. According to the NAR 2020 Survey of Home Buyers and Sellers. Homebuyers that chose new construction over resale did so for the following reasons:

  • Avoid renovations or problems with plumbing or electricity
  • Ability to choose and customize home design features
  • Amenities of new home construction communities
  • Green/Energy Efficiency
  • Lack of Inventory of resale
  • Smart Home Features

Choosing new construction has many advantages over purchasing an existing home, but is it the right decision for you?

 

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Building a home in Colorado Springs

Benefits of New Construction

New homes are much more energy efficient, with the latest in utilities, mechanical systems, insulation and building materials brings a level of efficiency it’s hard for resale homes to compete with. You also get more of what you want and get to make all of the choices– your wish list can get checked off more easily when you have a hand in designing your new home. 

Another benefit of building a home in Colorado Springs is that chances are you will be in a new neighborhood of your choosing. New neighborhoods typically have more amenities like recreation centers, common areas, trails, and being part of a new home community makes it easier to meet your neighbors and make friends. Having all of the homes newly built in your neighborhood means that you are less likely to suffer from the situation where your neighbor's house falls in disrepair, or doesn't keep up with the yard or maintenance.

With new construction, you are not inheriting someone else's problems. Your house is under warranty! Everything is brand new – and if something is not right – get it on a punch list and a builder who with a good reputation will stand by their product and fix problems that may arise. Overall, you will have a lower cost of maintenance and there will be less surprises (think Tom Hanks in the Money Pit).

Downsides to Building New Construction

With all of those benefits, is there a downside to purchasing new construction? Yes, new construction is not the right choice for everyone. If you are a person that prides themselves on individuality, the new construction route might not fit your tastes.

New neighborhoods and a new house built by tract or semi-custom builders are built with cost efficiency in mind. Builders gain efficiencies by making everything the same, or by following a pattern of designs that are repeated over and over. Drive into a new home community and you will often see every third house with the garage on the left and the dormers over the front door. Walk inside and you will experience the same continuity with repeated floor plans, design elements, furnishing and decorative touches. While this may appeal to some people, it does not appeal to everyone.

New construction does come with a premium price tag, you’ll pay a bit more for the newness factor. In addition to the higher price, timing can get complicated in new construction. You’re selling your home – but will the new one be finished when you want to move? Short term rental or (*gulp*!) living with in-laws might become a necessity. Also, if you love the feel of an established community, living in a place that is constantly under construction may not be the right fit for you.

For many, many people, the pros far outweigh the cons. And as you can see, there is so much available to choose from in the new construction market here in Colorado Springs. Please feel free to contact us with any questions. We’re here to guide you to the right fit for you.

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Types of Builders

When you talk about building a new home, that process encompasses a wide range of housing types including, condominiums, townhomes, patio homes, and single-family homes. Typically in Colorado Springs, most new construction falls into the single-family category. Within Single Family there are several different types of builders.

Single Family Tract

A tract builder uses predefined builder plans, with a minimum of customization you can choose colors carpet, and cabinets. These homes generally offer a design studio where you can choose from a long list of upgrades. This is one way the builder makes money.

These homes are generally built in the same areas. The builder is able to keep these prices under control through volume. They build a handful of plans in close proximity to each other. This keeps their labor from wasting time with travel and retooling. The idea is to tightly control their building process and offer the most square footage for the money.

These communities are the result of a developer purchasing the land, coming up with a plan for the community. They then take that plan through the appropriate state, county, and city authorities for approval.

Once approved, they implement their development plan adding the vital infrastructure required like water, sewer, roads, curbs, and sidewalks. Additionally, they build any community amenities like a community center or pool, etc.

Once the infrastructure is in place, they will sell the lots off to various builders that have agreed to purchase and build in the community. The builder will commit to purchase a certain number of lots and most likely build model homes in the neighborhood from which to sell from. 

In Colorado Springs, most of these types of developments can be found to the east and south of Colorado Springs. The mountains are located on the western edge of Colorado Springs and act as a natural boundary. Large sections of public land to the north and Fort Carson to the South have left the eastern plains as the ideal path for new home communities. The soils are mostly sandy which is great for foundations and the views of the mountains to the west are unobstructed. 

Some tract builders in Colorado Springs include Classic Homes, Campbell Homes, Covington Homes, and Creekstone Homes.

Single Family Semi-Custom

These homes offer a wider range of choices. Generally, the builder will offer a range of options within different levels. For example:

  • Level 1 might include 12 different tile options
  • Level 2 might include 8 different options of more expensive tile at a higher price. 

Semi-custom homes will also allow for different options in the floorplan and front elevation. These are predefined options the builder has already priced out. This allows the builder to offer some variation to the customer without having to price out every change or request. These are usually the most popular or most requested options.

The semi-custom home process is similar to the tract home process. The location, lot size, and community amenities are usually larger, more extensive, and more expensive than the tract home community.

Because of the expectation of more desirable location, views, and amenities, these communities are less common here in the pikes peak region. As the area grows it gets more difficult to find these areas. 

We often see these semi-custom communities as a part of a larger custom home development. The developer will set aside a portion of the project for higher density semi-custom development (i.e. flying horse). This gives the community a wider range of home choices. 

Some Semi-Custom builders in Colorado Springs include: Vantage Homes, Saddletree Homes, Toll Brothers.

Single Family Custom

This type of home requires the buyer to choose or sign off on almost everything. These are generally true luxury homes which allow you to have red glossy tile in the kitchen, or a pantry that is 100 square feet if that is your desire in your dream home. The building custom option puts more responsibility of the design and choices on the homebuyer. Additionally, the best custom home builders provide a much higher level of customer service.

  • The buyer usually buys the lot and then chooses the builder
  • The builder is essentially a general contractor
  • The buyer is responsible for providing the builder with a full set of plans
  • Plans can be created by an architect or a designer. The designer is a more affordable option and will give advice on interior finishes and design as well.
  • People will often work from an existing plan they have seen which helps narrow the scope of possibilities.

Custom homes in the Colorado Springs area tend to be in areas based on topography, views, and amenities. Trees, views, and golf courses are the most common features in a custom home area that you may not find in the semi-custom or tract home communities.

Some of the best custom builders in Colorado Springs known for building quality homes include: Sun River Construction, Goetzmann Custom Homes, Lost Creek Construction.

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Our New Construction Guide can give you insights on both great neighborhoods to consider as well as what builders are in your price point.

New Construction Guide
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Homeowner Associations (HOAs)

Most of the new communities available in the Colorado Springs area are going to have an HOA. Anytime a community has shared or common interests, there needs to be an HOA. HOAs usually mean the community will have covenants as well as architectural standards and rules and regulations. Learn more about HOAs before you make any decisions.

If you are trying to avoid an HOA and the rules and covenants that come with one, you should be looking in areas that aren’t necessarily in a subdivision or development. There are large parts of Black Forest that meet this requirement as well as Peyton and areas in Falcon. It’s important to remember that you can’t have it both ways. If you want to live without covenants, your neighbor won’t have them either. This means you have no say as to what they build or keep on their lot, this includes animals, rvs, school buses, etc as well as what color they paint their house.

Utilities

Another consideration when building a home in Colorado Springs is where are the utilities going to come from. Tract home subdivisions and most semi-custom home areas will get their utilities from some form of a municipality. While custom homes may also be on municipal utilities, it’s more likely they’ll get their water from a domestic well and sewer via a septic system. This eliminates utility bills but does require some maintenance and installation can be expensive.

 

How to Buy New Construction

When it comes to buying new construction, our advice is that you should use a Realtor®. Homebuilders work with and pay your Realtor's® fees. Realtors® have a great sense of a builder’s reputation as well as knowledge about where a particular new home subdivision is headed from an appreciation standpoint. They hear about warranty issues and problems associated with some builders and can share this knowledge with their buyers. The homebuyer ultimately makes up their own mind but feedback can be helpful in the decision-making process.

If you choose to work directly with the home builder and their representative, it’s important that you understand you are putting yourself at a disadvantage. The onsite sales rep is there to protect the home builder’s best interest, not yours. They must treat you fairly and honestly answer any questions you might have but you need to know what questions to ask.

New Home Warranty

You might be surprised to learn that the State of Colorado has no requirements for a “statutory builder’s warranty.” There are common law warranties that will protect you as the homebuyer on your newly constructed home. The most important common law warranty is that your home was built according to local building codes and laws. This warranty only applies to the original buyer of the home and is not transferable to future owners of the home.

In addition to the common law warranties, individual builders will add their own warranties as well to assure the homebuyers of the quality of their product and to help promote their reputation. Homebuyers have come to expect an express warranty of workmanship to cover the nervousness felt after spending such a large amount of money. It is important to realize however, that these express warranties often exclude issues like landscaping, drainage, settling and normal wear and tear.

In some cases, the builder will request that you waive the common law warranty in favor of their own express warranties. This may or may not be an issue but the bottom line is to carefully read everything that you are asked to sign, and consult with legal counsel if necessary.

New Home Inspections

New construction goes through a series of inspections. These start before the builder is able to move any dirt on the empty lot. 

Soils Testing

Soils and percolation tests are done on the site prior to permitting and the start of excavation. The purpose of these tests is to look at the composition of the soils to determine how the foundation will be designed. If there are expansive soils at the building site, the builder may need to do something called in over dig. This removes the expansive soils and replaces them with non-reactive soils which may add to the cost of building. 

Building Permit

In Colorado Springs, El Paso County, and Teller County, your new home builder will be required to obtain a building permit. This permit is obtained from the Pikes Peak Regional Building Department (PPRBD) who is responsible for reviewing plans, issuing building permits, and administering building inspections on any construction activity within the unincorporated areas of El Paso County, as well as the participating incorporated municipalities within the County. These currently include the City of Colorado Springs, Fountain, Colorado and Manitou Springs, Colorado. Additionally the PPRBD oversees the Towns of Green Mountain Falls, Monument and Palmer Lake, as well as the City of Woodland Park. 

The PPRBD is responsible for licensing builders that build within their area of authority. The building department establishes building standards through the implementation of a building code and then proceeds to make sure any building within its jurisdiction adheres to that standard. 

In addition to the inspections administered by PPRBD, we recommend hiring a private home inspector as well. Most home builders are fine with a private inspector looking at the property as long as they don’t interfere with any of the tradespeople working on the property.

We encourage our clients to do these types of additional inspections because while the PPRBD inspectors do a fine job, the scope of their inspections is very limited. A general home inspection will look at a more comprehensive list of items. If the builder has a problem with a private inspector looking at the property, this might be a red flag. Because of this, we always ask about a private inspection prior to signing any contracts. This gives the buyer the opportunity to consider the choice of builders before committing.

Financing New Construction

There are a couple of different options available when it comes to paying for your new home. Here in the Colorado Springs Real Estate market, the tract builders will carry the financing until your new home is finished. Once the home is finished, you purchase the home with a regular mortgage, exactly like you would use to purchase a resale home. The builder gets paid at closing and you get your new home.

Most Semi-Custom home builders operate the same way the tract builders do. These builders may require a little more money upfront to cover upgrades or changes that they wouldn’t have normally put into the home. One good example is exotic stone or exotic hardwoods. Since these choices might not appeal to a wide audience, in the event you don’t end up closing on the home, the builder may need to tear out some of your choices in order to re-sell the home. In order to cover the cost, the builder takes a larger non-refundable deposit. If you do close, the money is credited back to you.

If you decide to build a custom home, the financing might be very different. Most custom home builders will not carry the financing, the buyer is responsible for obtaining construction financing. These loans are riskier than a traditional mortgage, so the lender will require a larger down payment (20% or more) and the interest rate is generally higher as well. 

Most lenders will offer a one-time close construction loan. This is a convenient option because it allows the borrower to do one set of application paperwork for both the construction loan and the permanent loan. Once the home is finished the loan rolls right into your permanent financing.

If you own the lot you plan on building your custom home on, any equity you have in the property can be used as collateral for the construction financing as well.

Making the Right Decision

The real estate market is booming right now, inventory levels are at an all-time low and that makes this a good time to buy new construction. But this level of activity does bring its challenges. Things are tough all over when it comes to finding existing homes available for sale. And the resale home inventory is especially tight in Colorado Springs. Lower inventory in resale homes means prices are moving up – that’s simple supply and demand. Those factors are compounded in the nearby Denver market, driving prices higher and bringing some buyers to Colorado Springs willing to get a bit more bang for their buck in exchange for a longer commute.

All of this makes new construction an attractive alternative. Right now, you have access to so many great, quality options when it comes to building a new home in Colorado Springs.

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