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Information for those interested in investing in residential real estate.

New Construction Costs in Denver Metro Area

This article and information was generously provided by:

Copyright © 2017 Alliance Engineering, Ltd., All rights reserved.
Alliance Engineering, Ltd.
www.AELEngineering.com
(303) 485.8700

Projected Costs for New Home Construction in Denver, Colorado

One of the most important factors in designing a new single home or in developing out an entire neighborhood after platting is the cost per square foot of the home or Project to be built. Denver, Colorado is presently the fastest growing economy in the U.S and, thus, there is presently almost unlimited demand for homes of all types and sizes. As a result it is important to carefully consider the likely price per square foot of the construction of a new home as opposed to that of an existing home.  

Alliance has carefully studied the housing market and specifically those homes that are considered typical for a medium-high end custom home and are neither considered overly luxurious, nor economy homes. This information is being made available to the public for general use in qualifying budgets and design programs.

Typically, there are three (3) ways to measure square footage. This is important because it is a highly sensitive variable. The first is measuring only finished living space and not accounting for unfinished space or garages. The second is measuring total enclosed space, not including garages. The third is measuring total enclosed space including garages. When starting a project, make sure you clearly identify how you are measuring space in your program and that you are using a common standard of measurement with your engineer, architect, and/or contractor.

The costs noted below are for the construction of the finished home itself with all accessory appurtenant structures (decks, covered porches, and the like). It DOES NOT include land costs, site development costs, soft costs or finance costs. It does include all interior finishes. However, it does not include furnishings, art or interior decorating for the home.

Results of Study Regarding Construction Costs:

Total Finished Square Footage:
Low: $150 per Sq.Ft. / High: $275 per Sq.Ft. / Average: $235 per Sq.Ft. / Median: $230 per Sq.Ft.

Total Enclosed Square Footage not including Garage:
Low: $150 per Sq.Ft. / High: $230 per Sq.Ft. / Average: $195 per Sq.Ft. / Median: $185 per Sq.Ft.

Total Enclosed Square Footage including Garage::
Low: $125 per Sq.Ft. / High: $195 per Sq.Ft. / Average: $165 per Sq.Ft. / Median: $155 per Sq.Ft.

The breakdown of these costs by percentage of construction component is shown below. This is a generalized model based on the Denver housing data. As each project can vary significantly in one or more categories, a Schematic Design needs to be developed in order to allow for line-item budgeting to further inform the homeowner of the actual costs and breakdowns for the Project.

The typical new home construction cost breakdown is as follows:

General Contractor Fee: 15 %
General Conditions:  5 %
Interior Finishes: 20 %
Exterior Finishes: 10 %
MEP: 15 %
Shell: 35 %

Although these may seem high, that is the way it is in Denver, Colorado right now. When the time between listings of existing homes going onto the market and initial contract offers is not days, but hours, it is no wonder that new home pricing is as high as it is.

AEL is Licensed, Dependable, and Accurate
The Colorado Principal office is located in Westminster, Colorado. We have licensed Professional Engineers (“P.E.’s”) available on call to complete inspections and reports within 24 to 48 hours of the call coming in. Please call us at (303) 485-8700 or (720) 898-0660. You can also contact AEL by email at mcentofanti@AELEngineering.com. We oftentimes have to react instantaneously and are used to doing so due to an upcoming closing or contract.

Real Estate Bubble or Not?

The truth is I don’t know if this is a real estate bubble or not and neither does anyone else!  What I can tell you is what I tell all my clients.  “If you’re ready to buy then now is the right time”.  Of course, I also tell them to carefully consider the following information:

  1. Buy only what you can afford with the salary you are making RIGHT NOW.  Don’t count on a promotion, a raise or a new job.  In most cases, especially with first time home buyers, your income will increase, not decrease.  If you buy a home you can afford today you can weather any volatility in the the real estate market. 
  2. The market value of your home only matters when you SELL.  Although no one can predict the future, if you plan to stay in your home for 5 – 7 years you can very likely wait out any downturn in the market. Looking at historical data if you purchased your home at the peak in 2006, the Denver Market had essentially recovered by 2013 (7 years). Prior to that the property values had been increasing steadily since 1992! (S & P, Case-Shiller Home Price Index). 

    S&P Dow Jones Indices LLC, S&P/Case-Shiller CO-Denver Home Price Index© [DNXRSA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/DNXRSA, June 6, 2017.

  3. Interest rates are incredibly low right now and the likelihood of them increasing gets a little greater every day.  For every increase in interest rates you reduce your buying power. For example: if you want to keep your principle and interest payment around $1500 and you have 20%  down, the graphic below shows you how that affects your buying power.

With all that being said… If you’ve been sitting on the fence, wondering if you want to buy or not, please reach out to me.  I will help you logically evaluate your unique situation so you can make an informed decision about whether or not you’re ready to buy.

Property Value, Assessment, Taxes and Mill Levy – What does it all mean?

If you live in Colorado, you should be receiving your new property assessment and tax rate notification by May 1, 2017.  Below you will find definitions and information that I have summarized from the Arapahoe County Assessors website for your review.  It is extremely likely that your tax rate will have increased significantly as property values continue to increase at an extraordinary rate.

If you disagree with the property valuation you can make an appeal with your county assessor.  The deadline is likely June 1, 2017 to file an appeal.  You cannot appeal the mill levy as that is determined by the individual taxing authorities. 

If you disagree with the property value the assessor has determined, and are considering making an appeal, feel free to contact me and I will gladly provide you with comparable property sales for documentation to use in your appeal.

Property Value – In Colorado the county Assessor, for the county in which your property is located, is required to reappraise (determine the market value) all real property (land and improvements) every 2 years in the odd numbered years. 

Property Assessment    Every 2 years the assessor determines the actual (market) value for all real and personal property. Then a percentage (assessment rate) is multiplied by the actual value to determine the assessed value. In Colorado the residential assessment rate is currently 7.96%. 

Mill Levy – Is the tax rate applied to real property.  The mill levy is set by individual taxing authorities in your area, these might include schools, county, fire, water, sanitation, library, recreation districts and metropolitan districts.  Mill levies within a county can vary widely.

Property Taxes – The final property taxes for your home and/or land are calculated using this information.    The actual value is multiplied by the assessment rate which is then multiplied by the mill levy. The residential rate in Colorado currently is 7.96%. The assessment rate for all other property, including vacant land, is 29%.

Example: A home which has a market value of $300,000 (actual value) x 7.96% (residential assessment rate) x .081265 (mill levy) = $ 1,940.61 (annual tax dollars). Please note this is only an example. Your value and mill levy maybe different. (300,000 x .0796 = 23,880 then 23,880 x .081265 = 1,940.60)

Home Buying & Selling Classes

If you’re thinking about buying and/or selling a home in the near future, now is the time to sign up for one of my upcoming classes at Arapahoe Community College.  Both of these classes are designed to give you the information you need to be prepared to buy or sell a home, here in Colorado.

My expertise is helping my clients make great decisions with great information when buying, selling or investing in real estate.

My extensive skills, experience and knowledge are unmatched in the real estate industry. I have experience in building, inspecting, fixing, investing and of course buying and selling.  I have the information you need to move forward in the home buying and selling process and I’m happy to share it with you.

Home Buyer Basics

Judy Browne
Learn about the home buying process from start to finish. Start with a review of the current Colorado real estate market and cover a variety of topics, such as: describing your new home, choosing a real estate broker, what to look for when viewing homes, negotiating with sellers, understanding the home inspection process, understanding real estate contracts and forms, and knowing what to expect throughout the process.  Leave the class with the information you need to be an informed home buyer!

Sat, Apr 8, 10 a.m.-noon                                 Littleton Campus
INDS 1001S01-82438                                               $25

Thu, May 4, 6-8 p.m.                                         Littleton Campus
INDS 1001S02-82439                                             $25

What You Need to Know to Sell Your Home

Judy Browne
Learn the step by step process to follow when selling your home.  Review pricing strategies, what it costs to sell a home, recommendations for getting your home ready to sell, how to work with buyers and negotiating techniques. We will also review Colorado Real Estate Contracts and forms.  Each student will be offered a free comparative market analysis of their home at the conclusion of the class.

Sat, Apr 22, 10 a.m.-noon                              Littleton Campus
INDS 1002S01-82440                                             $25

Thu, May 18, 6-8 p.m.                                      Littleton Campus
INDS 1002S02-82441                                             $25

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